Jobs boom lifts Washington DC house prices to highest on record

By Ido Vock

Donald Trump may have failed to land the biggest property deal of his career when Denmark rebuffed the US president’s desire to purchase Greenland last month. Yet in Washington DC — site of his official home — more conventional residential deals are proving considerably easier to close.

House prices in the city were up nearly 3 per cent in the year to June, according to estate agent Long & Foster, boosted by a healthy jobs market in the US capital and online retailer Amazon’s decision to locate its second headquarters in Arlington County, Virginia, across the Potomac river.

Research by the Greater Capital Area Association of Realtors (GCAAR) indicates median house prices in June were the highest on record, at $620,000. This was $17,000 up on the same period in 2018.

Changes in federal tax rules, which last year brought in a $10,000 cap on the property tax deductible from federal taxes, have not affected the capital’s market, according to Koki Adasi, GCAAR president. The number of new listings was stable in June compared with a year earlier, according to the association’s research.

“Although the [tax cap] was not wanted by the majority of homebuyers, it doesn’t seem to have slowed the pace of transactions,” says Adasi.

Terraced houses in Washington with at least four bedrooms now cost more than $1m on average

Kornelia Stuphan, an estate agent at Long & Foster Christie’s International, says the growing housing market in the DC metro area is being fuelled by “very low federal interest rates” — currently 2.25 per cent, less than half pre-2008 levels of 5 per cent.

An influx of well-paid tech jobs has also helped raise property values, she says. Washington creates the most technically skilled graduates in North America after New York, according to a report by real estate services firm CBRE.

Historically, black and Latino neighbourhoods in Washington, including Columbia Heights and Mount Pleasant, have undergone rapid gentrification since 2000, when 50 years of population decline in the city began to reverse, according to Jeff Tucker, chief economist at Zillow, the online property database.

In 2018, Washington’s population topped 700,000 for the first time since the 1970s, according to data from the US Census Bureau.

The district of Columbia Heights has been gentrified over the past two decades

New developments, including in the Southwest Waterfront neighbourhood 1.5 miles from Capitol Hill, “have helped catalyse population growth” in those areas, says Tucker.

Worries over the availability of housing for first-time buyers have intensified since Amazon’s announcement in November. An analysis by the Urban Institute think-tank last October argued that the company’s creation of 50,000 new jobs could reduce the availability of housing for low and middle-income households in Washington without a corresponding growth in housebuilding. The report estimated 267,000 new housing units would be required by 2025 — 100,000 more than the current target.

The site of Amazon’s proposed second headquarters in Arlington

The median house price in Arlington grew by some $110,000, or 17 per cent, in the six months following Amazon’s announcement, according to “Amazon HQ2 has sparked the market in northern Virginia and effects have been felt in Washington,” says Adasi.

Asking prices for single-family homes in the area around the planned Amazon offices almost doubled in price in June, year on year, according to property listings service Bright MLS. While homeowners in the city might be thinking a boom is in the offing, Adasi cautions that over the next two years the market may cool a little, “as the cost to borrow money increases and inventory finally catches up with demand”.

Photographs: Dreamstime; Getty Images; Bloomberg


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