Straight Shooting Real Estate

A bit of a trend that we’ve seen this year continues to play out in Arkansas — average list prices on homes for sale are increasing while inventories continue to decline.

The question, of course, is why are list prices increasing while the average sales price in Arkansas continues to recover? Further, why are inventories (the number of homes for sale) declining?

According to Realtors throughout Arkansas, the answer has everything to do with foreclosures and first-time homebuyers. For one thing, the number of foreclosed properties on the market has dropped compared to last year as they are being purchased rapidly by investors as well as families and individuals looking for a good deal. Let’s not forget that building has slowed throughout Arkansas, meaning there are less new homes in inventory than there were a year ago.

With the number of foreclosures rapidly exiting the market and the number of new homes decreasing, it’s no wonder inventories have generally decreased throughout Arkansas. Also, there has been more activity in lower and middle price ranges as first time homeowners — attracted to the market by low interest rates and the first time homebuyers tax credit — are snapping up homes in those price ranges. Indeed, the National Association of Realtors tells us that almost half of all buyers are first timers and those people shop in the lower and middle price ranges.

With increased activity at the lower and middle price ranges, then, we’re seeing upward pressure on prices as there are plenty of homes in the upper ranges — around $200,000 and above in Arkansas. There are some exceptions to the rule, of course, but those generally involved flat growth in either list prices or inventory — on the whole, we’re seeing list prices rise and inventories fall.

Every week, the Arkansas Realtors Association collects and distributes the average and median list prices and the number of homes in inventory (homes for sale) for single family, new and existing houses in four markets. Those markets are Benton and Washington counties in Northwest Arkansas, the Fort Smith/Van Buren areas (Crawford and Sebastian counties) in west Arkansas, the Jonesboro area (Craighead County) in northeast Arkansas and the Little Rock-North Little Rock-Conway Metropolitan Statistical Area (Faulkner, Grant, Lonoke, Perry, Pulaski and Saline counties) in central Arkansas. While those four markets don’t tell the whole story, looking at them together gives us a pretty good idea about developing trends in markets throughout the state.

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