By a wide margin, Fayetteville accounted for the most residential building permits issued in Northwest Arkansas through the first seven months of the year.
Statistics gathered from each city by the Northwest Arkansas Business Journal show there were 441 single-family building permits issued in Fayetteville through July. That’s up a whopping 73% from the same period of 2017.
Bentonville issued 292 residential building permits through July this year, followed by Rogers with 230 and Springdale with 172. Fayetteville’s residential building activity the past three years has largely been unchanged, according to historical data. Matthew Cabe, the city’s building safety director, expected similar numbers in 2018.
“We surpassed last year’s numbers in many building and permitting categories by the end of the second quarter,” Cabe said. “This was not on our radar.”
On the other hand, the average value for residential building permits in Fayetteville is $241,622, the lowest value among the region’s four largest cites.
“We are seeing west Fayetteville continue to develop at a rapid pace with more affordable housing going up,” said Stuart Collier, principal broker and owner of Collier & Associates of Fayetteville. “Which is what we need in a bad way.”
Collier said land prices in east Fayetteville and downtown are too expensive for builders to make profit on affordable housing.
Bentonville continues to be the city with the highest valued home. The 292 permits issued in the city through July have a combined value of $109.47 million. That’s an average of $374,901 for each permit, an increase of 24% from last year, and a 55% increase from 2015.
“That’s certainly not great news for the affordable housing issue,” said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas. Jebaraj pointed to the “median multiple” approach as a good metric to gauge the affordability of housing in a given market. It involves taking an area’s median home price and dividing it by the median household income. For example, if the average income was $50,000 and the average house cost $250,000, the median multiple would be 5.
“If you are around [a median multiple of] 2.5, that’s considered affordable,” he said. “Much more than 3, you’re looking at people who are buying homes they can’t afford. It’s between 4 and 4.5 in Washington County and 3 and 3.5 in Benton County. Certainly the median income is higher in Benton County.”
Springdale is down for the year in both number of permits (172) and combined value ($45.5 million), but is up about 5% ($264,548) in the average value of each permit. Residential building continues to experience a resurgence in Bella Vista, where city officials issued 171 permits through July this year with a combined value of $44.13 million. That compares with 106 permits with a value of $28.21 million in the same period last year, 57 and $15.3 million in 2016 and 37 and $9.97 million in 2015.
Jebaraj also gave a broader analysis on the growing number of residential building permits.
“It matches the number of people we’re adding,” he said. “The population of Northwest Arkansas is growing by about 1,000 [people] per month, and 70% of that is people moving here. They’ve got to live somewhere.”