Amazon has recently signed three Crystal City leases totaling 537,000 square feet.
New development in the DC suburb has got locals wondering how Amazon HQ2 Crystal City will affect the housing market.
While it is a little early to speculate, the past has given us some excellent predictors of what to expect in the future.
Here’s what northern Virginia will notice now that Amazon is moving in.
1. Why Crystal City?
Amazon is setting up a new headquarters in northern Virginia. It includes parts of Crystal City, Pentagon City, Alexandria, all of which are suburbs of Washington, DC.
Crystal City is an urban neighborhood located just to the north of Alexandria. The area is older, with many homes built in the ’70s and ’80s. Most homes will need to get updated before they are ready to go back on the market.
Crystal City is conveniently located between Interstate 395, Regan National Airport, and The Pentagon. It wraps around Route 1. The Virginia Rail Expressway provides direct access to northern Virginia suburbs.
Underground corridors connect many of the stores, offices, and residences of Crystal City. A large part of it is therefore underground.
Crystal City is in close proximity to the Mt. Vernon Trail. It is a great option for those looking to purchase closer to the Potomac.
Crystal City is home to many great restaurants, hotels, and underground stops. Three of Amazon’s offices are clustered around the Crystal City Metro Station. The company also recently purchased two large pots of land in adjacent Pentagon City.
The area’s settled infrastructure, educated workforce, and close proximity to a major metro area made Crystal City an easy choice for Amazon. The company is in need of a large number of highly skilled and educated workers.
Northern Virginia has access to many data processing and related establishments. An influx of new apartments in the area is planned for the near future. Amazon employees who live here would be within walking distance to their offices.
2. New Housing
Amazon is planning to hire over 25,000 new employees with salaries of over $150,000, but it will take some time for them to get to that level. Many workers will settle in Northern Virginia.
The first big impact on the housing market is expected to be for apartments and condos before anyone makes a decision to buy. The biggest impact on the DC market will be along the Blue and Yellow Metro lines.
Those looking to purchase would be wise to rent first and see if they are ready to commit to spending several years in the area. An experienced real estate agent can help you find a home that will produce a high return on your investment. Look for homes that need only minor repairs, or that can be completely renovated to greatly increase in value.
3. Beware Of The Bubble?
Real estate prices in Northern Virginia are expected to rise by 17.2%. Northern Virginia is already one of the most expensive places to live in the country because of its close proximity to major global metropolitan areas.
As is the case whenever a big tech company moves into an area, good-paying jobs will mean that residents will be looking to buy eventually. This will decrease inventory and put upward pressure on the price of homes.
The tight inventory is its biggest challenge right now. Some homeowners are taking their homes off the market in the hopes of getting a higher payoff for their investment a few years down the line.
As with similar situations in the past, investors are beginning to target this market before new residents begin to purchase. They are buying homes in bulk, hoping to eventually rent them out to high-earning employees. They may also sell them for a profit in the future, which will increase demand even more.
A “housing bubble” occurs when home prices increase faster than wages. This creates affordability issues for many earners, particularly those with lower incomes.
The tipping point of a bubble occurs when the average earner can no longer afford a home. After housing prices have risen quickly and unsustainably, it will burst and prices will drop.
It is hard to tell if you are in a housing bubble until it pops. Housing prices in Northern Virginia are expected to rise at a slower rate than those in the past.
Folks looking to purchase in Northern Virginia can expect the highest prices to occur in around three or four years’ time. If you can purchase now, you will be able to avoid paying top-dollar for a home that will likely need some work.
4. Rent Trouble
Rent prices are expected to become a serious problem for lower-income families. Some are currently working two or three jobs just to make ends meet.
Virginia, Alexandria, and Arlington County have all increased their housing budgets for 2020. These provide affordable housing and housing grants for those struggling with the high cost of living.
The Washington Housing Initiative also aims to produce affordable housing. Amazon itself announced that it would donate $3 million to the Arlington Community Association. It will also match employee contributions to several organizations that focus on housing for up to $5 million.
Amazon HQ2 Crystal City
The impact of Amazon HQ2 Crystal City promises to be significant. By investing in a home at the right time, you can expect a high return on your purchase.
For more information on finding a home in northern Virginia, contact us today.