Can Crystal City Housing Market Support Amazon HQ2?
December 3, 2018
Amazon’s decision to open up an east coast headquarters in Crystal City (known as HQ2) has homeowners and investors taking a close look at the host cities housing market. Being home to the world’s biggest e-commerce business is certain to cause an increase in demand for housing in the small city that has a population of just over 22,000. Amazon is expected to have more than 25,000 full-time employees within the next seven years working out of office buildings located in Crystal City.
This huge influx of well-paid workers will definitely cause home prices to go up for both purchasing and renting. Arlington County residents are fearing the area will undergo the same housing market changes that were experienced in Seattle since Amazon moved there 10 years ago. Housing prices have doubled in the last 6 years for Seattle which has forced many residents out of the area due to the unaffordability. A recent study by Zillow shows that rising rents equals a larger homeless population.
Amazon now has over 45,000 employees in Seattle while the company only expected to have a total of 9,000 before locating there. This is a significant point since there is only an expectation of having 25,000 employees for Crystal City. Growth is expected to be a lot slower than what occurred in Seattle by planning to have just 400 employees next year and less than 1,000 in 2020. This should limit the stress on the housing market and give time to build housing units for the newcomers.
How Crystal City Housing Market Will Survive With Amazon HQ2
- Preserve Affordable Housing. Low-rent housing needs to be purchased by the government and protected from the extreme price increases that may be coming. The rental market will be the first hit by the increase in demand for housing. Newcomers are expected to take a year or two to feel out the area before looking to make a purchase. Amazon promises all of their 25,000 employees will have six-figure salaries. Aims by the government to preserve affordable housing must be taken in Arlington County to avoid the market out pricing the low to moderate income renters.
- Increase Housing Supply. Mixing a limited supply with an increase in demand is the perfect recipe for a housing crisis. There are about 9,000 apartment and condo units currently set to hit the market within the next three years. That should be enough to support the initial demand from Amazon will bring but building can’t stop. It is estimated that around 60,000 new residences will be needed by 2030 to support the housing demand that HQ2 will bring to Crystal City.
Crystal City is one of the very few places in the country that could take on 25,000 Amazon jobs with little stress on the real estate market. The prime located city just south of Washington D.C. has had just as many jobs leave the area in the last 15 years as Amazon plans to bring in. The area still has large neighborhoods of vacant and outdated office buildings that Amazon will surely be able to put to use.
With an occupancy rate of just 94% there should be no problem supporting Amazon’s new headquarters for at least the next few years. Even as the housing demands increase the available transit systems for neighboring areas will give access to more than 200,000 homes for future employees to choose from. Crystal City housing market can support Amazon HQ2.