Potential Buyers Can Benefit From Slow Housing Market (Stephen Lewandowski Commentary)

As subscribers to local news media, we are constantly bombarded with stories and articles of how the real estate market is “crashing” in such places as New York, California, Michigan, Florida and many other states.

We are reminded daily of the double digit increase in foreclosures and the mortgage melt down. If we go by what is printed in the media, the Northwest Arkansas housing market should be dead.

Thankfully for all of us, the report of the market’s demise, at least in our part of the world, is greatly exaggerated.

So how is the housing market really doing? Comparing our metropolitan statistical area housing data between 2003 and 2008, we find that the average sales price of a home increased from $145,478 to $184,707, respectively. This is an average increase of 5.4 percent per year.

The median sales price in January 2003 was $113,000 while in January 2008 it was $143,750. This was an average increase of 5.44 percent per year. Both of these statistics point to good steady growth. Not bad for being on our death beds.

Now if our homes are still appreciating, then something else must be off, right?

Well, sort of. The number of homes available for sale has grown steadily since 2003 and has nearly doubled since May 2005. This has had a direct effect on the number of days it takes to get a contract on a home and then close it.

Homes are now taking longer to go from available to sold.

Also, buyers now have a greater selection of homes to choose from.

The days of finding only 1 or 2 available homes and settling on them are gone. Homebuyers can now pick and choose the plans they want in the locations they prefer. This is an enormous advantage for homebuyers.

This surplus of available inventory will not last forever. Local economists are already seeing a reduction in vacant homes and empty lots. Permits for new construction are down as well as plans for new communities.

Both of these reductions will help to stabilize the inconsistencies in our market and help to promote the steady appreciation we prefer. If you find the home you want, at the price that fits your budget, then buy it.

Affordability is a main concern for many Northwest Arkansas buyers. The interest rates we have experienced the past 4 years have been some of the lowest in history. This helped fuel the record years we saw in the Northwest Arkansas housing industry. Today, rates are just as low or lower, allowing homeowners to afford more home. 

Back as early as 1989, interest rates were around 10 percent.  In the 1990s, rates were between 7.5 percent and 8 percent. In early March, some rates dipped below 5 percent.

This difference in interest rates calculates to savings of hundreds of dollars for homeowners each year.  However, with the volatility of the overall financial market, shopping for interest rates can be risky. It is important to remember that once you find a loan program that meets your needs and that fits your budget, lock in your rate. 

The federal government has lent our market a helping hand as well. The government recently, with the urging of Realtors, increased the loan limit of FHA loans to $271,050 for our area.

These loans are less restrictive than conventional loans and require less money for a down payment.

With the subprime lending market going away and becoming more restrictive, these loans will increase in popularity and will allow more families to qualify for a home.

Why is now a great time to buy a home in Northwest Arkansas?

The advantages of home ownership are numerous. It helps to build the community we live in by financing the schools, infrastructure and public services. The parks we walk in and the roads we drive on would not be here if there were no homeowners.

Also, the equity you gain by owning a home is like having a second 401(k).

With an estimated 800 additional people moving to our area monthly, job growth continuing and area amenities increasing, the Northwest Arkansas housing market is alive and well.

The extensive selection of homes, with a wide price range and many loan programs to meet most families’ needs make this a great time to buy a home.

(Stephen Lewandowski is an executive broker and realtor with Griffin Company Realtors in Springdale. He may be reached at 479-283-2614.)