Amazon received 238 proposals from communities vying to be the location of its second headquarters, or HQ2. Last week, Amazon cut the list down to 20 finalists.
- Los Angeles
- New York City
- Montgomery County, Maryland
- Northern Virginia
- Washington, D.C.
In our October 2017 Home Value Forecast, we discussed the real estate markets in the 10 communities Moody’s predicted would be finalists. Seven of the 10 communities cited by Moody’s have made it to Amazon’s final list of 20. In that post, we chose Atlanta as the most likely destination. Today, we are revisiting our prediction based on the 20 finalists.
With estimates that Amazon’s HQ2 will create more than 50,000 new high-paying jobs, landing the opportunity would mean an economic windfall for any metro. Let’s look at the current state of the housing markets in each community on Amazon’s shortlist (Washington, D.C. and the area of Northern Virginia in consideration are both in the D.C. CBSA):
Amazon’s criteria included: a metro area with more than a million people, a stable and business-friendly environment with the potential to attract and retain strong talent, the presence and support of a diverse population, access to transportation, an overall high quality of life and a strong university system — but surely other factors will play a role.
Could Bezos Be Key to Amazon’s HQ2?
An October Wall Street Journal article looked at where Jeff Bezos, Amazon’s CEO, has homes and hypothesized whether proximity would be a factor in what metro lands the project. The list above is highlighted to show the CBSAs closest to his Los Angeles, Washington D.C. and New York City homes.
D.C. and the surrounding area (Northern Virginia and Montgomery County, MD) make up three of the final 20 – quite a concentration. Add in Bezos’ ownership of the Washington Post and a new East Coast headquarters for Amazon Web Services in Fairfax, VA, and you can see the pull.
So let’s look at current home prices in the Washington metro and Northern Virginia:
Both experienced price decline after the housing crisis and are not expected to surpass pre-crash highs in the foreseeable future. Obviously, this would change dramatically with 50,000 new high-paying jobs. Housing stocks in both CBSAs are limited, with Months of Remaining Inventory (MRI) under four months for both.
So where are new homes being built? Looking at permits, you can see that the D.C. CBSA has been averaging 80,000 permits per year for the last five years compared to approximately 17,000 per year in Silver Spring, MD. Also, the percentage of multifamily homes in the D.C. CBSA makes the disparity even greater.
Finally, if an educated workforce is of most importance, the D.C. area has that covered, reporting the largest percentage of residents with a college degree or higher at 43.8%.
In our earlier post, we chose Atlanta as the most likely destination. Today, assuming a geographic preference for the D.C. metro, we now believe Bezos will settle HQ2 in Northern Virginia, perhaps specifically in the Fairfax, VA, area. It already has been chosen as Amazon Web Services HQ2 — might as well make it HQ2.2.
Stay tuned for an in-depth assessment of the lucky metro once it is announced.
About Home Value Forecast
Home Value Forecast (HVF) is brought to you by Pro Teck Valuation Services. HVF provides insight into the current and future state of the U.S. housing market, and delivers 14 market snapshot graphs from the top 30 CBSAs.
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