The possibility of rising interest rates, easier loan requirements and rising rental costs are helping to nudge more first-time homebuyers into the market, a dynamic that is playing out in the greater Fort Smith area, according to local agents.
MountData.com reports that agents sold 169 homes in the first two months of 2015, 9% more than sold in the year-ago period. The sales through February were valued at $20.847 million, up 5.6% from a year ago.
Average home prices are down slightly from last year as more first-time buyers and investors seeking lower-priced homes are among the two most active groups in the market this year, according to Cliff Warnock of Warnock Real Estate in Fort Smith.
Warnock said the average home price in the Fort Smith market is $123,660, which is close to the $123,356 noted by MountData.com at the end of February. Both are lower than $127,315 average price as of March 1, 2014.
He said there is pressure on average prices at this time of year because more first-time buyers and others using tax refunds for down payments are active in the market buying up the lower priced homes. Warnock expects to see more traditional buyers come out later this spring as they seek to sell and repurchase.
“I think 2015 is going to be really good year for the Fort Smith real estate market. Many of the right variables are lining up: the threat of higher interest rates, rising rental costs, improving job market, competitive prices and slightly looser qualifying requirements,” he said.
While there will always be ample demand for rental property, Warnock said investors buying up lower-end houses over the past few years have allowed them set the single family rental rates which continue to rise because of limited supply.
“Those who can make a down payment and qualify for financing can own their home cheaper than they rent today. This is helping to influencing the number of first-time buyers for the first time in several years,” he said.
With rents rising faster than incomes, many Millennials – a generational category of those born between the early 1980s and the early 2000s – are expected to start looking to buy homes of their own, according to Mark Zandi, chief economist for Moody's Analytics. A spike in the number of first-time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones, he said.
MountData reports Crawford County agents sold 79 homes through February, which was five more than sold last year. Total sales volume rose 4.8% to $8.755 million in the first two-months of this year compared to same period in 2014.
Van Buren almost lost its Rural Development loan eligibility at the end of 2014, but for now the city is still eligible, according to the federal website.
Warnock said homes are also selling because they are priced at a 15% discount to similar homes in Fort Smith. He said as the Fort Smith job market continues to strengthen that also help sales across the river in Van Buren for first-time buyers and those seeking more “bang for the buck.”
“Agents are still optimistic about Crawford County sales even without Van Buren’s eligibility for RD loans, (should they lose it). Buyers who need the 100% financing will just move a little further out to get a home that qualifies. That could benefit Alma,” Warnock said. “The RD program serves a purpose to help families with limited upfront capital buy property in a rural setting. Those who need it will find a way to buy a home." (The story previously incorrectly reported that Van Buren had lost its eligibility for RD loans which was to happen at the end of 2014. For now the city is still eligible.)
The median home prices in Crawford County were $105,375 through February, up 4.3% from a year ago. The median price per-square-foot was $65, which rose from $61 a year ago, according to MountData.com.
Fort Smith metro job numbers, however, are struggling. Fort Smith’s metro jobless rate did fall in December to 5.5%, but the number of employed in the Fort Smith region totaled 118,635 in December, down from 119,723 in November, and below the 119,964 employed in December 2013. The number of employed in the metro area is down 10.8% compared to the high of 133,061 in June 2006 – or 14,426 fewer jobs than the peak metro employment.
Home Sales Data (January – February)
2015: $8.755 million
2014: $8.348 million
2013: $4.683 million
Median Prices (per square foot)
2015: $20.846 million
2014: $19.733 million
2013: $19.022 million
Median Prices (per square foot)