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Northwest Arkansas home prices on the rise, unit sales slip

story by Kim Souza
ksouza@thecitywire.com

With half of 2014 in the books, Benton and Washington county real estate agents report an active market and higher sales volume but a fewer homes sold.

MountData.com reports agents sold 3,395 homes in the first six months of this year. Unit sales slipped 2.3% from 3,478 homes sold in the same period of 2013. That said, sales volume topped $627.35 million, marking the second best half-year on record behind 2006, said Paul Bynum, market analyst with MountData.com.

Bynum said home prices are increasing faster that the rate of inventory growth, which is a good sign for sellers. Among existing homes sales this year, the median price rose to $139,900, up 2% from the same period a year ago. He said the inventory of existing homes stood at 3,737, up 431 units from last year. 

In the past six months existing homes sales in the two counties were 2,938 units, down slightly from a year ago, but total volume rose 1% in the same period. Home sales have lagged slightly behind last year for the past several months.

In June agents sold 436 homes in Benton County, valued at $88.327 million, down 0.9% in units and up 5.37% in total volume. Washington County reported 14.9% more homes sold in June than in the prior year period. The 292 sales totaled at $55.047 million in June, compared to 254 sales worth $45.323 million in the year-ago period. 

"Our unit sales for 2014 are still lagging behind 2013, year to date. However, our average price has increased 5% year to date and 13% for June 2013 versus June 2014, so our sales volume figures are just flat to slightly down. We are certainly seeing homes selling closer to the asking prices; and our agents are dealing with multiple offer situations much more frequently," said George Faucette, CEO of the local Coldwell Banker franchise. "I believe sales will strengthen only slightly, if any, for the second half of this year; but I do believe the pace of the first half is sustainable. Our agents are continuing to be very busy, and the general economy of NW Arkansas is doing very well."

HIGHER PRICES
Tami Fagan, an agent with Crye-Leike in Fayetteville, completed a closing last week where a home appraised for $45,000 over the sales price. She said it is not the first time it has happen this year as rising appraisals continue to bode well for sellers. 

“I am also seeing more multiple offers on properties which pushes the purchase price higher. A new agent in our office showed a brand new listing on Saturday, but the offer they made the next day was too late. Many homes are selling very quickly and some at full price offers, it’s been a few years since we have seen that,” Fagan said.

Median home prices have moved up nationally, particularly in coastal areas which is impacting home affordability, according to Jed Kolko, chief economist with Trulia. He said in much of the Midwest, including Northern Arkansas, prices are starting to rise but homes are still affordable for most middle class buyers. 

Kolko said home affordability according to Trulia standards allows for consumers to spend no more than 31% of their gross, pre-tax income on housing — mortgage, taxes and insurance.

With median home prices in Benton County at roughly $150,000 as of June, the price per-square-foot has risen 2.9% in the past 12-month period, according to MountData.com. In Washington County the median price is also $150,000, but the average price per-square-foot rose to $86.9, up 2% since June of last year.

New home sales for the first six months of this year totaled 457 units, up 1% from a year ago. The median sales price for new home construction totaled $223,500, down 3% from a year ago. This dip in new construction prices relates to more lower priced, smaller homes being built than a year ago, according to city permit records.

While local home prices are moving up, another report by CoreLogic indicates statewide home prices are still 2.3% below their July 2007 peak market price, which includes distressed home sales. Excluding the distressed home sales, statewide Arkansas home valuations are flat against their peak price in mid 2007.

BETTER COMPARABLES
Existing homes listed for sale in prior years had to compete with more distressed properties such as foreclosures or short sales but Fagan said those numbers have “fallen off the charts”

With fewer foreclosures there is not the downward pull on overall pricing that many neighborhoods faced between 2007 and 2012 lifting overall comparables higher.

Fagan said the local market is like a puzzle with lots of pieces that are coming together such as higher pricing, attainable financing, fewer homes to chose from and overall stable local economy. She said there is some pent-up demand in this market that is starting to move toward purchases now that prices are headed up again. 

AGGRESSIVE INVESTORS
The City Wire has previously reported that investors are active in the local markets, which has driven up the cash offers and the number of institutional investors buying properties. These buyers have been acquiring property in fairly large numbers, which has kept the inventory low for traditional buyers.

“I work with a number of investors in this market who have been buying distressed properties to flip, but that inventory is all but dried up. They no longer wait for the listing, they check the courthouse records and are even knocking on doors offering to buy homes in the midst of foreclosure,” Fagan said.

RealtyTrac reported late last year that in some months as many as 30% of the local home purchases were cash deals and roughly 12% of local home sales had been to institutional investors, who hold the asset as rental properties.

Daren Blomquist, vice president of RealtyTrac, recently told The City Wire that much of the housing recovery has been attributed to active investors. Roughly 33% of sales in the U.S. this year have been to investors. He said institutional investors and hedge funds came into the market in mid-2012 gobbling up single family homes by the thousands, which they are now renting. He said homeownership rates overall are declining and he expects investors to stay active because the demand for rental property will only increase as Boomers age and Millennials delay home purchases for a few more years. 

THE NUMBERS
Home Sales Data
(January through June)
Benton County
Sales Volume
2014: $406.428 million
2013: $401.733 million

Unit Sales
2014: 2,166
2013: 2.176

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Median Price
2014: $150,000
2013: $150,000

Washington County
Sales Volume
2014: $220.928 million
2013: $224.201 million

Unit Sales
2014: 1,229
2013: 1,302

Median Price
2014: $150,000
2013: $146,700

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