How is the D.C. Housing Market Changing?

When Amazon announced plans to build a new headquarters, several states began to vie for the opportunity. They did this by offering incentives like tax cuts for each new job and committing to increasing tech education programs. For a while, New York looked like a prime location for the global giant’s eastern seaboard headquarters. However, the company decided that Virginia was a better fit.

This places the new headquarters evenly between the Big Apple and our country’s capital, Washington, D.C., and the D.C. housing market is benefiting from the decision.

How is the Market Going to Change?

“Of course, it’s going to affect the housing market in D.C.,” says Mike Egelston, CRO for CINC Systems. “Many people who are moving to jobs at the new headquarters will look to surrounding communities, including Washington, D.C., for housing.”
The housing market is often a key indicator for the economy, and D.C.’s market has turned around since the Great Recession of 2008. Virtually every metric by which the market is measured has made improvements since August 2009. Nine years ago, those looking for housing in D.C. had several listings to choose from. Despite there being more listings, 26% fewer home purchases were made.

Will Housing Prices Rise?

Another critical component in the housing equation is pricing. Sales prices and listing prices have risen by almost 50% since the economic downturn a decade ago. The price per square foot has also increased commensurately, rising from $356 per square foot to $553.
It’s no surprise that being the closest large metropolitan area to Amazon’s new headquarters will cause Washington, D.C. to start to see a housing squeeze. Since the company will likely hire many younger employees, for whom buying a house is not an option, the prices for short-term rentals are likely to rise. This will leave even the smallest of apartment spaces priced high, provided that such a space is even remotely livable.

What Does This Mean for the Housing Market?

One of the primary problems for the market in Washington, D.C. is that the area has already scaled up as much as possible. There isn’t that much more land to build on, so vacancies in an existing market that is already tight will be critical. Infill, or building new housing communities, takes time and is often fought out between city planning agencies and residents for years before construction begins.
However, don’t expect the housing crunch to come on suddenly and fiercely. After all, while Amazon has promised thousands of jobs, those jobs will come on gradually by 2030. It is also likely that the people filling those jobs will disperse throughout both Virginia and the Washington, D.C. metro area.
Much of those housing shortages and increased rents will not even be discernible as directly related to the new Amazon HQ. Indirect jobs created as the landscape adapts to an influx of new residents will also have an impact. Most of the employees for the new headquarters will likely work in Fairfax, and only about 5,000 of the new Amazon employees will move to D.C.