Empty Lot Inventory Falls From First Quarter Peak

It’s been eight months since anything was moving in the Belclaire subdivision on Arkansas Highway 112 in Fayetteville. That is, with the exceptions of field mice, tall grass and the occasional plastic bag blowing by like a post-industrial tumbleweed.

The streets, curbs and drains are cut, fire hydrants and lampposts stand at the ready and signs jut from the raw earth every few hundred feet, inviting homebuilders to stake a claim on $66,000 worth of land.

So far, no one has.

But principals at the Barber Group, which is developing the property, aren’t losing sleep, nor seem likely to lower prices or ease covenants.

Those observing the current real estate market correction have seen a tsunami of liens, foreclosures, bankruptcies and various other lawsuits and countersuits.

Through the third quarter of 2007, there have been 1,103 foreclosures in Benton County and 851 in Washington County, according to RealtyTrac, an Irvine, Calif.-based online realty company that tracks foreclosures.

Properties have changed hands and some developers have scaled back ambitious projects, lowered prices or eased minimum size requirements for houses in upscale subdivisions.

Others are still forging ahead as before, content to weather the storm with projects that aren’t moving as fast as they’d initially hoped.

What it all adds up to is that there are lots of empty lots in Benton and Washington counties. And even more have been preliminarily approved.

As of Sept. 30, there were 2,390 empty lots in Bentonville, 1,933 in Rogers, 1,669 in Fayetteville, 1,202 in Centerton, 920 in Springdale, 239 in Siloam Springs and 1,079 in west Washington County, according to data compiled by the University of Arkansas Center for Business and Economic Research for the Arvest Bank-sponsored Skyline Report.

The current supply of lots within active subdivisions in Northwest Arkansas could last 38.3 months, down from 42.1 months in the second quarter, according to the most recent report. That’s a 9 percent decrease in three months.

It’s also an 18 percent decrease from the third quarter of 2006 and a 23 percent decrease from the first quarter of this year, when inventory peaked at whopping 49.9 months.

But these figures don’t include lots on subdivisions that haven’t seen any construction started or houses completed, because the CBER considers such developments inactive.

The CBER does track lots that have been preliminarily approved, though. If each of these 18,623 lots were built right now, the supply of lots would last 91.1 months.

Of completed houses in active subdivisions in the third quarter, 47 percent in Benton County were empty, 39 percent occupied, 4 percent under construction and 10 percent recently completed, according to the Skyline Report.

In Washington County in the same quarter, 45 percent of houses in active subdivisions were empty, 43 percent occupied, 4 percent under construction, 7 percent recently complete and one percent just started.

Waiting Game

Belclaire is hardly the only subdivision in Northwest Arkansas that looks a little like a stage backdrop to “Waiting for Godot.” Walker Estates on Arkansas Highway 265 in Fayetteville is also barren.

None of that subdivision’s 11 lots have sold so far. The lots range in size (from 0.33 acres to 2 acres) and price (from $129,000 to $149,000) said listing agent Jody Hendrix, of Coldwell Banker Faucette Real Estate.

The fact that none of the 95 lots in Belclaire have sold yet isn’t a big problem, said Stacey McSpadden, listing agent for the Barber Group development.

Contrary to some developers who have lowered lot prices or eased covenants on home sizes to entice buyers, the Barber Group is content to wait.

“We’re not in a hurry,” McSpadden said. The lots are “kind of on the back burner” for now. The Barber Group is betting that the likelihood of a new high school in the vicinity will mean demand for the lots in Belclaire will increase eventually.

The lots at Belclaire and Walker Estates are listed, though, and McSpadden and Hendrix get inquiries about them often.

Another subdivision that could benefit from its proximity to a possible school is Waterford Estates on Arkansas Highway 45 in Goshen.

Gary Combs, the developer behind Waterford, donated 20 acres to the Fayetteville School District in 2006. If a school is built on the property it will be named after the Hissom family, the prior owners of the property.

The location would be great for a school at some point, said Alan Wilbourn, public information officer for the Fayetteville School District.

“You couldn’t ask for a better school site, but it’s going to have to be a few years down the road,” Wilbourn said.

On a recent afternoon, dozens of ducks waddled around near the entrance of the subdivision. The waterfowl outnumbered the houses in Waterford. But that is likely to change soon, and not simply because of winter migration.

Of the 180 lots on the 400-acre subdivision, four houses are complete, eight lots have been sold, three more houses – one valued at $2 million and two at $1.5 million – are under construction and work will begin soon on 20 more homes along the White River, Combs said.

Many of the lots in Waterford range from $80,000 to $90,000, but choice spots along the river go up to about $150,000. With a $2 million clubhouse, two miles of riverfront property, and gated access, the subdivision definitely fits the upscale mold. It is also, with 200 acres of green space to be set aside, “the state’s only conservation subdivision,” he said.

“I’ve been building for 30 years, and I can say that we don’t have any peers as far as subdivisions go,” Combs said.

Changing Hands

A little further to the northwest, in Benton County, several subdivisions have seen less than ideal starts and even foreclosures.

About five months ago, the city of Lowell began monitoring the progress in its five subdivisions closely, said Mike Solomon, the city’s director of planning and economic development.

“It’s essential that you track those numbers so you know where you’re at and where you need to go to fill those lots up,” Solomon said.

As of October, there were 509 total lots in Lowell, with 13 under construction, eight complete but unoccupied homes and four complete occupied homes.

Two of the subdivisions in Lowell – Carrington Parke and Meadowlands – had no homes under construction or completed, for a total of 81 empty lots.

Weatherton, on Arkansas Highway 264, was originally supposed to feature homes in the $300,000 to $500,000 range. Lot sizes vary from 0.25 acres to 0.75 acres, and the minimum house size is 1,550 SF. There are five houses under construction, which are priced between $158,900 and $300,000.

Borghese Gardens ended up back in the bank’s hands.

First Federal Bank foreclosed on developer Michael Spainhower’s Borghese Gardens subdivision in February. Builders have bought 20 of the 44 lots currently platted out. Six houses have been completed, two of which are occupied.

Lot sizes in the subdivision are about 0.33 acres, and the minimum for house size is 2,200 SF. The completed homes are priced between $250,000 and $450,000.