Northern Virginia Sees A 633% Increase In Home Sales Following Amazon's HQ2 Announcement! (Arlington: apartments, rental)

[lchoro]

You can find the raw data at NVAR.

https://nvar.com/realtors/news/marke...-november-2018

Data is thin for localized sales, especially during the winter.

[Abraham Walker]

At the end of the article, it states:

"Whether this was a blip or the beginning of a trend is anyone's guess, but UrbanTurf will continue to monitor the activity in this section of Northern Virginia."

Another journalist looking for a few clicks versus providing a quality product.

If they would have dug a little deeper, they would have found the real story.

Here's the pricing trend report from GetSmart chart, a service provided by Bright MLS.



Nothing special here. Just a chart showing the normal ebbs and flows of the market.

But,

And this is a big but,

Look at the Active Inventory for the past 10 years.



You can't see it from this chart.

Let's zoom into the past 5 years.



The story is still hiding. There's still too much data.



Let's look at the data a different way. What if we found the lowest number of active listings in the past 10 years to see if this is normal.

Nov 2018 5
Feb 2018 18
Jan 2018 18
Mar 2018 19
Dec 2017 22
Jan 2014 22
Feb 2014 25
Dec 2013 27
May 2018 29
Nov 2013 29

I'm about to perform a similar analysis on the surrounding zip codes to see if there's a true Amazon affect in the area.

(Side note: I'm showing properties to a client in Tysons Corner and Falls Church area this week. Homes in their price range have started receiving multiple offers while we're scheduling our tours. That's not normal for this time of the year. We're used to sales slowing and days on market increasing as we prepare for the winter season.)

[Abraham Walker]

After doing some more digging, I found some more evidence that Amazon is having a positive relationship on the real estate market around the Crystal City/National Landing area.

I noticed a pattern in the data when I calculated and ranked the percentage change in Active Listing inventory from October to November for the past 10 years should be enough

We can assume that listing inventory would resemble a pattern moving from year to. Even if the market is hot (strong seller's market with less than 3 months of inventory), the percentage change should be consistent from month to month.

Here are the zip codes used in this analysis:

• 22202
• 22204
• 22206
• 22305

By looking at the data for the surrounding zip codes, we can get a better picture of the effect Amazon is having on the local market.



Notice the pattern in the data. November 2018 represented the largest percentage decrease of Active Listing inventory in the past 10 years in Crystal City all of the surrounding zip codes. Nov 2009 was the only that every zip code had the same rank.

Why use Active Listings vs Closed Sales?
Two reasons come to mind.
1) Amazon announced HQ2 on November 13.

1) 27 - 35 days is the average time it takes a homebuyer to complete the purchase process after a successful contract has been accepted in the Crystal City area.

Closed sales from this news could not have taken place in the course of 17 days plus a banking holiday.

I'll dig into the numbers a little deeper to see when the properties went under contract throughout the month.

If this news is correct, homeowners looking to sell next year will test the market with higher listing prices.

[ACWhite]

Interesting, Abraham Walker; thanks. You might look also at 22201 and 22203 as they are 5-10 minutes from 22202.

[NC211]

I'd strongly suspect investor activity and not actual owner/occupier activity here, which should be considered a "given" to occur now for the submarket.


What'll be interesting to see is all of the CRE transactions that occurred around the other rumored locations now that occurred earlier this year. I saw deals come across my desk around the Dulles site that made little to no sense without Amazon. Some CRE "experts" are now likely looking to be long term holders to regain that investment back, in a relatively flat rental growth submarket (so far)...

[ACWhite]

NC211, you may well be right, at least for the lower-priced condos or run-down SFHs, to flip. But the renting #s generally do not work for 22202, for newly acquired detached homes and some other properties. For example, your SFhouse might be valued at $800K, but the estimated rent value is $3K per month. There is no way you would come close to covering PITI and repairs, etc. with those numbers. So I suspect that there are some owner/occupiers involved in some of the transactions.


One other thing that makes interpreting price data for all transactions lumped together difficult, is that in 22202 and some other zips, the mix of properties in a given period may vary a lot from that in another period, especially with sales etc. in the low double digits. For example, in one month, maybe 5 single family homes and 20 condos would sell, but in the next month, maybe 13 SFHs and 12 condos would sell.

[Abraham Walker]

Originally Posted by ACWhite

Interesting, Abraham Walker; thanks. You might look also at 22201 and 22203 as they are 5-10 minutes from 22202.

Bordering zip codes were the only zip codes at this time that showed any effect from the announcement. You'll start to see the ripple move through our market as time goes on.

I suspect that many homeowners will not place their properties on the market in the next few months to attempt to make sense of this new information.

There some interesting things going on in the listings that are currently under contract or sold since the announcement that I'll post this weekend. Fun times to be a homeowner in the Crystal City area.

[ersatz]

Originally Posted by Abraham Walker

Bordering zip codes were the only zip codes at this time that showed any effect from the announcement. You'll start to see the ripple move through our market as time goes on.

I suspect that many homeowners will not place their properties on the market in the next few months to attempt to make sense of this new information.

So what do the numbers tell us a year later? WTOP mentioned a recent study by Core Logic. https://www.corelogic.com/blog/2019/...ear-later.aspx

Looks like you were right Abraham. Initial bump and listing hold holdbacks in Arlington near the HQ2 site have now spread to different zips around DC and not just in NoVA. My zip wasn't in the table of top ten zips but even though my house is not on the market, I get calls, texts, and mailings from interested investors. It's not that my house is special but flipper wanna-bes are salivating at potential opportunities. I am curious how well our area real estate prices hold up during the next significant economic downturn. A friend of mine who owns a home in Capital Hill pointed out that certain neighborhoods there maintained steady values when everything else plunged during the Great Recession.

[ACWhite]

Thanks for the link. FWIW, I live in a nearby zip and I see the condos selling fairly quickly but houses that seem overpriced to me are sitting on the market. I think it may be because only a few Amazon HQ employees have been hired so far, and many of them may be renting until they get a feel for the metro area, or are not looking for “family” homes. This may change as more employees are added.

[boyd888]

Originally Posted by ersatz

Looks like you were right Abraham. Initial bump and listing hold holdbacks in Arlington near the HQ2 site have now spread to different zips around DC and not just in NoVA.

Did we read the same thing? That article seems clear to me that Amazon has had no measurable effect on the housing market at all

Like Vienna, one of the most desirable and expensive zips in northern VA needs amazon ten miles away to make home prices go up more? Yet 22202 (full of SFH) or 22203 both way closer aren't even on the list? And no Rosslyn, which is a short metro ride away and full of juicy expensive condos you'd think young professionals would be after. This article is basically "here are ten nova zip codes that have gained the most value in the past year" and the just comes to the conclusion that it's amazon effect...makes no sense.

"we see little evidence the metro area has experienced a large increase in housing prices"

"suggesting little correlation between the HQ2 announcement and the zip codes that have picked up the most gains in home price appreciation."