Photo: Kai Brinker/Flickr
If rising home prices in Long Island City (LIC) are any indication, then the “Amazon effect” may have already begun, according to a recent report by the listing site StreetEasy.
“Prior to the announcement, the LIC sales market struggled. But after, home prices in the neighborhood stopped falling and immediately began to climb,” writes Grant Long, StreetEasy senior economist, in the report.
The “Amazon effect” on housing prices is a reference to the Seattle, WA, market, where home prices skyrocketed after Amazon settled in the metro area. Over the last eight years, Amazon expanded from about 5,000 employees to well over 40,000 in Seattle. At the same time, the city’s home prices increased by roughly 50 percent, fueled at least in part by Amazon’s massive growth.
In the five weeks following November 5th, when Amazon’s plans leaked to the public, nearly 19 percent of listings in LIC saw price increases. By contrast, StreetEasy says that not a single listing in LIC had raised its price in the five weeks prior to the announcement.
And while there were notable price increases, there was a sprinkling of price decreases as well. There were five cuts in the wake of the announcement — only affecting about 2.2 percent of all LIC listings — compared to 37 individual price cuts prior to the announcement.
Because of a slew of new construction units flooding the LIC market, many sellers were forced to cut prices to remain competitive amid a surplus of supply and tepid demand.
In October 2018, LIC inventory was up 62 percent year-over-year and 13 percent of sellers slashed prices on their listings.
Unsurprisingly, interest in LIC soared following the news that Amazon was moving in. StreetEasy says that in the days immediately following the official announcement on November 13th it saw a 519 percent surge in interest in LIC among its users.
Meantime, even some sellers in not-so-neighboring areas tried to cash in on the Amazon deal, alerting potential buyers of the proximity to HQ2.
StreetEasy says that over 40 listings in Manhattan’s Midtown East neighborhood — less than 10 minutes from LIC by subway — boasted easy access to the new Queens campus. Yet, only four listings in Greenpoint, LIC’s immediate Brooklyn neighbor, mentioned Amazon or LIC.
“Over the long run, the less dense neighborhoods surrounding LIC could see the largest impact from Amazon. The quieter sections of Sunnyside and Astoria with more limited transit connections to Manhattan will likely prove more attractive as the new job hub emerges,” says Long.
Nonetheless, Long doesn’t necessarily believe there is a reason to expect a full-on repeat of the Seattle market here in LIC — not immediately, anyway.
“It will be months, if not years before data shows the full impact of Amazon’s plans on the housing market, and prices in the area likely won’t reflect the new campus until its workers start to arrive,” cautions Long.
Long jokes that the trend of Manhattan home listings touting their proximity to Queens illustrates just how “upside down” the New York City real estate market has become going into 2019.
“With Manhattan home prices down 2.5 percent from the prior year as of October and Queens prices up 5.4 percent, developers are pinning their hopes on Amazon,” says Long.