The volume of homes selling in Arkansas is rising as consumers take advantage of lower home prices and close to record low mortgage rates, but housing prices are declining and are forecast to drop in most areas of the state again in 2012.
In the state capital, Little Rock, prices on homes have gradually been slipping over the last two years as an over supply of homes and foreclosures weigh on the market. Home sales haven’t been hitting any new records, keeping close to about the same from month to month as Little Rock gets used to a new normal in real estate. Sales should chug along again in 2012 on forecast housing deflation of 3.6%.
Fort Smith is the second largest city in Arkansas. As home sales slowed after the real estate bubble burst prices fell only to recover when the federal tax credit spurred sales, especially to first time home buyers. Since the expiration of the credit sales eased and are expected to remain sluggish through most of the year on forecast deflation of 3.3%.
Home prices are particularly hard hit in Fayetteville and most of the rest of surrounding Washington County, where underwater homeowners are walking away from homes in increasing numbers. Foreclosures are hurting housing prices in the area and are projected to increase as more mortgage holders lose confidence in the U.S. economy and getting back to anything close to what they paid for their homes.
The grip on their homes for many homeowners is falling as home values, pressured by foreclosures tumble. Fayetteville home values are forecast to drop another 5.6% in 2012.
The housing market in much of Hot Springs is composed of vacation homes. Second home markets throughout most of the nation are
sustaining major losses as mortgage holders pay their primary residence mortgages before a monthly loan on their vacation home. Hard times force people to make tough choices.
Foreclosures in Hot Springs are expected to increase. Bank assisted short sales should also rise as lenders’ realize that Hot Springs shadow inventory of homes are not only defaulting on mortgages in growing numbers but are giving up on owning property they feel they paid too much for. Housing prices in the community are forecast to drop another 6.4% in 2012.
In the northern corner of the state in Jonesboro, home sales are sputtering along as the market slowly moves towards a recovery. Prices fell for months before slowing down and may be close to reaching a bottom sometime in 2012. Home prices are forecast to slip, however, 2.0% for the year.