Sep 29 2008
Arkansas average/median list prices and inventories for Sept. 29
Housing inventories — the number of homes for sale — rose a bit over the past in some Arkansas markets as average list prices continued to fall.
The Arkansas Realtors Association® releases a weekly average/median list prices and inventories report covering all new and existing, single family residences listed by Realtors® in the six counties in central Arkansas (Faulkner, Grant, Lonoke, Perry, Pulaski and Saline), the Fort Smith/Van Buren area (Crawford and Sebastian counties), the Jonesboro area (Craighead County in northeast Arkansas) and the two largest counties in northwest Arkansas (Benton and Washington). The report omits data from other markets for two primary reasons — it wouldn’t be practical to pull information from every multiple listing service in Arkansas on a weekly basis and the four markets, taken together, paint a fairly representative picture of the performance of housing markets throughout the state.
For the purposes of this discussion, it might be wise to click on the cumulative graphic at the top of this article and the raw data at the bottom. Both of those links will open in a new browser window or tab. An Excel version of the report can be downloaded right here.
Of the four markets surveyed, housing inventories and prices have continued to decline over the past three months. Throughout September, inventories declined only sharply but list prices, on the whole, declined slightly from a combined average of $229,236 at the first of the month to $227,636 at the end.
Inventories, meanwhile, dropped only slightly from a combined 13,831 units for sale at the first of the month to 13,812 at the end. What is more encouraging is looking at declines in inventories over the past three months. On June 30, there were 14,269 homes for sale in the four areas referenced in a report, and that total declined 3.2 percent by Sept. 29.
The most noteworthy decline in inventories has taken place in northwest Arkansas. Sales have declined the most in that part of the state over the past couple of years, but we’ve seen substantial drops in inventories there over the past three months — there were 6,861 homes for sale in Benton and Washington counties on June 30 and 6,533 on the market on Sept. 29. That adds up to a decline of 4.8 percent.
Declining inventories are encouraging, of course, as one of the problems in markets throughout the state has been an excess of homes for sale. Fewer homes on the market suggests more activity in the market and is certainly a reason to be hopeful. Of course, it could be that some homeowners are choosing to pull their homes off the market and that’s impacting inventory to a degree.
Whatever the reason, the fact that there are fewer homes for sale now than three months ago is encouraging, as is the fact average list prices are dropping. We’re not as concerned about why inventories are dropping just so long as they are and remain hopeful that housing markets are getting closer to reaching that sweet spot where supply and demand are in equilibrium.
I was curious and wanted a real estate expert’s view on something Biden said last night.
He mentioned that if someone has trouble paying for their house, the bank should lower the interest AND the principle. My first thought was that this will either drive up interest, or make mortgages even harder to get because now the bank not only risks profit, but principle. What do you think?
I’m not sure about that. Here’s why. Right now, banks are struggling with foreclosures and they’d much rather work something out on a home than have it slip into foreclosure. When a home goes all the way through foreclosure, banks lose a lot of the loan value, so other arrangements are preferred.
For example, we’re seeing a lot of short sales right now — a sale in which a bank agrees to forgo some of the amount owed under a mortgage so as to avoid foreclosure. The question banks are asking right now is this — will we lose less by avoiding foreclosure? If so, the bank may well go for an alternative arrangement.
I don’t know that we’ll see an increase in interest as those rates are tied closely to the bond market and have remained low. Why? People are moving their cash out of stocks into bonds and that drives down rates on bonds. Mortgages move right along with bonds, so there you go.
What I do think we’ll see out of necessity is that mortgages will, indeed, be harder to get. That has nothing to do with alternate arrangements. Instead, banks are tightening up their lending requirements so as to stop the problems they’re struggling through right now.
Of course, I could be completely wrong!