In November, after about a year of intense speculation, the tech giant told the world it had chosen the Queens neighborhood, across the East River from Manhattan, and Crystal City, VA, outside of Washington, DC, as sites for its new headquarters.
The news that the company would be hiring up to 25,000 workers with average salaries of $150,000 in each city was met with much fanfare—and the early signs of a real estate gold rush. Practically overnight, home prices shot up 10% to 25%, as hordes of buyers descended. This seemed to be a blessing for Long Island City’s real estate market, which had built so many luxury high-rise rental and condo towers in recent years that developers were having trouble filling them.
Now the future of Long Island City’s housing market is up for grabs. Currently, the median home price in the formerly industrial neighborhood is $992,500. While that sounds high, it’s still significantly below the median price in Manhattan, the heart of New York City, of $1,662,500.
“I don’t know exactly how far prices will go down, but [Long Island City] will definitely lose momentum,” says Chief Economist Danielle Hale of realtor.com®. “It’s a short-term setback for Long Island City’s housing market. But people are [still] going to be attracted to the area, and it’s got a lot going for it. So in the long run prices and sales will increase.”
None of local real estate broker Eric Benaim‘s clients have tried to pull out of any real estate deals yet.
But he anticipates it will take a little longer to rent and sell properties going forward, as the rush of folks trying to score a spot before Amazon opened its doors will now disappear. The cost to buy a home in the neighborhood could fall back to pre-Amazon levels.
“Prices will probably be a little more negotiable now,” says Benaim, of Modern Spaces.
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Seattle-based Amazon, owned by billionaire Jeff Bezos, decided to pull out of the neighborhood on Thursday. It had received substantial blowback from some New York City lawmakers and residents for being awarded billions in tax incentives. The company says it will move forward with its plans to open up another headquarters in Crystal City and expand into Nashville, TN, and its other locations, but will not look for another headquarters site.
“For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term,” the company wrote on its blog. “A number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”
That decision isn’t likely to decimate Long Island City’s housing market, although there could be adjustments.
After Amazon plucked it from national obscurity, it became “overhyped,” says New York City–based real estate appraiser Jonathan Miller. “There have been lots of stories about people buying three apartments sight unseen like there’s some sort of frenzy. … It’s not some sort of frenzy where people are in a mosh pit diving over each other to get the next apartment.”
He believes prices in the neighborhood could continue to rise—and it will have nothing to do with Amazon’s change of heart. Instead, more folks have been priced out of Brooklyn, so they’re heading to Queens and driving up real estate costs there. Prices in Queens overall have risen 8% year over year, to $585,000, as prices in Brooklyn have soared to hit $849,000 as of Jan. 1, according to realtor.com data. So Long Island City’s prices could rise along with the rest of Queens, just not at a breakneck pace.
And Long Island City won’t be any worse off from its brush with Amazon, says local real estate broker Rick Rosa, of Douglas Elliman.
“It brought LIC to a world stage,” he says. Thanks to the company, more potential buyers are familiar with the neighborhood.
“LIC still won because we got all this free publicity,” he adds.
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Source: Housing Trends Feed