Multiple offers, higher appraisal values, and a single day on the market are just a few signs of a glowing hot local real estate market in Benton and Washington counties.
In the first seven months of the year, agents in the two counties sold 4,752 homes. Unit sales are up 13.43% in Benton County, and trending more than 15% higher in Washington County. Total sales volume for the two county area is up 21.4% to $944.027 million. Local agents say the region will top $1 billion in sales before the August report is released. The region posted $1.391 billion in home sales in 2014, but didn’t surpass $1 billion until early October.
In Benton County, sales volume through July has doubled since 2012. In Washington County sales volume has risen 53% since the same period in 2012, which was a decent year, according to MountData.com.
George Faucette, CEO of the local Coldwell Banker franchise, said through July, their sales are up a little over 10% this year versus 2014. He said the pace has accelerated substantially since May.
"It may slow slightly for the remainder of the year, but we are projecting an increase for the full year of between 10-12%. Given our large starting base, we will be very pleased with that," Faucette said.
While interest rates are expected to move higher this fall, Faucette said he expects the increase to be modest this year.
"My estimate is somewhere between 0.25% and 0.50%. If that is accurate, that means long term rates will top out, at most, 4 1/2%," he added.
July home sales totaled $176.741 million in the two-county area, rising 21.5% from $145.453 million reported a year ago. Agents sold 525 homes in Benton County and 333 in Washington County last month.
Tami Fagan, agent with Crye-Leike Real Estate in Fayetteville, said the market rally is about as good as she can stand. Fagan, often a top 10 producing agent in her company, said two weeks ago she listed a home in Fayetteville on a Sunday afternoon. Another agent sent her an offer that evening before the listing became public on Monday morning. She said within minutes of the public listing on Monday she had four showings scheduled and two more offers had come in. The sellers accepted an offer that same day.
Lonnie Johnson of Bella Vista purchased his home in late 2012 and began updating the house with new flooring and a kitchen overhaul. He listed the home “for sale by owner” in early July. Johnson said the first couple that looked at the house made an offer and the deal recently closed. He couldn’t believe it sold so quickly at the price he wanted. He is relocating to Oklahoma and the new buyers are moving in from Oklahoma to be near their children in Fayetteville.
“That is what we are seeing in this market with homes priced to sell. Prices overall have come up, even in troubled neighborhoods like east Springdale and west Fayetteville that a took a beating in recent years. The biggest problem we have now is finding enough listings for the buyers in our market,” Fagan said.
She also closed a starter home in east Springdale last month that the owner had purchased as a foreclosure five years ago.
“She got it for a good price, fixed it up a bit, did some landscaping and she just sold it for a nice little profit,” Fagan said. “People who purchased five or six years ago are now able to sell and move up again. This has been a long-time coming after prices fell so dramatically after 2007 and 2008.”
She remembers not long ago when sellers were leaving the closing table with $12 profit and even a $50 profit was hard to muster as many sellers had to ante up money.
Paul Bynum, market analyst with MountData.com, reports that average home prices in Benton County this year are $202,304, up 6% year-over-year. The median home price of $168,750 has risen 11% in the same period. In neighboring Washington County, it’s the same story. Average home prices for the year at $192,479, up 5.9% compared to 2014. The median price has risen 8.6% to $163,000.
Local agents say there are two reasons why prices are moving higher. One is supply and demand – there simply is not enough listings on the market to satisfy the growing number of buyers in an area that continues to grow jobs and population at more than twice the national rate.
Fagan said she continues to work with buyers who move in from out of state. She said buyers coming from larger U.S. metro areas can’t believe the value they find in local home prices.
“I represented one couple out of California that sold a 1,000-square-foot condo there and bought a 2,800-square-foot home in Shadow Valley on the golf course for less money,” Fagan.
She said several appraisals her buyers have gotten in recent months are higher than the purchase price, which is another sign of a strong market.
HIGHER LAND COSTS
Higher new home costs and elevated land costs also push overall home prices upward. During the real estate bust of 2007 and the recession that ensued in 2008 local banks were left holding millions of dollars in partially developed residential projects. Over the past seven years the banks have successfully moved a lot of that property off their books. They did so by selling smaller tracts to select builders at lower discounted prices for spec homes that were then sold.
Bob Taylor, president of Parkway Bank in Rogers, said the number of those lots have dwindled to nearly nothing and new home construction is slowing a bit because of it. He said there are some new residential developments in the works, but those will come at a higher price than the discounted lots builders have been buying in recent years.
A builder with Cornerstone Construction in Bentonville said prices could escalate as much as 30% next year and in 2017 on new homes in new subdivisions.
HOME SALES (January – July)
2015: $604.687 million
2014: $500.528 million
Median Sales Price
2015: $339.340 million
2014: $277.688 million
Median Sales Price