A snapshot of the Northwest Arkansas housing market shows more sales at higher prices in a shorter amount of time. Local real estate experts say they see that trend continuing.
"By 2020, I would like to believe that real estate growth is in sync with population growth," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas. "When I look at 2020, the residential market is doing fine."
The Northwest Arkansas Board of Realtors reports home sales grew 17 percent from 2015 to 2016. The 9,819 homes sold by real estate agents last year fetched, on average, a 5 percent higher price and was on the market 23 percent less time, the board reports.
The average home sales price across Benton and Washington counties last year was $208,545 and average days-on-market was 109.
"This is the best January and February I've ever seen," said Suzett Sparks, Board of Realtors president and managing broker for Lindsey & Associates. "I've been in the market 21 years, and this is the best January and February ever, even better than 2005."
Home sales in Benton and Washington counties peaked in 2005 at 8,695 before falling to 5,290 in 2008 during the recession, according to the Arkansas Realtor Association. The National Bureau of Economic Research reports the recession ran from December 2007 to June 2009.
The U.S. fell into a mortgage crisis in 2007, but it wasn't felt locally until late 2008. Home sales in Benton and Washington counties plummeted 39 percent from the market's height in 2005 to its lowest point in 2010. Values dropped 27 percent and foreclosures shot up 852 percent during the same period.
January and February are typically the slowest sales months of the year, with 512 homes sold in January and 571 in February last year, according to the local Board of Realtors. Real estate agents sold 541 homes in January this year; February data is not yet available.
Johneese Adams, Arvest Bank's Fayetteville mortgage manager, agreed this year has started off strong.
"One reason I think we are seeing so much activity now is people are preparing for a rate hike," Adams said.
The Federal Reserve raised its benchmark interest rate by a quarter point March 15 and while this rate is not directly tied to mortgage rates, it could still push those rates up.
Freddie Mac reports rising inflation would have a significant impact on housing markets by driving up mortgage interest rates. The mortgage corporation predicts mortgage rates for a 30-year fixed loan will rise to 4.5 percent in 2018.
Adams said mortgage rates have ticked up slightly over the past few months, reaching 4.38 percent for a 30-year fixed-rate mortgage on March 8. The rate was 4.2 percent in mid-January and at a record low 3.36 percent last summer.
"These rates are still incredible," she said.
Sparks said even a slight rise in interest rates could be enough to encourage people on the fence to buy now.
"We have a long way to go to get to the 7 or 8 percent interest rates we were at in 2005," she said.
Northwest Arkansas homebuyers could have trouble finding a home in the 2,000- to 3,000-square-foot range, Adams said.
"There is a lot of demand, and we are seeing a shortage of homes that size," she said. "It is a very hot market."
Sparks said multiple offers on homes are helping drive prices up. New listings priced below $150,000 are selling within the first week, she said.
Deck said the strong real estate activity is opening the door to home builders with construction higher than any point since the recession.
Residential building permits peaked in 2005 with 5,697 issued in Benton and Washington counties, according to data from the university. Permits dropped to 1,134 in 2010 before steadily increasing each year to 3,180 in 2016.
Benton County is leading its neighbor to the south in both the sale of existing homes and new construction.
"All of Northwest Arkansas is growing, you just see it a little bit more in Benton County," Sparks said.
The 6,177 homes sold last year in Benton County were on the market an average of 107 days and sold for an average price of $217,470. There were 3,642 home sales in Washington County in 2016 that were on the market an average of 112 days and had an average sales price of $199,620.
Builders are constructing nearly twice as many homes in Benton County, with 2,078 permits in 2016 compared to 1,102 issued in Washington County.
NW News on 03/26/2017
Print Headline: Residential real estate market sizzles