Editor’s note: This is the inaugural report of The City Wire’s Arkansas Home Sales Report. The report, which will be released each month, accounts for between 70% and 75% of total Arkansas home sales.
Information in the inaugural The City Wire’s Arkansas Home Sales Report indicates that Arkansas’ housing market continues on a slow pace toward recovery, with low interest rates and economic uncertainty competing for the attention of potential home buyers.
The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties among the state’s four largest metro areas contained primarily within the state — Central Arkansas, Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.
The January report shows 935 home sales in the 14 counties, down 1.99% compared to January 2011, but up 16.15% compared to January 2010. The combined value of homes sold in the reporting area totaled $147.253 million, up 5.4% compared to January 2011 and up 23.53% compared to January 2010.
Michael Pakko, Arkansas state economic forecaster and an economist with the University of Arkansas at Little Rock, expects home sales to improve this year, but cautioned against reading too much into the numbers.
"As I look at the data and trends ... I guess the thing to notice is we're starting from a pretty low base,” he said.
Home sales in the 14-county reporting area totaled 1,383 in January 2005, and fell to a January low of 805 in 2010.
“I'm not expecting a huge turnaround, but we're starting from such a low base that we'll see growth this year,” he said.
Pakko said foreclosures are still a problem in that they inflate housing inventories and bring down prices. He said Arkansas consistently ranks in the bottom 10 states in terms of the percentage of foreclosure activity, but the number of homes taken through those actions is still a concern.
Arkansas, Pakko added, is somewhat lucky in that subprime lending “didn't really catch on here” like it did in some states. When the foreclosure market evaporated in 2007, Arkansas felt the impact but not nearly as acutely as some other states.
Of the metro areas measured in The City Wire’s Arkansas Home Sales Report, only the central Arkansas area posted a gain — up 8.62% — in January compared to January 2011. The central Arkansas info, provided by the Cooperative Arkansas Realtors MLS (CARMLS), having the highest average home sales price at $164,920.
Central Arkansas — Home sales
January 2012: 441
January 2011: 406
January 2010: 405
Fort Smith area — Home sales
January 2012: 91
January 2011: 96
January 2010: 98
Jonesboro area — Home sales
January 2012: 78
January 2011: 117
January 2010: 77
Northwest Arkansas — Home sales
January 2012: 325
January 2011: 335
January 2010: 225
In Northwest Arkansas, the average price of homes increased almost 11% in January compared to January 2011. There have been more higher-end properties sold in recent months than in the past couple of years, thanks largely to Wal-Mart moving its retail segment back to Bentonville from New York. The retail giant announced the move in October, saying it would relocating about 275 employees.
“For most of last year about a third of the sales were for properties valued over $150,000. By December, that metric had risen to nearly 45% with biggest jump seen in the $250,000 - $350,000 range,” said Paul Bynum, a real estate market analyst with MountData.
LOW RATES, HIGH UNCERTAINTY
Bryant Realtor Jerry Hill — with Hill Realty — said one trend he's observed is that second homes aren't selling as well as they did a few years ago. Hill markets homes in the Lake Norrell area in Alexander.
“People are wanting to get rid of them,” he said of second homes. “On the flip side, there are plenty of opportunities to buy.”
Hill said the market for buyers is very good due to low interest rate, plenty of inventory and sellers who are flexible on prices.
“When you look at the market from a buyer's standpoint, there's no reason not to buy,” Hill said. “All the reasons to buy are there. You've got a large market. You've got discounted prices. You've got low interest rates. No matter what the economy is, you've got people who have to sell.”
Still, Hill said sellers aren't just competing with each other – they're competing against economic uncertainty.
“Even people who have good jobs are reluctant to do anything,” he said, pointing out that news of job losses, concern over unemployment rates and a general sense that the economy is still recovering has made buyers cautious. “There's a desire for the market to pick up. Everyone's crouched and ready, but they're not sure when to move.”
One factor that may influence people to start buying again is the average interest rate on a 30-year mortgage. That rate is hovering around 4.3% and has remained low for the past year. Should it start to rise again, Hill said people may choose to buy rather than wait until rates rise higher.
Brenda Dacus, a Realtor with Fred Dacus Associates in Jonesboro, said she's noticed some movement in the upper price ranges in the area due to new jobs coming into the area. Northeast Arkansas Baptist Memorial Hospital, for example, is building a facility that is about three times the size of the current one on 3024 Stadium Blvd. in Jonesboro and is bringing in more physicians and other well-paid professionals to the area.
Meanwhile, St. Bernard's Healthcare – a competitor to Northeast Arkansas Baptist – isn't standing still. That hospital, Dacus said, is also expanding and creating jobs in the area.
“There are still people who want to have their dream homes, the larger properties,” Dacus said.
Throw in growth in the banking industry and Arkansas State University, and Dacus said you've got a healthy economy in the area that will – hopefully – prove strong enough to improve homes sales in Craighead and Greene counties.
She said sales did rise a bit in the first half of 2011, but sales went flat for a few months and started to pick up in November and December. Dacus said she hopes sales continue to improve in 2012.
Link here for a PDF document of complete report results.