A strong finish in 2012 for local real estate market

Agents and brokers across Northwest Arkansas agree 2012 has been a year of pleasant surprises with rising home prices, additional sales and fewer distressed properties in the mix. It’s been the best year of the past five.

Through 11 months of the year, Benton and Washington counties reported 5,593 home sales valued at $974.294 million. This is up 18.3% from a year ago and the best climate in six years for sellers, according to Paul Bynum, analyst with MountData.com.

NOVEMBER RESULTS
One of the three largest real estate firms in Northwest Arkansas – Crye-Leike – reports November sales totaled $27.5 million, up 33% from the same month in 2011.

The local market is performing a little better than the broader reach of Crye-Leike companywide. CEO Harold Crye said his firm’s total sales in November were $367.5 million, up 26% from sales reported for November 2011.

MountData reports November sales results were mixed among the two local counties. Benton County reported strong results and Washington County lost a little ground. Washington County agents sold 154 homes in November valued $24.576 million. This is down slightly from 156 units in 2011 and a value of $26.244 million.

Benton County agents did better, reporting 303 sales with a value of $56.229 million. This is up from 258 sales worth $43.507 million in the year-ago period.

Not only were the number of sales higher, but median home prices rose 12.6% on a square-foot basis in Benton County, according to MountData.com. In Washington County median home prices rose a modest 3.8% on a square-foot basis.

AGENT’S TAKE
Bob Downum, owner/broker with Weichert Realty Downum Group in Springdale, says the boost in median home prices is directly related to fewer foreclosures in the market place.

“It’s been a good year so far and November was very strong with our firm’s unit business rising 69% from a year ago. There have been more higher priced relocation purchases ($300,000 plus) this year and our agents have had very good success with open houses,” Downum said.

He said the firm’s total sales volume has risen from $18.7 million in 2011 to $31.5 million in November and he credits that to the hard work of his agents; noting the firm added four additional agents in 2012.

Downum said open houses were very well attended and tenacious agent follow-up has led to more closings.

George Faucette, CEO of the local Coldwell Banker franchise, said 2012 has been good for his firm, the largest in the region.

“Through today (Dec. 17), our firm has done close to $450 million in sales, that compares to $350 million last year, which is a nice 28.5% increase. I am hopeful, but still somewhat cautious about 2013, given what we have seen these past five years,” Faucette said.

Nicky Dou, executive broker for Century 21 Exclamation Realty, says “If the ending of 2012 is a preview of what 2013 has in store then I am extremely excited because 2012 was my best year in real estate since I began in 2001.”

Dou went on to say she has more closings in December than any other month this year, a time which is usually the slowest.

“The foreclosures and distressed property sales have really leveled off which has helped stabilize prices and we are even beginning to see prices on the rise,” she said.

Bynum reports median home prices through November were $145,000 in Benton County, up 20.83% from 2011 levels. In Washington County median home prices stood at $137,900 at the end of November, up 15.88% from a year ago.

Dou says she has seen new construction homes also make a comeback in recent months.

“I have sold two new construction homes in Benton County in the last 30 days,” she said.

LOWER INVENTORY
Bynum says greatly reduced overall inventory is making the market more attractive for sellers, and low interest rates — 3.32% — are also a sweet deal for buyers.

The market inventory in Northwest Arkansas stood at 3,456 homes at end of November. This is down 10% from a year ago and roughly half the glutted market high in August 2007.

Bynum also reports homes for sale are spending less time on the market across the region this year. The average in November was 60 days.

Dou says she’s sold many of her listings within the first two weeks on the market in past couple of months. She says one owner was recently shocked when the full-price offer came after just two showings in the first week of listing.

“They said ‘what are we supposed to do now’ – I laughed told them to sign the contract. They thought it was going to take at least nine months to maybe a year because that’s what all their co-workers were telling them,” Dou said.

Overall, Dou says she is “thrilled with the real estate market in 2012 and is looking forward and very optimistic for great things in 2013.”

LOOKING AHEAD
Downum says he is optimistic for 2013, but remains cautious about the potential loss of the homeowner interest deduction, which is being debated on Capitol Hill as legislators work to reign-in government spending and revamp certain tax deductions ahead of 2013.

“This would be a blow the consumer confidence that is needed to keep the residential market in full recovery. I hate to think what the impact would be on the mind-set of those young folks who are still waiting to establish a household,” Downum said.

Faucette agreed, saying he does expect some scale-back or gradual decrease to the full mortgage interest deduction as it stands now.

“I don’t think the entire deduction will go away at once, in my wildest dreams I can’t imagine that,” he said.

The agents agreed the market, while stronger in many respects. is not well enough to withstand a blow of that magnitude when it comes to buyer sentiment.

The National Association of Realty estimates there is some 1.2 million households that should form in 2013, these are predominantly millennial generation adults between the ages of 18 and 34.

Faucette said this generation already doesn’t hold homeownership at the same level of importance as earlier generations. The tax deduction is a perceived benefit that often woos potential homeowners off the fence.

Real estate marketing firm, Trulia.com. shared its  2012 American Dream Survey found 43% of millennials are already homeowners but 93% say they expect to purchase a home at some point.

“Millennials have been shaken, not scarred by the housing bust,” says Jed Kolko, Trulia’s chief economist. “But many of them think today’s low prices and low mortgage rates will last. They may be in for sticker shock if the cost of home ownership has returned to normal levels by the time they’re ready to buy.”

Home Sales (January through November)
Benton County
2012: 3,513 units, $629.930 million
2011: 3,322 units, $519.917 million
2010: 3,005 units, $494.061 million

Washington County
2012: 2,080 units, $344.211 million
2011: 2,114 units, $309.347 million
2010: 1,914 units, $298.795 million
Source: MountData.com

Median Sales Price (January through November)
Benton County
2012: $145,000
2011: $120,000
2010: $129,900

Washington County
2012: $137,900
2011: $119,000
2010: $129,000
Source: MountData.com