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Home selling and home building activity is increasing in the region as the number of foreclosures levels off.
Between 2012 and 2013 home sales were up 19.4 percent and building permits for single-family residences increased 12.7 percent.
"Certainly our market was better in 2013 than it had been," said Tom Reed, a partner with Streetsmart Data Services. "We continue to show improvement, and as we get into 2014, we are heading toward a building season."
Daren Blomquist, vice president of RealtyTrac, an online marketplace for foreclosed property, said Benton and Washington counties last year averaged 147 foreclosures a month. Foreclosures peaked in July 2009 with 1,039 filings. There were 120 foreclosures in January.
"Once the foreclosures are cleared out, the market can go forward with more confidence," he said. "There won't be some surprise attack of foreclosure filings."
Paul Bynum, owner and principal broker of real estate data firm MountData, said in his annual home sales report for 2013 that the area's low unemployment rate and growing population, along with low interest rates, will help the market.
The area's unemployment rate in December, the most recent number available, was 4.9 percent, according the Bureau of Labor Statistics.
About 20,000 people moved to Benton and Washington counties between 2010 and 2012, taking population to 443,679, according to the U.S. Census Bureau.
The rate for a 30-year, fixed mortgage was 4.37 percent as of Feb. 27, according to mortgage company Freddie Mac.
Reed said consumer confidence could be a drag on the market. People spend more money when they feel optimistic about the economy's outlook. The University of Michigan's consumer sentiment index rose slightly from January to February, but is still below December levels.
"Consumer confidence is not overall where you would expect it to be, and it's one area holding things back," Reed said. "People are still a little hesitant about things."
Home sales
MountData reports the value of homes sold in Benton and Washington counties hit $1.3 billion in 2013, the third best year on record and the highest since 2006.
Fayetteville posted the area's largest increase in sales value with a 25 percent increase from 2012 to 2013. Bentonville had the largest growth in sales with a 21 percent increase.
Sales volume was $287.2 million on 1,350 sales in Fayetteville.
Bentonville's 1,086 sales were worth $247.6 million.
Rogers had 1,336 sales for $279.5 million, and Springdale's 880 sales totaled $129.2 million.
Sales prices remain about 12 percent below the record high median of $155,000 the market hit in 2007. The median sales price across the two-county area was $136,000 in January. Median is the middle value, meaning half are higher in value and half are lower.
Anthony Clark, owner and broker for Clark Partners Realty Group, felt the real estate market was growing enough to open his own business in January. He said he has been in the real estate business in Arkansas and Oklahoma since 2002.
"The area's inventory levels are still low, but we know buyers are out there waiting to see what comes along," he said. "It's a very different story from 2009 when buyers had more than enough to choose from."
Bynum said inventory, or the number of homes for sale, does not mean much on its own. Demand is an important factor. A high inventory is OK as long as there are a lot of people buying homes.
Most locations in the area and price ranges are close to being what is considered a neutral market, meaning there is no advantage to either the buyer or seller.
MountData reports the best markets for sellers are Bentonville for existing homes and Bella Vista for new homes. A sellers' market typically means multiple offers and higher sales prices.
Springdale has the best buyers' market for both new and existing homes. Buyers can haggle over price in these markets because there are several homes to choose from.
New construction homes were a hot commodity before the housing bubble burst. The housing bubble was a main component of the U.S. recession that ran from December 2007 to June 2009. It wasn't felt locally until 2008.
The number of existing homes on the market exploded, with five times more going on the market between 2005 and 2008, because buyers were purchasing new homes. Eventually, the number of new homes available also dropped because builders couldn't get loans and had to stop building.
New Construction
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, said Benton County had 126 and Washington County had 115 subdivisions platted but never built before the housing bubble burst.
That is changing.
"Now builders have filled up a good portion of those subdivisions. There are still some lots, but many are not where builders want to build," Reed said.
Andrew Garner, Fayetteville's planning director, said it is good to see the empty subdivisions get houses because vacant lots can cause safety and public health problems.
He said housing growth is stretching across the city from the west side off Wedington Drive to a new subdivision platted on Dead Horse Mountain Road in south Fayetteville.
"It's been a good balance in location and a pretty good mix of home sizes," he said.
Derrel Smith, Rogers senior planner, said the city does not have many empty subdivisions, and there are few vacant lots ready for construction. He said seven new subdivisions had already gone through planning in the first two months of 2014. Most of the new development is happening on the city's southwest side, where Smith said most of the growth has been since about 2000.
Smith pointed to the area around Janie Darr Elementary School at 6505 S. Mount Hebron Road. The school opened in the fall.
"Anytime you see a new elementary school, you see new houses. They are development magnets," he said.
Seven of the 23 residential builder permits issued in Springdale in January were around Hunt Elementary School at 3511 Silent Grove Road.
Troy Galloway, Bentonville director of community development, said the 509 new housing permits issued last year were nearly 100 fewer than the city issued at its peak, but that is a good thing.
"At those levels, it really wasn't sustainable. All that building was stressing the city's infrastructure," he said. "What we've encountered the past couple of years is much more manageable."
Many home builders survived doing individual custom homes during the recession, said Shawn Karnes, vice president of mortgage banking for Arvest. As the market picks up, more houses can be built on speculation, meaning they are built and then sold. Karnes added that only builders with good, solid credit are getting money to build.
Chris Beekman, owner of GreenBridge Builders in Fayetteville, started his company six years ago.
"We started right before the market tanked," he said. "We enjoy doing custom homes. We're not throwing up spec houses."
He said he kept his five employees busy with a handful of custom homes and on remodeling projects.
Foreclosures
Foreclosure activity in Benton and Washington counties is dropping to prehousing crisis levels after peaking in 2009.
Filings dropped dramatically in 2011 and 2012 wasn't it earlier than that, like 2010 or 2011? because of a lawsuit that stalled many foreclosures across the state. The suit was resolved and foreclosures increased.
"There was a period where the market was playing catch up in foreclosures, but now the numbers are starting to come down again when comparing it to last year," Blomquist said.
He said the nation would hit prerecession foreclosure levels in early 2015. Northwest Arkansas is on track to hit that point this year, he said.
"We're getting pretty close," he said. "We've seen several months of decreasing foreclosure activity."
NW News on 03/23/2014