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Ask Eli: Real Estate Investor Activity in Arlington

by ARLnow.com Sponsor — August 30, 2016 at 2:45 pm 0

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This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: By year and areas of Arlington, what percentage of original house sales have been to developers and what percentage have been to individual/family occupants?

Answer: The numbers suggest that since 2009, just over 1,000 detached home sales in Arlington are to an investor. Unfortunately, it’s difficult to accurately determine the true numbers because so many investors buy properties off-market, but I’ll walk you through the data I used, some caveats, and my findings to get as close to an answer as I can.

The Data

  1. Data set includes all 8,004 sales recorded in MRIS (REALTOR database of record for “on-market” sales) of detached/single family homes in Arlington from Jan 1 2009 to Aug 20 2016
  2. Despite attempts with tax records and the County, I couldn’t come up with a good way to account for off-market deals. Since many tear-downs are off-market purchases I’ve attempted to back into the data using the sales of the finished home.
  3. Defining investor activity
    • I targeted tear-down/new build sales by parsing out homes sold within three years from when they were built
    • I targeted flips by parsing out two transactions at the same address where the second sale had a % return and time to market that suggested investor activity (quick re-sale w/ high mark-up)

Tear Down/New Build Sales:

Of the 8,004 detached home sales, 711 are likely tear-down/new build investor projects. Most should have a 1:1 corresponding purchase, but are small developments where multiple homes were built on one or more sub-divided lots (one purchase results in multiple new home sales).

Ask Eli Aug 30 2016 table FINAL

Tear Down/New Build Sales Stats:

I was able to locate corresponding purchase data in MRIS for 188 out of the 711 tear-down sales summarized above. Some sales statistics for those 188 sales below:

Ask Eli Aug 30 2016 Table 2

House Flipping:

While not quite as common, I identified 232 likely flips by investors in which two sales occurred over a short period of time (usually within 12 months) and the second sale sold for a significantly higher price. Here’s a summary of the non-tear down investor sales. Each has a corresponding purchase recorded in MRIS:

Ask Eli Aug 30 2016 Table 3

Based on the above data, I’ve identified 420 sales by investors since 2009 with corresponding purchases in MRIS and approximately 500 off-market, tear down purchases. There’s also likely to be a small number of off-market flip deals, but not nearly as many as off-market tear-down purchases.

There are currently 91 detached homes listed for sale or under contract that were built since 2014 that have a corresponding purchase by an investor either on or off-market. Additionally, the historical flip numbers suggest that there are about 20-30 flips purchased in the last 12 months by investors that have yet to be sold.

This brings us to approximately 1,050-1,100 homes sold to investors since 2009, which represents approximately 10-12% of total home sales. With each investor purchase having a corresponding sale by the investor, the total transaction activity for detached homes in Arlington attributed to investors is around 20%.

This week’s question was brought to us by one of ARLnow’s most prolific commenters and I enjoyed the challenge! It certainly put my data/Excel skills (and patience) to the test. I enjoy this type of data-driven article and welcome similar questions from other readers.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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