Foreclosures Continue Steady Increase in Northwest Arkansas

While the national rate for foreclosures declined 12 percent from August to September, rates in Northwest Arkansas continue to climb.

One in 475 households in the United States was facing foreclosure in September, according to Irvine Ca.-based RealtyTrac, which compiles foreclosures nationally.

Benton County ranks No. 1 among foreclosure rates in Northwest Arkansas, with 410 homes, or one in every 198 households, in foreclosure.

The rate is a 120 percent jump from September of 2007 when 186 homes were facing foreclosure.

In Washington County, 208 homes, or one in every 384 homes, were in foreclosure, a 61 percent increase over last September.

Sebastian County fared better, with just 66 homes in foreclosure, or one in every 794 households.

Crawford County saw a decrease in foreclosures in September with 19 homes in foreclosure compared to 39 last year.

Carroll and Madison counties each had three properties in foreclosure.

Arkansas ranked 19th in the country for the highest foreclosure rates in September, according to RealtyTrac, with 1,620 homes in foreclosure.

Foreclosures in the state were up 20.5 percent over September 2007.

In September, Arkansas had 1,620 households in some form of foreclosure, or one in every 786 homes.

Kathy Deck, director of the University of Arkansas’ Center for Business and Economic Research, said the increase reflects not just individual homes that are under foreclosure but entire housing developments being foreclosed on as a result of builders getting in over their heads.

Since about 2006, she said, the market has been in a corrective situation.

“We’ve seen fewer and fewer building permits issued,” she said. “Everyone is kind of a bunker mentality.”

There’s not the same demand for houses as employment growth stays at about 1 percent compared to 3 percent a few years ago, she said.

“A lot of bankers will tell you they can still make loans but there’s just an abundance of caution on the part of would-be homebuyers,” she said.

Deck said the numbers also show that the longer the downturn continues, the more people it will affect.

“When you think about the prolonged economic weakness at the national level and the unemployment situation in Northwest Arkansas, the longer it lasts, the harder it is to make it,” she said. “Folks that can hold on for a while run out of liquidity as this goes on longer.”

Jeff Collins, an economist with Streetsmart Data Services in Fayetteville, said any place that has experienced rapid growth is now seeing problems in the real estate market.

“Compared to most of the state, Northwest Arkansas probably has the most challenges because the growth rate here has been so much faster,” he said.

As long as the national economy is relatively slow, Collins said, the local real estate market is going to struggle.

But the struggle won’t last forever.

“From my perspective, the challenges that the local economy faces, at least on the real estate side, are starting to work themselves out,” he said. “The data that we look at indicates there is still absorption in the single-family and multi-family markets.”

As long as the absorption rate continues, he said, the market will begin to correct itself.

“We’re seeing very little construction activity so we’re not adding to the housing supply and people are still moving here and wanting housing,” he said. “That has to imply that the market is returning to equilibrium.

It might take some time, however.

“Some folks are at the end of the liquidity,” he said. “I think we’ll see some more foreclosures in the near term but the market seems to be stabilizing.”

According to RealtyTrac, Nevada had the highest foreclosure rate in the country in September, with one home in 82 in foreclosure.

Florida was next at 178, followed by California with 189.