Fort Smith, Van Buren housing markets return to normal

A more than 15-year look at the regional housing market indicates that the 2003-2007 period reflected “abnormal growth years” with respect to home sales, with 2008 and 2009 reflecting a return to normal, according to Realtor Ernie Schimmelman.

In his King Realty Group Market Report, Schimmelman shows that home sales in Crawford and Sebastian Counties typically have a 4%-5% annual growth rate. Also, his research shows that home sales in 1994 totaled around 1,650 and home sales in 2009 reached 1,856. (see graphic below)

There were 1,948 homes sold during 2009 in Crawford, Franklin and Sebastian counties, down 6.39% from the 2,081 sold in 2008, according to information released Jan. 21 by the Arkansas Realtors Association. However, the three counties ended the year with a combined 9.39% gain in homes sold during December compared to December 2008.

Despite recent economic trends, the decade brought growth to the Fort Smith/Van Buren home markets. Schimmelman’s report shows that 1,856 homes were sold in the two counties in 2009, up 14.2% over the 1,625 homes sold in 2000.

But not all of the growth during the decade was normal, Schimmelman says, especially beginning in 2003 when 2,154 homes were sold in Crawford and Sebastian counties and ending in 2007 when 2,312 homes were sold. Schimmelman’s “abnormal” period peaked in 2006 with 2,524 homes sold in the two counties.

“The no-fault loans really fueled that growth. Those conditions won’t repeat themselves,” Schimmelman said. “What we had was an abnormal period during the 2000 decade and now we’re getting back to a more normal market where you don’t have the government pushing those no-fault loans.”

Schimmelman says the no-fault loans were those that required little to no documentation of the borrowers financial or work history. Banks and mortgage companies were willing to push such loans because they were backed and encouraged by the federal government.

The new push by the federal government with its homebuyer tax credit is not likely to create another abnormal situation because most lenders have returned to fundamentals in terms of mortgage approvals, Schimmelman noted.

Ethan Nobles, spokesman for the Arkansas Realtors Association, agreed with Schimmelman’s overall assessment. He said Arkansas historically sees a 3% to 4% annual appreciation in the value of homes sold. However, the return-to-normal theory is problematic for the thousands of Realtors who entered the business during the boom times of 2003-2007.

“I think he’s (Schimmelman) probably right, but the issue we face is how do our folks continue to sell real estate,” Nobles said. “From our perspective, we still have a lot of Realtors who entered the business in the middle part of the decade and now you have more people chasing those normal dollars.”

Nobles said most of the Realtors who will succeed in a return-to-normal environment are those who were the first to recognize that the 2003-2007 patterns were not normal.

“The Realtors who are doing well right now are the ones who knew this would not last forever and began to come up with new strategies and save their money. … I wish people had been applying that kind of logic (that the growth was abnormal) all along,” Nobles said.