Fort Smith market sees fewer cash home sales
by July 25, 2013 12:06 am 94 views
Home sales across Northwest Arkansas and much of the country are being fueled in part by all-cash deals, short sales and institutional investors, but the Fort Smith metro area is bucking that trend.
A new report from RealtyTrac revealed 30% of the home sales in June across the U.S. were all-cash. That was fairly consistent with the year-ago period. Statewide, cash deals were 29% of the real estate transactions in June. up from 24% a year ago.
Local cash deals represented 16% of homes sales in Sebastian County and 18% of the residential purchases in Crawford County during the month of June.
In both areas, cash transactions were down from a year ago – 29% and 32%, respectively.
According to RealtyTrac, institutional investors make up a small part of the Fort Smith metro area with 1% of sales in Sebastian County and 5% in Crawford County. These levels were comparable to investor activity a year ago.
Real estate analysts have said markets where investors and cash transactions have been heavy, home prices have risen. RealtyTrac indicated the Fort Smith metro area has not seen a rise a home in prices, like the majority of the nation. Without the investor activity helping to drive up demand, local median home prices declined 10% in June, according to RealtyTrac data.
The median home sales price in Sebastian County in June was $111,000, down from $123,500, a year ago. Median sales prices slid 5% in Crawford County to $112,000, according to the report.
Other areas in the state that have seen heavier investor traffic and higher home sales include Benton and Washington Counties. The Northwest Arkansas market has experienced an 8% jump in median home prices this year and investors make up roughly 25% of sales in the two counties north of the Bobby Hopper Tunnel.
Daren Blomquist, vice president with RealtyTrac, said a flurry of institutional investors and cash buyers flocked into the single family market about a year ago, pushing up prices and picking clean the best inventory available in many areas across the country.
He said this is not normal nor a sustainable recovery, but those local markets have been working through this changing dynamic.
“Rising home values should continue to unlock more non-distressed inventory while also pricing institutional investors out of more markets, which, combined with rising interest rates, will cool off the pace of price appreciation,” Blomquist said.
In markets like Arkansas where lingering distressed inventory is working its way back to listing, institutional investors and cash buyers are still lurking. However, the Fort Smith metro area showed no distressed sales during the month of June, according to RealtyTrac.
Diana Olick, a real estate analyst with CNBC, said investors are chasing distressed properties, when you find one, you will also find the other.
The Fort Smith metro area has had neither to help create more buyer demand in that market this year.