Northwest Arkansas: 'Somebody Turned the Water Back On'

by Chris Bahn  on Monday, Apr. 22, 2013 12:00 am  

Building permits in the last half of 2012 rose 53 percent compared with 2011, according to the Skyline Report.  (Photo by Ryan A. Miller)

Interest rates are favorable for buyers. Firms are beginning to see 15 and 20 percent growth in sales volume.

Agents are seeing time on the market drop significantly this quarter. Rigo Gomez, Fayetteville sales manager for Lindsey & Associates, said the list price ratios are above 95 percent, meaning sellers are being realistic about how they’ve priced properties and buyers are comfortable with those prices. MountData reports those list price ratios at 98.3 percent for the region.

Northwest Arkansas has seen a nearly 4.5 percent increase in prices with the median value of homes sold at about $140,000, according to numbers distributed by Median prices nationally are at $190,000 with a 0.05 percent price increase from last year. 

Homes are no longer going three to six months before selling. Some listings are lasting less than a week. Multiple real estate agents reported seeing houses sold within 24 hours, though the average time from listing to closing is 55 days, according to MountData. Compare that with 100-plus days in December 2011.

“We’re telling buyers now: If you like it, buy it,” Gomez said. “If you like something and it’s priced well, it won’t be on the market long. That hasn’t been the case for a few years.”

‘Hope People Remember’

Optimism in northwest Arkansas doesn’t come without some caution or hesitation, however. Throughout the region there are reminders of how oversaturated the market got in the mid-2000s.

Subdivisions remain underdeveloped or, in some cases, undeveloped entirely. One Benton County development of 126 lots recently sold for less than $3,000 per lot, one local builder said, noting the cost of developing a lot typically runs between $15,000 and $20,000.

“You hope people remember the fly-by-night developers and builders, cutting up stuff that had no business being cut up,” Sean T. Morris of Walker & Associates Realtors Inc. said. “Hopefully, people keep those examples in mind and move cautiously. Just because you can dig them, doesn’t mean you should.”

Construction prices and tighter restrictions on lending should keep things in check. George Faucette, CEO of Coldwell Banker Harris McHaney & Faucette, whose company reported 22 percent growth in the first quarters of 2013 compared with the first quarter of 2012, said optimism is best as long as it doesn’t get out of control.

“We learned hard lessons in real estate. Homebuilders, the banks and developers learned hard lessons,” Faucette said. “We all have to be smart. Now you hope we don’t all have short memories.”

Deck, the UA economist, also offers a word of caution. While buyers might see conditions favorable to making a home purchase, Deck suggests a thorough review of personal finances prior to getting locked into a mortgage.

“From a buyer’s perspective, it’s a reasonable time to get back into the market,” Deck said. “That said, it only makes sense if it makes sense for the individual buyer. Otherwise, you wind up back where we were with people thinking, ‘I can’t lose.’

“We now know that’s not the case.”



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