Want to buy in Crystal City? You can count the homes for sale on two hands.
Realtor Stephen Karbelk gets the question all the time.
“People ask me, ‘Can I buy something near Amazon?’” said the president of RealMarkets, a Century 21 New Millennium team.
“And I say, ‘No, you really can’t.’”
In the 22202 ZIP code — which comprises Crystal City, Pentagon City, Aurora Hills, Aurora Highlands and Arlington Ridge — there were just seven active listings in February, down from 21 a year ago, according to Redfin, a national real estate brokerage.
That's two single-family homes. Four condos. And one townhouse.
The 22202 inventory has plummeted 84 percent since November, when Amazon.com Inc. (NASDAQ: AMZN) announced it had selected the neighborhood for its second headquarters. The ZIP code had just 0.3 months of inventory in February, according to MarketStats by ShowingTime, down from 1.89 months in October. In February 2018, the 22202 inventory stood at 0.79 months.
That makes it one of the tightest markets in the entire region. A balanced market typically has about six months of inventory, and the D.C. market as a whole tends to have around two months of inventory.
“My guess is that this would be the new normal,” said Brian MacMahon, a Redfin real estate agent, whose client pulled a listing for her condo just outside of the 22202 ZIP code after the HQ2 decision. This week, it’s going back up — at a $30,000 markup.
The Crystal City submarket typically doesn’t average a lot of sales — usually between 10 and 30 depending on the month — but the dearth of listings as the spring market churns into overdrive is stark. The ZIP code has 15,461 houses and condos total, according to city-data.com. That means less than roughly .00045 percent of the total properties were available in February.
Karbelk said anticipation that Crystal City was a strong HQ2 contender started affecting the market even before the announcement. He points to 41 listed properties in the 22202 ZIP code that were canceled from March to October of 2018.
"Clearly people are waiting to either bet that the Amazon effect will cause values to go way up or they are just going to wait it out and see what happens," Karbelk said.
The median sale price for 22202 in February — $572,000 — is not the highest it's been historically; it hit $621,000 in January 2016. But sellers are commanding more for their listings: The average sale-to-list price, meaning how much sellers end up selling their homes over list price, climbed above 100 percent for the first time since 2012 in February, at 100.4 percent. That means the average seller got more than list price. To be sure, the low number of sales in February means one good or bad sale could skew the numbers, but that in turn just shows how little is for sale at the moment.
But as much as Amazon’s entry into Northern Virginia was hyped across the region, the initial effects didn’t extend far beyond Crystal City, according to Federated Realty CEO Artin Afsharjavan. At first real estate agents were adding descriptions of properties in Prince George’s County to tout how close they were to Amazon’s new headquarters, but he said those have mostly faded away.
“It seems that day by day outside of that Crystal City market people are caring less and less about Amazon coming in,” Afsharjavan said. “The ripple effect didn’t go so far.”
Inventory in nearby Alexandria is down 59 percent since October, dropping from 1.90 months to just 0.78 months last month. In Prince George's County, inventory is down slightly, from 2.66 months in February 2018 to two months in February 2019.
Ultimately the lack of big splash across the region just boils down to the fact that even the presence of a large tech company has only a limited impact on a metro market with millions of people and hundreds of thousands of houses. Not to mention that Amazon's HQ2 employees really won't arrive in droves for at least a couple of years.
"As important of a company as Amazon is, the D.C. metropolitan area is so large and robust of an economy that it’s almost impossible for any company to be able to move the needle," Afsharjavan said.
Afsharjavan said the market in and around Crystal City will adjust around Amazon, with some people turning their homes into rentals instead of selling them, although the large presence of condos and condo boards will most likely provide at least some resistance to a huge number of properties becoming rentals.
He said he believes the market will adjust over the next couple of years as prices rise high enough to convince sellers to start parting with their homes — especially since the relatively transient nature of many residents in the D.C. region means large groups of people will move away.
“I think the market is going to move. It's just going to be at a substantially higher price point over time,” Afsharjavan said. “People need time to soak it in.”
Washington Business Journal