“It appears that prices bottomed out last year, and now they are going up,” said Judy Luna of Keller Williams Realty. “It appears we are on the upswing.”

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Luna, who writes an online blog that tracks realty trends in the area, said the natural appreciation that occurs in real estate climbed too high, too fast from 2003 to 2007, when home values peaked unnaturally. Prices fell and have been “bumping along the bottom” ever since, Luna said. Those values now are slowly increasing.

According to figures provided by Luna from the Northwest Arkansas Multiple Listing Service, median sales prices for June 2012 were up substantially from a year ago in Bentonville, Fayetteville, Springdale, Rogers and Bella Vista.

The biggest jump was in Bentonville, where the median sales price last month was $220,000 compared to $160,000 in June 2011. A less drastic increase was seen in Fayetteville, where median sales prices rose from $158,000 in June 2011 to $164,250 this June.

Other indicators that the real estate market is trending toward a healthier status is that the inventory of listed homes is going down and homes on the market are being absorbed quicker.

In June 2011, there were 4,723 listings in Benton and Washington counties, and the average time on the market was about 10 months. Last month, there were 3,650 listings, and the average time on the market dropped to about seven months, according to listing service figures provided by Brandon Long, owner/broker of Weichert Realtors-The Griffin Company.

“Sellers are getting more realistic about prices. Inventory is going down, and prices are going up,” Long said. “It’s getting to be a really good market, and things that are priced and marketed properly will sell.”

Suzette Sparks, managing broker for Lindsey & Associates, also said listings are spending less time on the market, and more sellers are entertaining multiple offers.

“I still think it’s a buyer’s market, but that tide is turning a little bit, and it’s starting to be a more level market,” Sparks said.

Low interest rates also have been a factor in the upswing.

“I think this is an ideal time to buy,” Luna said. “With interest rates so low, you can buy a lot more house for your money. Prices are still low, but they are starting to creep back up.”

Luna said that for those who need to sell a house before they can buy, the deals created by low interest rates on the “buy side” can offset small losses on the “sell side.”

The health of the real estate market is linked to the job market, and employment figures are improving for the area, according to Kathy Deck, director of  the Center for Business and Economic Research at the University of Arkansas in Fayetteville. The real estate market is becoming more balanced and stable, and job growth is a key element for it to continue to thrive, she added.

“We are seeing some recovery of the housing market,” Deck said. “As we see employment opportunities grow, the housing market will follow.”

Even with the appreciation of home values and other positive indicators, Luna urged caution when it comes to determining the health of the market. Foreclosures and short sales — or sales in which a property’s price is less than the balance owed to a lender — still threaten to put downward pressure on slowly rising home values, she said.

A ruling by the U.S. Bankruptcy Court for the Eastern District of Arkansas in fall 2011 put a hold on a lot of nonjudicial foreclosure action in the state. That ruling was recently overturned by a higher court but has since been appealed.

“There is a shadow inventory of foreclosures that banks have but haven’t put on the market,” Luna said. “There may be another dip in prices as these foreclosures come back on the market.”

The area’s rental market is going strong. The vacancy rate for Northwest Arkansas apartment properties at the end of 2011 was 6.1 percent, down significantly from 12.8 percent a year earlier, Deck said.

The substantial fall in the vacancy rate has translated to an increased interest in multifamily developments, she said. As enrollment grows at the University of Arkansas, developers are seeing an opportunity to expand rental options in Fayetteville.

Employers like Walmart Stores Inc., Tyson Foods Inc. and J.B. Hunt Transport Services Inc., also continue to bring people to the area from all over the world, Long said. Because those employees tend to move often, many lease instead of buy in an unsure market, he added.

“Rentals are flying off the market because we live in a relocation market,” Long said.

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.”