Home sales haven’t exactly been flying in Arkansas, but sales rose in the first part of the year thanks to the home buyers’ tax credit only to slow after the expiration of the federal credit.
In a state that’s been less affected by the real estate crash than most, prices on homes have still been declining, but only marginally. The tax credit fueled the market for a time, but then ran out of gas as buyers became reluctant over the uncertain economy, despite record low mortgage rates. Even in the center of the Deep South in Arkansas economic jitters trouble the housing market.
Fewer subprime and adjustable rate mortgages sold to home buyers during the boom have contributed to less foreclosure activity in Arkansas, which is ranked at #21 for foreclosures nationally. Comparatively low unemployment and business growth are aiding the state in its recovery.
In Little Rock, the state’s largest metropolitan area most of the businesses that were having trouble making it have already closed, and the rest seem to be working through the tough economy. But higher foreclosures have contributed to bargain priced homes as bankers slash prices to sell-off their troubled inventories, keeping a lid on any sort of market appreciation.
The slowdown could last into next year as a pent up inventory of properties already in the foreclosure pipeline but not yet taken back by bankers’ impacts home prices. Little government aid is expected to trigger momentum in the market. Little Rock is forecast to see average home prices decline a slight 3.1% by year’s end.
In posh Hot Springs, once known for being a strong second home market, vacationers are flocking to the area, and some are looking for bargain priced deals. The fall out from the financial crisis led to a foreclosure mess in Hot Springs , which had some of the highest priced real estate in the region until the economic dip. Home prices are projected to sustain the downturn with only an average of 4.2% in housing deflation in 2010.
Nearly hidden away in north-west Arkansas, Fayetteville was in a major free-fall for a time as investors walked away from homes that became to expensive to hold onto. But another round of real estate investors has filled their place buying up bargain priced homes to rent out, halting the free fall. Fayetteville should get through the rest of 2010 at only 2.7% deflation for the year.
In Fort Smith, home prices have taken a gradual decline, but not at an exaggerated pace like areas that saw double-digit appreciation during the boom. The tax credit helped the market rebound for a short time, but then things slowed down again, and they’re expected to remain that way for sometime. Housing prices in Fort Smith are forecast to deflate 3.4% for the year.
Across the state, in Jonesboro new creative mortgage products triggered a foreclosure crisis, but investors came into buy up the lower priced homes with owner occupants, hurting local home values. Newer homes were more heavily impacted as a result of aggressive lending practices and mortgage brokers that sold loan products that just about everyone agrees now should have never been marketed. Home values continue to slide as a result and are forecast to decline 3.9% on the average Jonesboro home by year’s end.