With all of the surrounding buzz around Amazon and their plan for a new headquarters #2 location, we thought this would be a great chance to educate people on how this could potentially affect the real estate industry. Recently, the final 20 possible landing spots for Amazon's second headquarters were released, and 3 of those locations are in the DMV (DC, Maryland, and Virginia). Northern Virginia, Washington DC, and Montgomery County were all notified that they would remain in the running. With 3 of the final 20 spots being located here, there is a decent possibility of the HQ2 landing in DMV. In fact, Jeff Bezos owns the biggest house in DC so why not keep a close eye on your team! Let's take a look at how this could change the real estate industry as Amazon is promising to bring over $5 billion of investments, and over 50,000 high paying jobs to whichever location wins the bid.
1. Immediate need for development projects
Obviously, there is not currently 50,000 homes and apartments that are available for people who would potentially be moving into the DMV area. Data from MarketStats-by ShowingTime, suggests that listings are continuing to decline each year, and have dropped about 13 percent from where they were last April. It seems that there is already beginning to be a shortage of available properties in this area even before the possibility of HQ2 moving to the area. This will call for more houses to be built in order to sustain the expected rapid increase in population.
2. Housing prices will continue to rise
The DMV area has already seen a rise in the price of housing recently, and 50,000 additional people looking to purchase or rent a home will surely help continue this trend. In addition to the continuous rise we have been seeing, it would be very likely that there is a spike in pricing because of the need for the employees to live within the confines of the final destination of the HQ2. As we all know, when demand is high, prices tends to increase...not rocket science here.
3. Cost of renting will increase
Once property managers find out that the new Amazon HQ will be coming to their area there will most likely be an increase to the costs of renting. If you are already in a lease you are safe, for now. This would likely affect all new renters in the area, or those who need to resign a lease.
4. It could convert renters into buyers
With a rise in the cost of renting it would surely motivate some of the potential buyers in the area who do not want an increase in their current rent. Converting from a renter to an owner could seem more appealing because of the investment opportunity it brings. If people know that there is already a shortage in housing, and an additional 50,000 people moving into the area there could certainly be a push for current renters to jump ship and become owners.
5. A lot of money to be made for Real Estate Professionals
This brings a huge opportunity for those people who work in the real estate industry. Let's go to crazy land for this next example: If half of the 50,000 people decided to purchase a home that would still be 25,000 new purchases. If we say that the average price of a home in the Northern VA/DC area is $500,000, that is a potential of $12.5 BILLION of revenue generated from Amazon related real estate transactions. That is a lot of money to be dispersed throughout companies within the real estate industry!
To sum things up we spoke with Sherif Abdalla, who is a high-end agent from TTR Sotheby's specializing in DC and Arlington. He said, "I would bet that the new headquarters will be a short commute from Bezos' new home in DC!" While this would be a great thing for the real estate industry within the DMV, there will be a waiting game as Amazon will not announce the location until later 2018.
At Allied Title & Escrow, our team of industry experts and attorneys have over 25 years of experience in title, settlements and real estate transactions. Headquartered in Arlington, VA, we provide residential and commercial services throughout all counties of Northern Virginia, Washington DC and Maryland. We strive to provide the highest level of service and will handle all aspects of the title and settlement process.