Sandwiched between Dallas and Fort Worth, Arlington offers a hot location with unexpectedly low prices. This unique super-suburb feeds not one, but two major employment centers in addition to its own.
Arlington is the third largest city in northern Texas, with a workforce of more than two million people within a 25-mile radius of its center, according to the Arlington Chamber of Commerce website. This creates plenty of demand for homes and makes for a strong future outlook.
An average home price of $127,240, according to Fortune, and a median income of $53,145, according to Money, make Arlington’s homes quite affordable.
Arlington was ranked the third most affordable U.S. market by the 2006 Coldwell Banker Home Price Comparison Index, which evaluated average prices in 317 U.S. markets for comparable 2,200 square foot four-bedroom homes.
At $140,975 for such a home, Arlington’s prices were well below the national average of $423,950. Fort Worth’s average for such a home was $151,250, making it the ninth most affordable U.S. market, while Dallas, the most expensive market in Texas, was at $288,278.
Investors can find lower prices in Arlington than in surrounding areas, and “in a few years…water is going to seek its own level and it’s going to balance out, and you’re going to be able to make a great profit,” Dennis Henson, president of Vanguard Marketing and Investments and organizer of the Arlington Real Estate Association of Investors, said.
Affordability is one of the factors that caused Primacy Relocation and Worldwide ERC to name Arlington 2007’s best large city for relocating families. “We have some of the lowest square foot prices that you can find anywhere out there,” Scott Bradshaw, an agent with the Penny Bradshaw Real Estate Team in Arlington, said.
East and southeast Arlington have the lowest square footage prices in the city, at approximately $60 to $63 per square foot for existing homes, Lora Darter, an agent with Stanfield Realtors Inc. in nearby Grand Prairie, said.
Arlington’s market remained stable while many national markets experienced bubbles, Bradshaw said. “We’re running about 3 to 5 percent [appreciation] a year…and because of that we’re not really in a bubble situation.”
In December 2006, Fortune ranked Fort Worth/Arlington the ninth best place in the nation to own real estate for 2007 and 2008, with projected appreciation of 4.4 percent for 2007 and 3.5 percent for 2008.
“If an investor is looking for good cash flow but not necessarily rapid appreciation, this is a pretty good place to invest. Less risky than other places,” Bradshaw said.
Arlington’s occupancy rate is strong, at 91 to 92.6 percent, Darter said. Single family homes have the greatest rental demand because many people move to Arlington seeking less congestion, Mark Kreditor, Master Property Manager and broker/president of GTF Realty in Dallas, said.
“Fair Market Rents” set by the Department of Housing and Urban Development for 2007 in the Fort Worth-Arlington area were $565 for a studio, $605 for a one-bedroom, $745 for a two-bedroom, $1,010 for a three-bedroom and $1,135 for a four-bedroom.
A search performed on rentalhouses.com for “Arlington Texas” indicated that rental rates for single family homes can range from approximately $800 to more than $2,000 per month, depending on the home’s size, location, amenities and other factors.
“The Arlington real estate market has stayed fairly constant with only just minor market corrections over the last few years,” Darter said. “Currently we have approximately a six-month inventory of homes for sale in the DFW area. So you can be fairly certain there [are] quite a few sellers who are very motivated to sell their properties at this time.”
Although prices may be low and cash flow possible, high property taxes throughout Texas are suppressing values. For a $100,000 home in Arlington, taxes will be approximately $3,500 per year, Henson said.
Job growth and commerce
With Dallas, Fort Worth and the Dallas Fort Worth International Airport all fewer than 20 miles away, Arlington benefits from a wide range of employment in a fast-growing area.
The Dallas-Fort Worth-Arlington area added 91,500 jobs between March 2006 and March 2007, the largest numerical increase among the 12 largest U.S. metropolitan areas, according to the Bureau of Labor Statistics.
The local job growth rate during that period was 3.2 percent, more than double the national increase of 1.5 percent, and total non-farm employment for the area stood at 2,915,000 in March 2007, according to the Bureau of Labor Statistics.
Not surprisingly, population growth accompanies job growth. The Dallas-Fort Worth-Arlington area gained 842,449 residents from April 1, 2000, to July 1, 2006, the second-largest numerical gain of the nation’s 361 metro areas, bringing the total population to about six million, according to an April 2007 U.S. Census press release.
Arlington itself is home to more than 367,000 residents, according to the census. More than 50 percent of that population is between 18 and 44, according to the chamber of commerce website. “This economic group are our prime target homebuyers and sellers,” Darter said.
Major employers include the Arlington Independent School District, the University of Texas Arlington campus, the Parks mall and General Motors, Darter said.
The original Six Flags Over Texas amusement park and Hurricane Harbor water park make Arlington a popular entertainment destination.
Sports are another draw. The Texas Rangers play at Rangers Ballpark at Arlington. Arlington is also home to the new stadium for the Dallas Cowboys, which is under construction.
Costs for the new stadium are nearing $1 billion, according to the Dallas Cowboys website. Set to open in 2009, the stadium will be the largest NFL venue, with an 80,000 seat capacity and the ability to fit 100,000 at large events, according to the website.
The stadium will host the 2011 Super Bowl, which should raise the city’s profile and may spur relocations. “The eyes of the nation are going to be pointed right here in little Arlington, Texas, so what do you think property values are going to do? I think they’re just going to skyrocket,” Henson said.
The area around the stadium is experiencing tremendous growth and development, adding hotels, retail outlets and restaurants, Bradshaw said. This “replaced a lot of lower economic area in Arlington with some much higher-end type of businesses and hotels.”
Road construction and highway expansions indicate that the Texas Department of Transportation expects growth in Arlington, Henson said.
Arlington’s leaders actively attract businesses to the city and are good at retaining corporate presence, Frank Curtin, a professional real estate investor based in nearby Grapevine and the author of The Mortgage Survival Guide, said. “The city’s not one to wait for change to happen. They actually go out and make it happen.”
Areas of opportunity
Because much of north Arlington is already built out, most of the opportunities for new properties, developments or commercial projects are “really towards the south and actually into Mansfield and to some degree Kennedale; those areas are really, really, really growing and [are] the only areas left really to build into,” Bradshaw said.
Mansfield’s desirable school district creates demand, so that area is a strong one for flips, Henson said.
Foreclosures are highest in southeast Arlington, where the newer homes are located, and low prices there make the area good for quick flips, Curtin said. These newer homes “don’t need as much by the way of repairs, and the demand…is very, very stable.”
Because east and southeast Arlington offer the lowest square footage prices of $60 to $63 per square foot, Darter said, they may also offer cash flow opportunities.
Neighborhoods near Lake Arlington are desirable; a new development project there is selling out the lots before they begin construction, Henson said.
The area around the General Motors plant would be good for flips and for rentals, Henson said. “There’s always a lot of people needing housing in that area.”
The freeways are growth areas, Henson said. “It seems like every day there’s a new shopping center or a set of apartments or a new hotel going up or some great big store along the freeway.”
Homes along Interstate 30 offer rehab opportunities because they are older and need improvements, Curtin said. However, competition for rehabs is high, Bradshaw said.
North Arlington probably offers the best long-term appreciation potential for existing properties, Darter said. It is popular with Dallas and Forth Worth commuters and has a younger feel, with more townhomes, condos and entertainment venues, such as the new Cowboys stadium, the Texas Rangers ballpark, Six Flags Over Texas, Hurricane Harbor water park, restaurants and upscale shopping, she said.
Arlington’s foreclosures allow investors “to buy these properties at a really great price,” Curtin said. “And if you couple that along with a strong demand for this inventory, either as a rental or an outright retail sale…you really have the makings of a great investment market. Even the most novice of investors can really find good deals here.”
“Investing in the single family residence in Arlington…can only help an investor’s bottom line, both short term with positive cash flow and long term with equity growth,” he said.
“I think right now the best way to look at Arlington would be to go into perhaps the foreclosure market or any type of auctions,” Bradshaw said. “The foreclosure market usually is the place to go to pick up properties to get good cash flow.”
“My favorite real estate investment in this area is buying properties for the long term that have some positive cash flow. The price appreciation here is so little…but at some point in time it does begin to go up, and at that point in time someone basically has bought your property for you,” Bradshaw said.
New construction offers opportunities because many builders give 6 to 7 percent commissions plus bonuses to real estate agents on spec homes and some build jobs, and many agents will give a portion of that back to the parties, Darter said.
Making offers on for sale by owner properties is another way to find lower prices, Darter said. She recommended that investors find an agent with negotiation skills because “sellers of all persuasions are ready to deal.”
Short sales to help families avoid foreclosure are becoming popular in Arlington and have the potential to be win-win for all parties, Curtin said.
Another area of opportunity may be in catering to Arlington’s rapidly growing Hispanic market, which is creating a demand for Spanish-speaking service professionals and materials, Bradshaw said. “That’s just a wonderful market, it’s a growing market….We’re actually beginning to produce flyers in Spanish for our properties because we’re finding we get a better response that way.”
Creative investing is common in Arlington, including hard money loans, making and selling contracts, general property auctions and buying with notes, Henson said. In this market…you’re only limited by your imagination.”
“The overall economic future for Arlington is very good, with a diverse population, affordable housing, good schools, plenty of parks and recreation. Arlington is a great place to live and invest in,” Darter said. “The only negative issues that may plague the north central Texas area would be the availability of water and the infrastructure keeping up with growth.”
“I think that the Arlington market will continue to stabilize…we’re already seeing a leveling off over last year. I think we will see a return of prices modestly increasing and a decrease in housing inventory,” she said. “Beyond that, I think the area will continue to grow and the market will continue to increase and we will see a return of the seller’s market.”
In fact, Bradshaw said he has already begun “to hear about and personally see a shift away from what’s been a buyer’s market here to more of a seller’s market.”
Texas has not been known for its escalating appreciation, but it has escaped deflation, and “the whole metroplex is poised for housing appreciation over the next…three to five years,” Curtin said.
The interior of the metroplex is being rapidly built out, and although people have thus far been willing to commute, “we can’t build too far out before people are not willing to drive any further,” Bradshaw said. Eventually, perhaps in five to 10 years, “people are going to have to start bidding up prices in the interior of the metroplex,” he said.
With its convenient position in the center of that metroplex, Arlington is “in a great location to feed both Dallas and the Fort Worth employment markets in addition to its own,” Curtin said. “It’s simply a ‘location, location, location’ dream come true for any real estate investor.”
* Feature photo courtesy of the Arlington Convention and Visitors Bureau