Home sales in Northwest Arkansas are down slightly from last year, new houses are going up with great caution by builders and rental properties are mostly occupied — all because of strict lending practices.
Judy Luna of Keller Williams Realty said in a recent edition of her real estate blog that the housing market remains somewhat weak, mirroring national trends. Activity also tends to be seasonal and weather-driven, and a stormy spring hurt home sales, she said.
Luna, whose blog tracks realty trends in the area, said another negative factor is the expiration of the tax credit for home buyers.“One main reason for [higher home sales in 2010] was the home buyer’s tax credit, which expired June 30 of 2010,” she said. “This caused more people to purchase homes earlier in the year last year in order to get the credit before it expired.”
Another factor contributing to low home sales, Luna said, is that many people moving into the area are having difficulty selling their current home.
Despite the lagging sales, Luna thinks the Bentonville area “may have turned the corner in terms of bottoming out on home values and may now be appreciating again.”
One factor keeping prices down are foreclosures and other distressed properties, she said. “Springdale in particular has a large number of short-sale properties listed, particularly onthe low end,” she said. “For example, the [Multiple Listing Service] has 165 properties listed in Springdale at present between $75,000 and $125,000. Of those, 65 are characterized as short sales, and 24 are bank-owned or [Housing and Urban Development] houses. Of 178 homes listed for between $40,000 and $75,000, about half of those are characterized as short sales.”A short sale is one in which a property’s selling price is less than the balance owed to a lender.
Karon Reese, executive broker at Bassett Mix and Associates, said many people are renting because of stricter lending practices in the wake of the ongoing housing market slump.
“I’ve even had a developer tell me that he can command higher prices for his rentals because the market is so strong,” Reese said. “This means that investing in real estate is a smart way to spend money right now — lately I’ve had people take retirement funds that are diminishing in the stock market and invest in real estate for a rental income.”
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said the vacancy rate for Northwest Arkansas apartment properties at the end of last year was 12.8 percent, down from 15.6 percent at the end of 2009.
Reese said construction also is down, but some builders are proceeding very carefully.
“I believe that what is good about this is that rather than throwing up houses as quickly as possible, projects are being more thought out and more carefully planned,” she said.“I think that even builders who did not consider sustain- ability, infill, ‘green’ building measures and how people live within a community or neighborhood are considering these things more as they plan.”