The Amazon effect is fueling intense competition for homes with an easy commute to Crystal City
The most competitive U.S. housing markets are the two that are closest to Crystal City, home of Amazon’s upcoming second headquarters (HQ2) in Virginia: Alexandria and Arlington. This is according to the latest ranking of cities by Redfin Compete Score, which rates how tough it is for buyers to win a home using Redfin data on the number of competing offers and waived contingencies, as well as multiple listing service (MLS) data on how quickly homes are going under contract and for how much above list price. Both with a Compete Score of 96, Alexandria and Arlington buyers face the most intense competition anywhere in the country.
In the HQ2-adjacent cities, homes are going under contract far faster than the national rate or even the D.C. metro as a whole. Homes sold in July went off the market in a median 11 days in Arlington and 14 days in Alexandria, about a week less than last July in both and far lower than the 27-day median for the D.C. metro and 38 days nationally. Over half of all homes for sale (57%) in both Arlington and Alexandria went off the market in two weeks or less. That was true of just 40 percent of homes in the D.C. metro and just 29 percent of homes nationwide.
Crystal City, home to Amazon HQ2 is located in Arlington, VA and immediately adjacent to Alexandria, VA“The Amazon HQ2 effect has become a permanent factor in the Arlington and Alexandria housing markets,” said local Redfin listing agent Marcia Burgos-Stone. “Some sellers are still opting to hold on to their homes and wait until it becomes a more concrete reality in the hopes that they’ll get more money. This has led to a shortage of homes for sale, which puts pressure on buyers who are concerned that they’ll be left behind if they can’t find a home before things get too heated up.”
In both Arlington and Alexandria, the number of homes for sale fell by about 50 percent year over year in July. Without enough supply to meet demand, more homes are selling above list price. Nearly half (46 percent) of Arlington homes sold in July went for more than list price, versus just 27 percent a year ago. In Alexandria 36 percent sold for more than list, up from 24 percent a year ago. Compare that with 32 percent in the D.C. metro and 24 percent nationwide.
Median home sale prices in Arlington and Alexandria are more volatile, especially with a declining volume of sales due to the increased competition, and are currently flat to down from a year ago.
| Measure | Arlington, VA | Alexandria, VA | Washington, D.C. metro | National |
|---|---|---|---|---|
| Median sale price | $616,000 | $490,000 | $421,500 | $318,100 |
| Median sale price, YoY change | +0.2% | -4.4% | +2.8% | +3.3% |
| Home sales, YoY change | -22.0% | -21.8% | -7.2% | -1.1% |
| Inventory, YoY change | -50.5% | -47.1% | -12.7% | -3.4% |
| Median days on market | 11 days | 14 days | 27 days | 38 days |
| Median days on market, YoY change | -7 days | -6 days | +8 days | +2 days |
| Percent under contract within 2 weeks | 57.1% | 57.0% | 39.6% | 29.1% |
| Percent under contract within 2 weeks, YoY percentage point change from a year ago | +5.8 pts | +12.8 pts | -8.1 pts | -1.6 pts |
| Percent sold above asking | 45.9% | 35.7% | 32.2% | 23.9% |
| Percent sold above asking, YoY percentage point change | +19.2 pts | +12.1 pts | +2.9 pts | -3.2 pts |
| Share of homes with a price drop | 27.7% | 25.2% | 30.0% | 28.1% |
| Share of homes with a price drop, YoY percentage point change | -7.2 pts | -18.1 pts | -6.2 pts | +1.8 pts |
“A market can become highly competitive when buyers agree that home values will increase steeply in the future, “said Redfin chief economist Daryl Fairweather. “If you believe home values will go up hundreds of thousands of dollars in the next five years, you will race to bid five or ten thousand dollars above asking price today. So, even though it may take a decade for Amazon’s HQ2 to grow the size of the Seattle headquarters, attracting high-earners and driving economic growth in the surrounding area, homebuyers and home sellers are already operating under the assumption that there will be strong demand for homes going forward.”
“Both Arlington and Alexandria are still competitive well beyond what would be considered the typical busy season,” said local Redfin agent Mara Gemond. “Buyers are adapting to our new norm of a hot market by extending their leases, going month to month or looking well in advance of lease expiration to ease the pressure of their home search.”
Most Competitive Cities for Homebuyers
| Rank | City | Redfin Compete Score |
|---|---|---|
| 1 | Alexandria, VA | 96 |
| 2 | Arlington, VA | 96 |
| 3 | Grand Rapids, MI | 96 |
| 4 | Tacoma, WA | 95 |
| 5 | Oakland, CA | 93 |
Compared to last summer when we debuted the Redfin Compete Score, only Oakland and Tacoma have retained their positions in the top five most-competitive markets.
Amazon is also likely a major factor in the fourth-most-competitive market, Tacoma, Washington (as we noted in May). Buyers in nearby Seattle who have been priced out are looking to their neighbor to the south for more affordable options.
In addition to the HQ2 cities shooting to the top of the list, Grand Rapids is also one of the most competitive markets in the country, thanks to its affordability (more on this from earlier this year). The median home sold in Grand Rapids in July went for just $215,800, well below the national median price of $318,100.
For the rest of the top 10 most competitive markets, check out our national housing market stats page.
This post first appeared on Redfin.com. To see the original, click here.