New Home Boomlet Building

Compared to the blistering pace at which new homes were springing up around Bentonville six or seven years ago, today’s building activity might seem tame.

But the hammers are swinging once again, and homes are springing up in many of the lots previously abandoned by their original developers.

Troy Galloway, Bentonville’s director of community development, said the city is on track to see more than 450 single-family building permits this year — nearly as many as in the peak year before the recession and housing market crash.

Through July, the latest month for which figures are available, the city had sold 268 permits, with a total construction cost of $70.21 million.

Last year, builders bought 345 single-family permits in Bentonville, for a total construction cost of $82.18 million.

In comparison, Bentonville had 526 permits in 2006, during the building boom. That figure dropped to 350 as the recession hit in late 2007, and reached a low of 192 the following year.

Other Northwest Arkansas cities are seeing nowhere near the building permit activity that Bentonville is enjoying.

Through July, Fayetteville had sold 215 permits; Rogers had 172; and Springdale, 102.

Galloway said Bentonville current building activity is largely in subdivisions on the city’s southwest side that were platted during the boom years.

There are also a “handful” of smaller infill projects — typically around 15 to 20 lots — in older neighborhoods closer to downtown, he said.

Sean T. Morris with Walker and Associates Realtors Inc. said most of the new construction is on the Arkansas Highway 102 and Highway 12 corridors west of Walton Boulevard.

“That’s where the majority of your lots were that needed to be absorbed and filled in,” he said.

“They don’t need to cut new lots,” Morris said. “There’s plenty of them out there.”

Walker and Associates, which Morris helped form more than 15 years ago, teams with ARC Construction to build homes. Together, the firms have built and sold more than 1,000 homes in Northwest Arkansas, Morris said.

Right now, they’re finishing the last couple of houses in Phase IV of Windwood subdivision, south of Highway 102 at Been Road.

The company started the multiphase project around 2001, he said, but held off on construction during the market downturn.

One of the big changes he’s seen in this new building cycle is the prevalence of presold homes as opposed to homes built on spec.

In fact, he said, “We haven’t been able to get many spec homes out there to have one or two for that person who needs to be in a house in 30 days or 45 days. Most everything’s been sold from the beginning.

“That’s obviously a change over the past 36 months roughly. The percentage of [presolds] went up quite a bit.”

ARC’s next step will be building a north-south street connecting Southwest 18th and 20th streets in preparation for Phase V, a 26-lot development on the east side of Windwood.

As for what’s driving the resurgence in building, Morris said the absorption of many foreclosed homes on the market and robust sales of other pre-owned homes are creating a need for new homes at all price points.

Some of the buyers are Wal-Mart Stores Inc. or supplier transfers, he said, but he’s seeing newcomers from all fields and walks of life.

There are also first-time homebuyers and people who’ve simply outgrown their home and need to move up to a bigger one, he said.

ARC/Walker’s new homes in Bentonville are selling mostly in the $170,000 to $180,000 range, he said. But he cautioned that with the cost of construction materials going up, “I don’t know how long Walker Construction and other builders will be able to hold those prices.”

Still, he said, construction is proceeding at a “nice, steady pace.”

“And as long as we keep a nice, steady pace, we’ll be just fine,” he added.

Galloway said another factor driving the activity is economics. Historically low interest rates play a role, he said, and lot prices still have not risen to the pre-slump levels.

Residential lots are typically going for $20,000 to $30,000, he said, with the exception of around downtown Bentonville, where lots sell in the $50,000 to $60,000 range.

“I think it has to do with the whole downtown experience,” Galloway said. “I think the renaissance we’ve seen in downtown over the last decade is bringing people in.”

He cited quality schools near downtown, as well as the Crystal Bridges Museum of American Art, parks and trails, and a splash park as part of the area’s appeal.

“The city really has focused on infrastructure over the last decade that would make good development projects in and around downtown,” he said. “They have lent to the explosion of growth, so the city’s investment is starting to pay a return.”