Agents and lenders across Northwest Arkansas said business could not have been better in August despite hot weather and threats of higher interest rates.
There were 763 homes sold last month in Benton and Washington counties, a 20% jump in activity from the prior-year period, according to MountData.com. Those transactions racked up $147.25 million in total sales volume, up 22% from August in 2012.
But the number of sales is just part of the reason local real estate professionals give 2013 a solid “B+” grade.
Crye-Leike Real Estate said its Northwest Arkansas business rose 27% in August with volume of $46 million from 265 closed transactions. Year-to-date, the firm reports local sales of $261 million, up 18% from last year.
George Faucette, CEO of the local Coldwell Banker franchise, said his firm also pulled off a strong August with 9% gain in sales volume and units sold. He said this year sales volume is up 24%, against an 18% gain in units sold. Average prices have risen 5% this year over last, he added.
“Property values have been rising over the past year and we are finally now seeing them reflected in the appraisals. The sky is no longer falling and conversations around the water cooler are happening about higher property values, which builds consumer confidence,” said Austin Bivens, agent with ReMax Partners in Springdale.
Median sales prices rose 3.2% in August across the combined two counties, up 5.8% in Benton County and inching up less than 1% in Washington County, according to MountData.com.
SUPPLY & DEMAND
Bivens said prices have been rising this entire year as buyer demand has been strong and steady amid near record low inventory levels – a formula he said is a recipe for success.
Median sales prices rose to $155,000 through the first eights of this year in Benton County, up 8% from the same period in 2012. In Washington County median prices were $149,000 through August, rising 8.36% from the same period last year.
Faucette said he is not concerned that rising prices are creating a bubble situation, because local job growth is helping to fuel buyer demand, and he said the price increases are relatively moderate thanks to active new home sales and more foreclosures among the resale market.
“There were 3,724 homes listed for sale at the end of August, about 50 more than in July, but inventory is down 4% from August 2012 and 48% lower than the all-time high (7,192) listings in August 2007,” said Paul Bynum, market analyst with MountData.com.
Agents have sold 4,978 homes in the two counties through the first eight months of the year, totaling $906.374 million. Bynum said sold market units rose 17% from the prior year, while total volume is up 25%, thanks to higher overall prices.
“I have five pending contracts right now, three of them came in over the weekend. Buyers are finding if they like a property they better submit an offer,” Bivens said.
Jim Long, an agent with Crye-Leike in Bentonville, said he has had recent three buyers lose out on deals because either the offer came in late or the seller got a higher offer.
Bynum said the demand is better at both ends of the buying spectrum this year. When more higher-end homes are sold as in this year, median and average prices will rise. He analyzed the number of sales by price category and found that nearly half (49.2%) of the total sales this year were priced below $150,000, which is pretty normal for the Northwest Arkansas market. He said 28% of the homes sold were priced between $150,000 and $250,000, which is more than one-quarter of the local market.
But agents also sold 826 homes priced between $251,000 and $499,000 this year, roughly 16% of the total market, which is better than in prior years.
Another 269 homes were sold between $500,000 and $999,000, which is 5.4% of this year’s market. Lastly, there were nine homes selling for more than $1 million, also helping to push median and average prices higher.
Stephanie Hagan, senior mortgage loan officer at First Federal Bank in Rogers, said borrowers are more confident in the local economy. They are seeing a few foreclosures coming on the market, with many selling fast. They also have seen interest rates edge up and know they need to capture values why they can while prices are also trending higher. She said when prices and interest rates move in tandem that can squeeze a buyer’s purchasing power, which is enough incentive to get them looking and bidding.
“I believe buyers are more confident today, when they are riding my car I don’t hear them assessing every little economic worry. They seem to be focused on finding value in properties they really want to own, not just trying to get a better deal than their friend got,” Bivens said.
Hagan said there is still a fair amount of cash deals in the market, which is mostly spurred on from those moving into the region, having sold their property elsewhere.
“One thing I am seeing more of is local resale and repurchase deals, which is a healthy sign for the local market,” she said.
Bivens agreed. He said while outside relocation business is always a perk, the basic fundamentals are improved when local folks sell and repurchase and that only happens when prices are moving up.
Bynum said consumer confidence and sentiment remain at some of the highest levels in five years. On a national level consumer spending is growing at a 2.5% pace, a little slower than the 3% to 3.5% growth rate historically, according Jay Bryson, global economist with Wells Fargo Securities. He said consumers have been de-leveraging their personal balance sheets since the housing crisis more than five years ago.
“If this were a baseball game I would say we are in the 7th inning of de-leveraging,” he said.
Byson said a bright spot in the economy continues to be the housing market along with stronger business balance sheets, which means they aren’t as likely to have layoffs, both of these are positive for consumer sentiment and spending.
BY THE NUMBERS
47: The days on market for homes selling in the past 90 days.
$87: The median price (per square foot) of homes selling this year.
873: The sales pending at the end of August in Benton and Washington counties.
7.2: The months of inventory in the local market based on sales this year.