?Affordable? Homes Near Extinction in Fayetteville

Although what is and what isn’t an affordable home is debatable, there is little argument that people looking for newly built houses under $150,000 in Fayetteville may have a better chance of having Ed McMahon ring their doorbell.

Fayetteville just hasn’t been conducive to a new homes market priced for the working class. At least one developer wonders how Fayetteville will be able to keep the tax revenue from individuals in that market if something is not done quickly.

Superior Industries is already planning an expansion that will add between 250-400 new manufacturing jobs at its Fayetteville plant.

“Fayetteville is in dire need of delivering a new product out there,” said Mark Marquess, one of the biggest home builders in Northwest Arkansas. “If we’re going to continue to watch our employment base grow, then to keep those workers in Fayetteville, we’ve got to do something. We’ve got industries that want to expand and add jobs here, and we don’t want them to go north to live. We want to keep the tax base here.”

As the hub of Northwest Arkansas’ $3.4 billion mortgage loan market, Fayetteville has had many homes in the $200,000-and-up range built in the last four years. But some city officials, such as councilman Lionel Jordan, have expressed a desire for less-pricey subdivisions.

Building such affordable housing in Fayetteville, however, is not as simple as putting up sheet-rock and nailing down a few two-by-fours.

The price of land, even small lots, is too expensive for developers to justify putting lower-priced homes on them. Roger Kelley, who has built homes all over the two-county area, said there is a big demand for smaller homes everywhere, especially near the populated labor force areas around the poultry plants and tool factories.

“There is a demand for smaller homes, but when you put in a subdivision and try to build lots, you’ve got to get so much per lot,” Kelley said. “By the time you put a house in and finish out the lot, that narrows it down. You’ve only got a handful of homes anywhere around here under $100,000.”

And the price skyrockets in east Fayetteville.

According to the Northwest Arkansas Multiple Listing Service, the lowest priced lots available in the Vandergriff Elementary School district is $55,900 each — and those are all the way out south of the Twin Bridges area near Goshen in the old White Bluffs Estates subdivision. Lots at the relatively new Candlewood subdivision range from a low of $69,900 all the way to a three-acre $130,000 lot. And the average listing price for those 17 lots is $93,453.

Fifteen of the 17 lots available in the Vandergriff district in Fayetteville are at Candlewood.

A two-acre lot at Ridgemont View subdivision lists for $89,000, and it’s still not curbed, guttered or sidewalked and has no sewer.

Existing houses in the Vandergriff district are even more rare. Jeff Elliott, a vice president for Lindsey & Associates, said there were only 25 homes for sale in the entire Vandergriff district in Fayetteville. There are a few in the Goshen area.

In fact, only three of those 25 homes were listing under $245,000. The average listing price of those 25 homes is $389,508.

“Unfortunately, there are not any new subdivisions in Fayetteville that have addressed homes from the $90,000-$150,000 market in the last four years,” Marquess said. “One of the biggest problems we’ve had the last two or three years is the fear of a sewer shortage, which the approval bonds last year helped negate that concern.

“But the other concern is what’s our impact fee structure going to be. If the impact fee is going to be $3,000 to $4,000 a lot, well, the smaller homes are certainly going to be affected more with the asking price percentage-wise than a house that’s $250,000. But the way it sounds now is the city is going to put in an impact fee that won’t be as drastic. Looks like it’s going to be about $1,000 per house.”

Bentonville has had several “affordable” home subdivisions erected in the last four years. But Marquess said Bentonville has few if any on the drawing table currently because of the $3,500-per-house impact fee it has implemented.

Other Building Problems

West Fayetteville poses another set of difficulties for developers. While its land is cheaper per acre, it can be just as expensive at times for developers to get the land subdivision-ready.

“On the west side you’ll find problems with the infrastructure, the water and sewer,” noted Marquess. “Sometimes there’s a tremendous amount of on-site work. Fayetteville’s land is very diverse. The east side has more suitable streets. And the west side is so flat that it requires a lot of red dirt to be brought in and more infrastructure built. It’s kind of a Catch-22.”

Marquess said the biggest advantage to future development on the west side of Fayetteville is its easy access to Interstate 540.

“Anytime you put a subdivision in you’ve got to build it where people want to buy,” Marquess said. “Being able to access that 540 corridor is very important. If you’ll notice, a lot of the new subdivisions in Springdale and Rogers are just off 540.”

While the long-term impact of the impact fees has yet to be seen, Benton County has already taken over Washington County as the hot spot for new subdivisions. In fact, Benton County has steadily held a decisive advantage in real estate filings over Washington County in the last decade. (See chart.)

And, according to information compiled by Matt Kendall, a vice president of Waco Title Co., Benton County is again running away from its southern neighbor in platted lots this year. This holds especially true for homes priced near $100,000.

As of Nov. 20, Kendall said Benton County had 234 platted lots for such houses, while Washington County had just 101.

Bank on it

The capital fuel for the residential building around Northwest Arkansas has come in the form of low-interest mortgage loans from banks.

During 2001, 37 banks and mortgage companies made 21,191 mortgage loans in Benton and Washington counties that totaled $3.4 billion (See list, page 22), according to research by Courthouse Data of Fayetteville. The notes included both residential and commercial mortgages.

Of that, 11,207 mortgage loans totaling $1.4 billion were made in Benton County compared with 9,984 totaling nearly $2 billion that were made in Washington County.

Those totals also do not include an additional 165 mortgages totaling $17.1 million from two banks that were not included in the listing because they declined to supply the Northwest Arkansas Business Journal with relevant information.