Arkansas has one of the strongest economies with one of the best employment rates in the nation, which is propelling its housing markets to improving conditions much sooner than most of the U.S. Home sales haven’t been setting any records, but near record low mortgage rates have kept most markets active with homeowners who are able wait out the rest of the downturn. A recovery should be underway sometime in 2011.
Arkansas has been impacted by the real estate collapse much less than most other states. Sales declined after the federal home buyer tax credit expired, producing a rise in homes listed for sale. Despite the drop, housing values are starting to show signs of stabilizing in Little Rock, the state’s largest metropolitan area. Fewer subprime and Alt-A mortgages were sold there, which will produce a safety net for the market. But job losses and underwater mortgages are contributing to more foreclosures.
Arkansas fluctuates to rank in the 20-something area of states in the foreclosure crisis on a monthly basis and they will have a serious impact on home values until the inventory is cleared and markets are able to fully stabilize. Foreclosures are producing many bargain priced home sales, where bankers slash prices to sell-off troubled properties. Little Rock is forecast by Housing Predictor to see average home prices decline just 2.4% in 2011.
Down the road, in Hot Springs vacationers have slowed the pace of things a bit from their real estate hey-days. The second home market has slowed to a crawl like most second home markets and many homeowners aren’t showing up quite as often as they were. A tough economy is changing things, but low mortgage rates are keeping at least a volume of sales moving forward.
The fallout from the financial crisis has hurt Hot Springs economy and the foreclosure crisis is making things tough for the real estate market. However, there is some comfort for locals that not all of its market is suited solely for second home owners.
Hot Springs should see a healthier volume of sales towards the spring time and sustain only minor deflation for the average home of 3.1% for the year.
In Fayetteville, the University of Arkansas has actually helped the housing market as students’ parents came forward to purchase income property at lower prices in hopes they will make a profit on foreclosures. Before that developed after the market was in a free-fall as students and investors walked away from homes like never before.
The bottom to the market is finally beginning to show development, but another round of foreclosed properties will have to be sold off before it fully develops. Look for investors to pick those homes up at lower prices before the market stabilizes, and that should take at least most of the year. Fayetteville is forecast to average 3.4% deflation in 2011 as the market makes inroads towards stabilization.
Fort Smith is the second largest city in Arkansas trailing Little Rock. The federal tax credit spurred home sales but they slowed after its expiration. Any sort of stabilization will have to wait a while, however, as sales remain sluggish and are expected to remain that way as the economy slumbers through the financial crisis. However, higher employment will push Fort Smith through the tough times much better than many other areas of the country. Home values should begin to see signs of an improvement towards the middle of the year, but are forecast to experience average housing deflation of 2.1% in 2011.
Lots of new home building may end up hurting the Jonesboro housing market. Aggressive mortgage lending practices that weren’t seen everywhere else in Arkansas were widely marketed in Jonesboro, and local banks were happy to accommodate just about anyone who could sign their name for a mortgage. As a result foreclosures are more common and home prices are hurting. The over-supply of inventory coupled with lower priced homes will have to be sold-off before the market reaches a point to recover. Average home prices are forecast to slide another 3.0% in Jonesboro during the year.