After Amazon HQ2: New York and D.C. Offer a Tale of Two Housing Markets
Arlington, Va. housing market continues to surge while Manhattan has cooled off
SANTA CLARA, Calif., May 23, 2019 /PRNewswire/ -- Being named an Amazon HQ2 winner has resulted in dramatically different outcomes for the Arlington, Va. and Manhattan, N.Y. housing markets, according to a recent realtor.com® analysis released today. Although the initial announcement instantly fueled the housing markets in both cities, Amazon's later decision to pull out of Queens, N.Y., has cooled the Manhattan market, while Arlington continues to remain hot.
Immediately following the November announcement, home sales in both cities jumped 50 percent year-over-year, but their similarities ended there. To date, Arlington has seen six-figure (17 percent) median list price growth of $110,000 and a more than 40 percent drop in inventory, while Manhattan has had a comparatively meager price increase of less than 3 percent growth of $40,000, and a 3 percent decrease in inventory.
Another difference is the metros' geographical impact. News of the Arlington headquarters prompted a flurry of activity in the area closest to the new headquarters, but the Queens headquarters spurred growth across the bridge in Manhattan, likely due to anticipated high salaries from Amazon.
"With a household name as big as Amazon moving into Arlington's backyard, we expected that home prices were going to increase, but because the number of homes for sale is not keeping up with demand, the price growth we've witnessed so far in both the mid-market and luxury sector has been dramatic," said Danielle Hale, realtor.com®'s chief economist. "Meanwhile, Manhattan's housing market, which boomed in November following the announcement, has cooled off after Amazon decided to pull out of the city."
Amazon Effect Increases Home Prices
At the time of Amazon's HQ2 announcement in November 2018, Arlington's median home price was $640,000. The median home price in the area has sky-rocketed since then, increasing by a whopping $110,000 or 17.3 percent to $750,000 in April. Comparatively, over the same time frame, the national median list price has only increased $17,000 or 5.5 percent.
Conversely, the typical Manhattan home list price was $1.65 million in November. Since the time of the announcement and subsequent pulling out, Manhattan's median list price has increased a pedestrian 2.4 percent to $1.69 million.
Sales Surge and Inventory Drops Following Announcement
Even as prices are skyrocketing, Arlington's inventory reveals a market that's unable to keep up with the overwhelming demand. According to realtor.com®'s April inventory data, after sales surged, the number of active listings was down 48.2 percent, to less than 400 listings -- a massive year-over-year drop in inventory.
Meanwhile in Manhattan, the housing market responded similarly in the early stages, but changed following Amazon's reversal. Initially, after the announcement in November, home sales jumped 52.1 percent year-over-year -- a night and day difference from the 0.7 percent increase Manhattan saw the previous month in October. In February, Manhattan home sales were up 11 percent year-over-year, a healthy increase, but still significantly lower than the area's initial response. In November, Manhattan had 8,275 active listings available for sale. That number dropped to 8,015 in February. Even though more homes were scooped up in Manhattan than in Arlington, it resulted in a much less noticeable, 3.1 percent decrease.
Buyers Expand Their Search Area to Find a Home
As the number of listings in Arlington dwindles, buyers are broadening their searches to surrounding markets. The number of active listings in the Northern Virginia area fell 22.5 percent since April 2018, and half of all homes sold rapidly in under 34 days. Meanwhile, median list prices were up 2.3 percent year-over-year, and reached $545,000 in April.
Amazon's Impact Extends Into Luxury Sector
While Arlington's mid-market is thriving, its luxury sector is faring even better. Luxury asking prices in Arlington -- the top 5 percent of home prices -- reached $2.4 million in April, up 22.1 percent year-over-year. At the same time, sales of million-dollar homes increased by 34.8 percent, according to realtor.com®'s most recent sales data. Similarly, luxury prices in the surrounding area of Northern Virginia reached $1.6 million, up 10.5 percent year-over-year, while sales of million-dollar homes increased by 45.7 percent.
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