Northwest Arkansas real estate market sees another banner year

Agents in Benton and Washington counties sold 7,314 homes last year, pushing the cumulative volume to $1.392 billion and marking the region’s best performance since 2006, according to Paul Bynum, analyst with MountData.com.

The nearly $1.4 billion in volume was up almost 6% from the prior year, and down about 10% from 2005, the record year for Northwest Arkansas, Bynum said. Overall, he classified 2014 as the third best year for the region.

Benton County reported the majority of activity at more than twice the size of neighboring Washington County. Sales in Benton County crept closer to the $1 billion mark ending up at $915.26 million. Sales rose 7.7% year-over-year.

Part of the increase was the banner year reported in Bentonville with sales growing 10% year-over-year. Bella Vista also rang up an 8% increase in sales last year, while sales volume in Rogers was flat against 2013 levels. Following are the 2014 and 2013 numbers for the three cities.
• Bella Vista: $135.801 million, versus $127.498 million
• Bentonville:$272.954 million, versus $247.571 million
• Rogers $280.100 million, versus $279.526 million

In Washington County total sales volume grew to $476.302 million during 2014. Agents sold 2,643 homes, which was down from 2,672 sold in the prior year. Fayetteville posted  a 2% drop in unit sales while total volume was virtually flat. Springdale posted the biggest decline in the region, down 6% year-over-year.
• Fayetteville: $285.996 million, versus $287.180 million 
• Springdale: $122.010 million, versus $129.202 million

George Faucette, co-owner of the local Coldwell Banker franchise, said the market was off slightly in 2014, primarily due to fewer closings in November and December compared to prior years. 

“We have not compiled our final 2014 stats but my projection is that our company will also be off comparatively. In my opinion, this is due to two factors, a leveling off of the pent-up demand seen in 2013 and a tighter inventory of home in most price ranges in the latter half of 2014,” Faucette said.

Nicky Dou, a broker with Keller Williams in Bentonville, said she posted a great year closing 105 deals ringing up $29.65 million in sales, a gain of 160% over 2013, which was the third best performance in the region.

Joseph Hayes, also with Keller Williams in Bentonville, tallied up 172 sales valued at $35.48 million. Dou and Hayes were formerly with Coldwell Banker before joining Keller Williams in 2013.

Other top sales agents in the region for 2014 include:
• The Limbird Team at ReMax had 337 transactions and total sales of $56.4 million.
• Kendall Riggins of Lindsey & Associates with 191 deals worth $28.84 million.
• Toby Crawford Real Estate had 90 sales valued at $26.021 million.

INVENTORY UPDATE
Bynum reports that at the end of 2013 the region had 3,001 homes listed for sale. This inventory was down to 2,590 at the end of 2014. The existing market inventory is down almost 400 homes from 2013. 

The new construction inventory is beginning to rise as new homes enter the market, Bynum notes. All cities show a substantial increase in new construction inventory over 2013. New construction inventory is up 26.8% year-over-year.

Cumulatively, the new and existing home market inventory decreased to 3,059, down from 3,371 the prior year.

Bynum said there is always more caution for building new homes in light of the 2008 meltdown. But he said the increased new construction activity in 2014 was warranted given adequate buyer demand. He said 2014 was a year for rebuilding some of the depleted inventory levels across the region.

Builders added 469 homes to the new inventory last year, but another 992 new homes were sold. Areas that have the demand capacity to keep building based on the current months supply of inventory include Bentonville at 5.4 months inventory, Fayetteville with 5.7 months, and Rogers with 4.4 months. Bynum said a balanced market lies in the 5-to 6-month supply of inventory, anything less favors the seller and anything more favors the buyer.

FORWARD LOOK
Faucette said he believes 2015 will be stronger than 2014 and possibly even 2013. He said the brisk growth in the regional job market is likely to result in increased demand for housing.

“The exceptionally low interest rates for home loans, as well as the lower cost of mortgage insurance for FHA loans are also a plus. The faster pace of single family new home construction will alleviate some of the supply issue,” Faucette said.

Bynum said Northwest Arkansas continues to be about 27% below the national unemployment rate, and jobs are a leading indicator for a positive real estate market. He adds the low interest rates have been a positive for the market, although rates are expected to increase in the back half of the year. Rates stood at 3.8% at the end of 2014, and estimates are that rates will push toward 5% by the end of this year.

Dou also is bullish on her prospects for 2015. She continues to see listings sell quickly, particularly in favored areas of Bentonville. 

Nicki Rogers, an agent with Lindsey & Associates, said older properties in and near downtown Bentonville are the hot tickets. List prices on totally refurbished homes are holding at about $200 per square foot, sometimes going under contract immediately upon listing.

Tami Fagan, a Crye-Leike agent in Fayetteville, said 2014 was a really good year. Fagan said she did more partner listings and showings to give herself more time and reduce her earnings after the rude awakening she had when filing her 2013 taxes.

“I opted to work a little less. Partnering some worked out pretty good for me. I don’t see anything really holding back sales in 2015. It should be another good year for Northwest Arkansas real estate,” Fagan recently told The City Wire.

FHA CHANGES
Homeowners opting for FHA loans in 2015 will be paying less in mortgage insurance premiums after Jan. 26. 

The Federal Housing Administration recently announced a reduction to the annual mortgage insurance premiums for FHA backed mortgage loans. This is the first reduction after several increases that followed the housing bubble crash. The reduction will apply to FHA loans with case numbers issued on or after Jan. 26, 2015. For the majority of buyers, the rate will reduce from 1.35% of the loan amount to 0.85%, a pretty hefty reduction.

For FHA backed mortgage loans, buyers pay an annual mortgage insurance premium that is spread out through monthly mortgage payments. A $150,000 home purchase with FHA loan requires a 3.5% downpayment. The net mortgage amount of $144,750 is subject to mortgage insurance. Prior to Jan. 26 the homeowner’s mortgage insurance would be $1,954.12 annually which is $162.84 per month added to the mortgage payment.

With the lower rate of 0.85% the $144,750 mortgage is subject to a mortgage premium of $1,230 annually or $102.53 per year. This is a savings of $60.31 per month for the life of the loan. 

FORECLOSURE WRAP
Foreclosures continue to be a shrinking part of the NWA housing market. Irvine, Calif.,-based RealtyTrac reports 604 household properties in the two-county area had a foreclosure filing in 2014.

Benton County had 414 foreclosure filings on single property homes. Filings were down 64.7% from 2013 and 48.5% lower than in 2012. 

In Washington County there were 190 households in jeopardy of foreclosure last year. The foreclosure filings which range from defaults after 90 days of non-payment to trustee sale and bank repossession declined 68% in Washington County last year. Filings were down 61% compared to 2012, according to RealtyTrac.

There were 1.117 million U.S. foreclosure filings in 2014, down 18% from 2013 and down 61% from the peak of 2.8 million properties with foreclosure filings in 2010. 

RealtyTrac said the foreclosure filings in 2014 were the lowest annual total since 2006.

“The U.S. foreclosure numbers in 2014 show a foreclosure market that is close to finding a floor and stabilizing at a historically normal level,” said Daren Blomquist vice president at RealtyTrac.

Jim Long, agent with Crye-Leike Real Estate in Bentonville, said there are 229 foreclosure properties listed for sale in the region, which includes Crawford and Sebastian counties. The local foreclosure inventory is down slightly from 237 properties in mid-December.

HOME SALES SUMMARY
Benton County
Unit Sales
2014: 4,671
2013: 4,596
2012: 3,851

Sales Volume
2014: $915.260 million
2013: $849.665 million 
2012: $691.675 million

Median Sales Price
2014: $157,000
2013: $150,000
2012: $145,000

Washington County
Unit Sales
2014: 2,643
2013: 2,672
2012: 2,276

Sales Volume
2014: $476.302 million
2013: $473.546 million 
2012: $379.757 million

Median Sales Price
2014: $150,000
2013: $148,000
2012: $139,900