According to a report from Redfin, if you want purchase a home in Arlington or Alexandria, Virginia, which are the two closest cities to HQ2’s home of Crystal City, you’ll need some luck as data indicates these metros are now the nation’s most competitive housing markets.
In order to determine this, Redfin utilized its Compete Score tool, which rates housing competition in cities and neighborhoods. The tool is used to help sellers strategize listings, and homebuyers understand “what it takes” to win a home in some of the country’s most lucrative markets.
Redfin’s Compete Score ranks markets from a 0-100 scale. Homes in markets ranked closer to zero on the scale take months to sell, whereas homes in areas that rank closer to 100 typically receive multiple offers.
According to the company’s report, both Alexandria and Arlington received a compete score of 96, meaning buyers in these markets face more intense competition than anywhere else in the country.
“A market can become highly competitive when buyers agree that home values will increase steeply in the future. If you believe home values will go up hundreds of thousands of dollars in the next five years, you will race to bid five or ten thousand dollars above asking price today,” Redfin Chief Economist Daryl Fairweather said. “So, even though it may take a decade for Amazon’s HQ2 to grow the size of the Seattle headquarters, attracting high-earners and driving economic growth in the surrounding area, homebuyers and home sellers are already operating under the assumption that there will be strong demand for homes going forward.”
And Fairweather is right, demand in these two housing markets is climbing as the number of homes for sale in both Arlington and Alexandria fell by about 50% year over year in July. Without enough supply to meet demand, Redfin indicates that more homes are selling above list price.
In fact, 46% of homes sold in Arlington during the month of July went for more than list price, versus just 27% a year ago. In Alexandria this rate sits at 36%, rising from last year’s 24%.
Redfin listing agent Marcia Burgos-Stone says the Amazon HQ2 effect has now become a permanent factor in the Arlington and Alexandria housing markets.
“Some sellers are still opting to hold on to their homes and wait until it becomes a more concrete reality in the hopes that they’ll get more money,” Burgos-Stone said. “This has led to a shortage of homes for sale, which puts pressure on buyers who are concerned that they’ll be left behind if they can’t find a home before things get too heated up.”