One of the challenges facing the housing market today is that home prices tend to skyrocket in the cities and counties where good-paying jobs are abundant, making it less affordable to buy in those areas. This has become such a hot trend that housing experts today often track where major corporations are locating (or re-locating) their facilities, so as to estimate and track the impact on home prices.
Adding to the challenge is the fact that so many states and cities are competing with each other for jobs, with many offering tax incentives to attract companies. The problem is the companies today are more likely to pick up and leave when these incentives expire – or when another state puts a more enticing offer on the table – creating volatility in home prices in the affected areas.
However, the degree to which individual housing markets are impacted by this trend varies. As a recent report from CoreLogic reveals, although homes in close proximity to a new corporate facility often see price increases, homes that are farther way but in the same city may not be affected at all.
Take, for example, the impact of the new Amazon HQ2 on the Washington, D.C. Metro housing market. The online retail behemoth stunned everyone last year when it announced that it was choosing not one, but two sites for the location of its second headquarters (HQ2): Arlington County, Virginia, at Crystal City, and Queens, N.Y., at Long Island City. However, just three months later, Amazon said it would be withdrawing its intent to open the New York location, instead focusing on job growth in Crystal City and other locations.
Now that a year has passed, many are wondering if the news has had any noticeable effect on the Washington, D.C. housing market.
According to a recent report from CoreLogic, there has been “little evidence the [D.C.] metro area has experienced a large increase in housing prices since the November 2018 announcement.”
However, the report reveals that “some individual zip codes – especially those near the HQ2 location – have had a strong uptick in price gains since the announcement.” It shows that there is a “relationship between proximity to the HQ2 site and home price gains.”
“The impact of Amazon choosing the district housing market – which includes both the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions – for the location of its HQ2 is unclear at best,” CoreLogic says. “Looking at the year-over-year change in the monthly CoreLogic Home Price Index, the data shows that both metro divisions saw little change in the rate of appreciation after November 2018.”
“In September 2018 – the most recent comparison month between 2018 and 2019 – annual home price growth in the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions rested at 3.4 percent and 2.1 percent, respectively, but grew slightly to 3.5 percent and 2.3 percent by September 2019,” CoreLogic adds. “This is hardly what one would call a ‘boom.’”
“However, when compared to national trends over the same period, there is evidence that these two metro divisions outperformed the broader area,” the report adds. “National home price growth descended by nearly two whole percentage points, from 5.3 percent to 3.5 percent, as high mortgage rates and uncertain macroeconomic conditions stymied the market towards the end of 2018 and into the first half 2019. While anecdotal, this does suggest that the HQ2 announcement possibly buoyed the market in what might have otherwise been a period of slowing home price growth for the Washington, D.C. metro area.”