story by Kim Souza
ksouza@thecitywire.com
The days of runaway prices and easy profits in local real estate are gone for Northwest Arkansas, but economists and real estate experts agree the steady pace seen in 2014 is healthy and may be the new norm.
Agents sold 615 homes in September in Benton and Washington counties. The sales of new and existing homes totaled $116.04 million, up 4.2% from September 2013. Units sales were down 1.6% from the 625 transactions a year ago, according to Paul Bynum, market analyst with MountData.com.
New construction accounted for 13% of the recorded home sales in September. That compared to 11% in the year-ago period. Median home prices in Benton County sales last month were $155,000 or $86 per square foot. That compared to $142,000 or $81 per square foot in September 2013. The median price rose 9.2%, while the square-foot- price was 6.2% higher than a year ago.
In Washington County the median sales price last month was $154,950, or $90.6 per square foot. Total prices are up 8.7% year-over-year, while the square-foot price rose 9.5% from a year ago.
Prices are going in the right direction, but they have not fully recovered to the peak year values, according to Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas. She said prices are still anywhere from 5% to 10% below peak levels hit nearly a decade ago.
“What we have is a balanced market, even in light of all the new construction going up in the past year or so. We are not seeing any concern or caution at this point because the empty and completed homes listed for sale are not unmanageable. That is something we track closely,” Deck said.
New homes listed for sale at the end of September totaled 488, up 33% from the same month last year. New home inventory has risen each month since February when there were 373 listings, according to MountData.com.
Including existing homes there was a total inventory of 3,724 houses and condos listed for sale at the end of September. This inventory was down by 36 homes in August, but up 1% from September 2013.
Jim Long, agent with Crye-Leike in Bentonville, said he closed three home sales in September, a pace he can live with. One of those was a foreclosure. He said there is a fair number of buyers coming through his office and he is working with three potential buyers at this time.
“One is a first-time buyer looking in Bentonville with a budget of $125,000. Another client is shopping in the Lowell area at the $150,000 price range, and another couple is looking in the $180,000 range. Two of the three buyers are new to this area, one moving from Batesville and the other relocating from out-of-state,” Long said.
He said one hurdle for other buyers in that home prices have not come up enough to justify a move to another property.
“They are stuck underwater and can’t downsize or upsize until prices rebound further,” Long said.
Deck said prices have not appreciated to the point where those who bought near the market high nearly a decade ago, have enough equity to sell and move up or down, despite low interest rates.
“This is not just a local issue, it’s true in many areas across the nation,” Deck said.
“Interest rate uncertainty and a steady supply of new construction has helped keep a lid on price appreciation,” Deck said. “Northwest Arkansas is starting to act like a more mature market. There isn’t the opportunity for quick deal turnarounds that helped fuel the price appreciation to the (2006) peak.”
NINE MONTH REVIEW
For the first nine months of 2014, there have been 5,501 home sales, valued at $1.03 billion, sales volume is down from a year ago at 5,648 sales, according to MountData.com.
Bynum said the greatest number of sales so far this year (757) have been in the $125,000 to $150,000 price range. He said nearly half (47%) of the sales this year have been under $150,000. With 53% of sales greater than $150,000, the median price has increased to $153,000, from $150,000 in the year-over-year period. At the high end of the spectrum there have been 14 homes selling for more than $1 million this year, compared to nine a year ago.
He said the months of inventory at the end of September was four months for the homes prices under $150,000, which favors the sellers. Homes priced between $150,000 and $250,000 had a six month inventory which is considered a neutral market for buyers and sellers. Homes prices between $250,000 and $350,000 had a seven month supply which slightly favors the buyers. Beyond that, the supply is heaviest between $600,000 and $750,000 where there is between 21 and 28 months of inventory. At the $1 million category there is 28-month supply, based on sales so far this year.
Looking ahead to pending sales, Bynum said the trend of slightly fewer transactions is likely to continue. At the end of September he reports there were 566 new pending transactions compared to 579 new pending deals a year ago.
“Pending are a rough leading indicator of future sales,” Bynum said.