Waiting for Amazon, two quiet real estate markets turn white

WASHINGTON (AP) – Amazon has just unleashed a frenzy in real estate to compete with Cyber ​​Monday.

A three-bedroom condo with views of Manhattan, priced at $ 1.7 million, which has been drawing in the market for months, is suddenly drawing potential buyers now that Amazon has announced plans to build a portion of its new headquarters in Long Island City.

The online search for homes in Long Island City, New York's long industrial district of Queens, climbed 248 percent last week, real estate broker Redfin announced. Research in the other winner of the Amazon contest, Crystal City, Virginia, jumped 84%. Real estate agents say they have news of investors who want to become homeowners and sellers who have decided to withdraw their home from the market, to sit down and wait for prices to rise.

The intensification of interest followed Amazon's selection of these two zones to create each 25,000 new paid jobs on average at $ 150,000.

Both localities already reflect the ultra-expensive metropolises of New York and Washington, although sales of real estate have been relatively modest in recent times. In fact, housing prices in both locations, whether for renters or buyers, are worrisome, but they are for all but the richest in the years to come.

Critics point out that the same trend has long existed in high-tech centers such as San Francisco, San Jose, California and Seattle, where Amazon is based. In these cities, low- and middle-income families are finding it increasingly difficult to afford housing close to their place of work.

Fearing that the arrival of Amazon will make homes expensive, buyers around Crystal City are suddenly eager to close their sales, said Brian MacMahon, Redfin Realtor in North Virginia .

Imagining a rising stream of rental income, investors are calling from as far as California to buy homes that they could rent out or just let their value grow, MacMahon said. Two sellers have just removed their ads from the market, he said, so that houses can be reinstated next year, probably at higher prices, after the market's adaptation to the market. arrival of Amazon.

"When we have good things coming to the market, they are taking off," MacMahon said.

By choosing the regions of New York and Washington, Amazon has unintentionally cast a spotlight on the gap between a small group of prosperous but very expensive American cities and the rest of the country. Housing in Amazon's two new hubs is well over twice the median house price of $ 255,000 in the country, according to ATTOM Data Solutions.

The median price in Arlington County has risen 12.5% ​​so far this year to reach $ 585,000. In Queens County, the median rose 7% to $ 630,000.

Amazon executives were attracted by the large pools of well-educated and skilled workers in the two regions, which they chose from 18 other finalists, with generally less expensive housing.

"The affordability of the home has not been a determining factor for Amazon," said Daren Blomquist, senior vice president of ATTOM.

In some ways, Amazon had injected adrenaline into a market in New York City where price growth outpaced payrolls to the point where sales had begun to slow down. Until last weekend, according to realtors, attendance at the Long Island City condo open houses had been low.

The $ 1.7 million Foundry building, with its private terrace and skyscraper views, was once the kind of showcase property that triggered competing offers in a matter of weeks. Buyers, however, had adopted a wait-and-see attitude in the face of rising mortgage rates, luxurious construction flooding the market and the loss of interest of foreign buyers.

Yet over the weekend, attendance at the Long Island City Open House suddenly tripled at the announcement of the public announcement made by Amazon, said Christopher Austad, real estate broker at Douglas Elliman .

"We just took a big breath of fresh air – it's as if someone had just resuscitated us," said Austad. "I've had a dozen new buyers and investors this week." Previous sellers have contracted me and said, "Chris, we want to invest in low-income countries" It's good. "

In the Seattle area, the presence of Amazon, as well as other technology giants such as Microsoft, would have contributed to the creation of home values ​​that have moved away from even the most affluent families and have left few options for the poorest residents. Homelessness is aggravated. Over the past five years, the median value of homes in Seattle has risen 73 percent to $ 739,600, according to an analysis by Zillow, which is also based there.

In partial response, the city has approved a series of minimum wage increases, which will reach $ 16 an hour next year. He approved a corporate tax this year to help the homeless, although this tax was repealed after being challenged by the business world, including Amazon.

Aaron Terrazas, senior economist at Zillow, said he thought the New York and Washington subways would avoid the same situation.

"I do not think we should expect a similar leap," Terrazas said. "New York and D.C. have both demonstrated their ability to increase the offer in a way that Seattle hesitated."

Both metropolitan areas are already comfortable with building blocks of apartment and condominium towers, he said. Their high-density construction facilitates employment growth compared to cities that favor single-family housing.

They also contain extensive transit systems. In theory at least, the New York and Washington metros can ease the pressure on housing prices by allowing workers to spread out.

Nevertheless, the benefits of public transit depend on maintaining and improving their systems in New York and Washington – a major challenge in recent years due to breakdowns, deteriorating runways, and increasing expenditures in the United States. two transport systems.

Yet the underlying message of both selections of Amazon is that large technology companies do not seem to see housing costs as a barrier to hiring workers. Companies in Seattle and San Francisco worry more and more about the technological talent that would migrate to Salt Lake City, Boise or other cities where homes are more affordable.

Amazon seems less concerned.

"In Silicon Valley, it was feared that all these emerging technology centers would challenge them," Terrazas said. "What the selection of D.C. and New York highlights, is how dominant players continue to be dominant."