Editor’s note: The following commentary appeared in the March 16 edition of the Northwest Arkansas Business Journal.
Recent reporting would lead most people to believe the Washington County housing market is in fabulous shape and that everything is selling. While there are some bright spots (new single family houses under $250,000 and single family houses close to campus, Dickson Street and the downtown square), there are plenty of properties that are not selling.
Here are some of my observations and advice:
- Student housing is overbuilt. We can already see signs of significant softening with the new mega-student housing projects. We have too many expensive new four-bedroom apartments for affluent students from the Dallas-Fort Worth area, while at the same time, university enrollment has taken its first dip in 20 years. And we are seeing fewer Texas students.
- There are too many new houses on small lots priced from $500,000 to $600,000. Couple this excess supply with garage-centric, earth tone-colored builder designs that look exactly like they came out of 2004, and it’s no wonder they aren’t selling. Traditional design is one thing, but haven’t we had enough craftsman-styled tapered columns by now?
- We have too many multifloor expensive townhouses in town. When you consider the typical buyer who wants to live close-in — and can afford to — is at least 55 years old, it baffles me why developers would keep building narrow units with too few windows and bedrooms on the second and third floors. No wonder they don’t sell. Older people want single-floor living.
- We have too many modern, expensive houses and townhouses in south Fayetteville. When you go modern, you immediately lose about 95% of the market for the people who can afford houses of at least $400,000. When those units are built in the areas with the highest crime rates, you lose most of the two-income families with children that could actually afford to buy them. When it costs no more (and maybe even less) per square foot to live in the suburbs with the best-rated schools, traditional designs, larger yards and less crime, it’s no wonder sellers are having a tough time finding enough urban pioneers to buy these expensive south Fayetteville homes. Most are being rented out. What is needed and does sell is smaller/more affordable housing units for first-time buyers down there.
- We still have opportunities because people need places to live. Downtown Springdale is up and coming and could be the next south Fayetteville because it’s funky and affordable but has a better town center with new brew pubs, shops and more that appeal to younger buyers.
- Design-wise, people today want white houses with dark bronze windows. Traditional exteriors (not builder interpretations of “craftsman”) with modern, open interiors. Large master baths and closets. Kitchens with islands you can eat at. First-floor master bedrooms. Large side- or rear-entry garages. Fenced backyards for kids and dogs. While you see some of this, not enough of it is small enough to be affordable for the preponderance of buyers. And when will builders here stop using the cheapest HVAC systems made, installing inoperable windows in all but the bedrooms where they have to open by code, and rough cedar columns on houses that shouldn’t have them?
And when will they stop using the “peel and stick” fake rock, or even worse, brick applied over the lower 2 feet of house and foundation where it can create water problems and future rot?
Dang. I’m out of space here. And I’m just getting started.
Mark Zweig is the founder of two Fayetteville-based Inc. 500/5000 companies. He is also an executive in-residence teaching entrepreneurship in the Sam M. Walton College of Business at the University of Arkansas. The opinions expressed are those of the author.