Little Rock’s Upscale Market Healthier Than Much of U.S.

Looking to sell that $400,000-plus home? Be prepared to wait a while.

Cooperative Arkansas Realtors Multiple Listing Services Inc., the state’s largest regional listing service, which covers a large chunk of central Arkansas, showed 654 residences in that category at the beginning of February. And the average number of days they’ve been on the market is 214 – roughly seven months.

It’s the same situation in Northwest Arkansas, where 608 residences listed at $400,000 or more are on the market, according to the Northwest Arkansas Multiple Listing Service LLC, which covers Washington and Benton counties. Average days on the market? 213.

That varies quite a bit, depending on location, but the slowed economy and tighter credit rules have changed the real estate business.

“It’s definitely taking longer to sell,” said John Selva, owner-broker of Pulaski Heights Realty of Little Rock. “Ninety days was a good market time.”

“Buyers are out there,” he said, “but if they’re wanting to move up, they have a house to sell.” The seller wants a good price for his home, but the buyer thinks that the current market equates to a fire sale. The seller, in turn, thinks the buyer is low-balling the offer. It can become something of a stalemate, Selva said.

While sales of new homes nationwide closed out 2008 by dropping to record lows, Arkansas home sales have fared better, though they too have fallen.

In 2007, according to the Arkansas Realtors Association, home sales stood at $4.7 billion. Figures for 2008 figures are estimated at about $900 million below that.

In January, Forbes magazine ranked the Little Rock housing market as the ninth strongest in the nation in metropolitan areas of more than 500,000 people.

“The housing boom passed right over Little Rock,” the article said. “So has the bust.

“Housing prices in Little Rock don’t look likely to fall by more than about 1percent by the middle of next year. That’s because they never climbed like they did in the rest of the country. In fact, 1percent is about how much they have risen in the last year,” the article said.

Wally Loveless, a broker with Adkins McNeill Smith & Associates Inc. of Little Rock, said the market is slower but, noting the Forbes article, added that the metropolitan area is one of the stronger markets in the country.

“There’s no question the market is significantly less than it used to be,” said Jon Underhill, the owner of Jon Underhill Real Estate of Little Rock, which deals exclusively with upscale housing.

And there’s no question it’s definitely a buyer’s market.

“Anyone putting a home on the market today needs to be more thoughtful in making the house shine,” Loveless said. “It’s much more pertinent in today’s climate than it was years ago.

“It’s not a question anymore of getting more for the house, but a question of just selling it. Buyers are more cautious these days. Houses will sell; it may just take a longer time to sell,” Loveless said.

Drop in November

Nationwide, home prices in 20 U.S. cities fell in November by 18 percent compared with the year before. Arkansas saw a decline of 7.6 percent in November, according to the Arkansas Realtors Association.

The problem is basic economics – there are more homes available than buyers and until that situation is corrected, housing prices will continue to decline.

CARMLS showed an average price of those 654 residences in central Arkansas of $672,601 and a median price of $544,550. Sales are pending on 53 of the residences.

The Northwest Arkansas Multiple Listing Service said the average price of those 608 residences in Washington and Benton counties is $723,635 and the median price is $559,900.

Despite what looks like many upscale residences on the market, an upbeat Meza Harris, an agent with Lindsey & Associates Inc., said she has been swamped recently with requests to show residences listed at $400,000 or more.

“It’s almost like the old days,” she said. “Lots of vendors are coming in [to the Bentonville area], and they’re looking for houses in the $500,000 to $600,000 range.”

Both Loveless and Harris said money is available for financing. Harris said the customers coming to her are already prequalified and have their financing set up.

Both said that with the number of upscale residences on the market, homeowners wanting to sell need to have them ready to show and sell.

Harris told of a homeowner in Shadow Valley, a gated community in Rogers, who was motivated to sell and got his place in tip-top shape.

He then put it on the market at $165 per SF and it sold the next day.

“I tell them this is what you’re going to have to do. You have to be ready when you show it to get top dollar,” she said.

Sales of residences in the Heights and Hillcrest areas of Little Rock are running about $105 to $130 per SF, Selva said, while Chenal residences are averaging $120 to $125 per SF.

In north-central Arkansas, Dorwin Shaddox, owner of Advanced Realty & Auction Group in Harrison, said there are 31 homes over $400,000 currently on the market in Boone, Newton, Carroll and Searcy counties.

Shaddox said homeowners in the area he covers have been lowering their listed prices to sell.

He said several of the upscale homes eventually sold for far less than the original asking price. A home that was listed at $820,000 finally sold for 39 percent less at $590,000. Another new house with a pool was listed at $750,000 but sold for $475,000 – a dip of 58 percent.

Even with those kinds of results, Shaddox said the local housing market isn’t as bad as a lot of markets elsewhere in the state and across the nation.

Shaddox said that he saw where the market was headed a couple of years ago and started studying to be an auctioneer. There’s a growing trend of homeowners using auctions to sell, he said. Shaddox added that he was able to obtain for sellers their expected sale price 93 percent of the time.

Jon Underhill said he had also seen many homes selling at big discounts from the listed price, but added that in most of those cases the listing was not based on solid sales data.

“The numbers could not be justified,” he said. “Banks and underwriters are very cautious right now.

“I’m still selling, but the price may not be what people thought their houses were worth a year ago.”

What’s Selling

What is selling? In the Little Rock area, it depends on location, but residences priced up to $250,000 make up the largest segment.

In the Heights and Hillcrest, what sells fastest is housing in the $250,000 to $499,000 category, according to figures supplied by Underhill, who tracks the market. That’s true also in the areas of west Little Rock, Chenal and west Pulaski County, where on Feb. 3 sales were pending on 10 residences out of the 118 in the $250,000 to $499,000 sector.

Selva agreed that homes priced about $200,000 are the better sellers, especially if they’re in neighborhoods that are more desirable.

The Arkansas Realtors Association said the statewide average sales prices for 2008 should be around $150,000, down about $2,000 from last year.

Nationwide, the National Association of Realtors said the pending home sales index climbed 6.3 percent based on contracts signed in December.

While that was much better than expected, foreclosures may have been the primary driver of the sales.

The report also cited improved affordability conditions as a factor as well as a drop in mortgage rates in bringing buyers back to the market.

Lawrence Yun, chief economist for the Realtors organization, said the index shows a modest rebound, but added that the outlook for housing and the economy remains murky.

“Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around,” Yun said.

“If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,”