Benton County Single-Family Outlook (Market Analysis)

Anyone trying to navigate around Benton County can easily see that developer interest in single-family home construction remains strong. Despite warnings of becoming overbuilt, there were more than 1,000 lots delivered (receiving final plat from their respective cities) in Benton County during the first half of 2005. At that rate, it looks to be another record year for single-family housing in Benton County.

Bentonville remains the hottest area in the county for development. Bentonville’s west and southwest areas (located off Arkansas highways 102 and 12) are experiencing most of the growth. Various developments around the Northwest Arkansas Regional Airport have spurred increased residential development activity there, as well.

Unfortunately, for prospective homebuyers, Bentonville’s lot prices and subsequent home prices continue to rise. Bentonville also has more planned lots than the other surrounding cities, and this is not expected to improve by the end of the year.

With higher home prices in Bentonville, developer interest in nearby Centerton remains strong. However, warnings of excessive activity in Centerton seem to have been effective as developers appear to have put some planned projects on hold. The number of lots improved during the first half of 2005 slowed tremendously compared to the prior year. With Centerton offering a majority of lots being sold in the $30,000 range, it remains the closest affordable alternative to Bentonville. That being said, Centerton currently has more than 2,500 lots in the planning stage.

Bentonville and Centerton aren’t the only active areas in Benton County. Rogers had more lots sold during the first half of the year than any other city in the county. More than 200 lots were sold in Rogers by mid-year 2005. Rogers also had the most improved lots (lots with construction activity). Currently, there are more than 2,000 lots in the planning stage for Rogers. The bulk of this activity is expected to be in the south and southwest part of the city.

Pea Ridge has become another lower-price alternative, and developer interest has certainly increased. With more than 400 lots unoccupied and an additional 700 lots planned as of mid-year 2005, Pea Ridge is expected to definitely have an impact on the Benton County residential market, particularly the Rogers sector. However, it is unlikely that Pea Ridge will have the same rate of activity that Centerton has experienced in the past few years, since it is not located within the Bentonville School District. It will be interesting, nevertheless, to see what happens to Pea Ridge in the coming years.

As mentioned in a previous article, Lowell may also impact residential housing in the area as development commences again. The city of Lowell recently decided to again allow certain types of single-family residential development after a growth moratorium it started in 2003. Prior to that moratorium, Lowell had become an area of more affordable housing.

Another more affordable alternative in Benton County is Siloam Springs. Siloam Springs currently has 311 unoccupied lots with another 430 lots in the pipeline at mid-year 2005. Average lot prices in this area are near $30,000.

As of mid-year 2005, Real Estate Market Data estimated more than 10,000 lots are in the pipeline for Benton County. It will be very difficult to absorb this amount of development in the next two years, despite the strong population growth of recent years. Although the likelihood of all planned projects actually being developed is small, it is important to remain cautious. As interest rates continue to rise along with construction costs, true affordable housing may become harder to find in Northwest Arkansas.

(Real Estate Market Data tracks various aspects of the single-family housing market in Northwest Arkansas through data obtained from public records, the NWA MLS Records, developers, builders, and on-site inspections. In Benton County, the cities of Bentonville, Cave Springs, Centerton, Lowell, Pea Ridge, Rogers and Siloam Springs are covered.)