Fayetteville Arkansas, University of Arkansas--Old Main Overview

Fayetteville Arkansas, University of Arkansas--Old Main Overview
Overview of Fayetteville, AR

Monday, June 19, 2006

Looks Like the Adjustment Period is Here Too

It appears an adjustment period in NWA real estate has begun. Home prices are leveling out. There is a large inventory of homes for sale in the $200,000 and up category. I don’t believe prices will go down, but at the very least, I do not think they will rise as rapidly as they have in the past couple of years.

There are more homes to choose from now and buyers are taking their time looking. Even homes under $150K are staying on the market longer, where last year the good ones would have sold within a week or so.

Mortgage rates have been slowly but steadily rising and that affects home prices and home sales. When interest rates were at their lowest, many buyers who wanted to move up to a bigger, better home did so. Those people are now homeowners, not buyers. And for those who didn't buy, many are now staying in their current homes, since higher interest rates mean that they can purchase less house for the same money now.

What all this means to you depends on whether you are buying, selling, or staying put.

For buyers, it means more choices, perhaps a bit more home or extra amenities than they expected, and more time to make a decision.

For sellers, it means pricing the home realistically, perhaps doing a little extra sprucing up, and being patient.

For those staying put, the adjustment has no short-term effects. Home prices have traditionally increased over time and will no doubt continue to do so in the long term.

In a recent article, Parade Magazine stated “The wild housing boom of the past few years is over.” I would have to agree. The unprecedented, unwarranted increases experienced in some parts of the country are now coming down to more realistic numbers. And the high inventory of homes available in NW Arkansas, as well as higher interest rates, are contributing to an "adjustment" here as well.

Home prices in Northwest Arkansas have also risen significantly in the past few years but in more rational amounts than some of the “hot” markets such as San Francisco, Boston, Las Vegas, and Phoenix, where home prices have skyrocketed in just a few short years. A correction in that type of market is inevitable. It is also occurring here but on a smaller scale.

The thing to remember is that what happens in one part of the country doesn’t necessarily have any correlation to another part. In other words, the current adjustment in the real estate market will have many variations throughout the country. The traditional wisdom is that all real estate is "local" and that is certainly true here in NW Arkansas. Reading national headlines and statistics can cause undue concern. This adjustment period was not unexpected. The real estate market has always experienced swings and the current swing favors buyers.

People have not stopped moving to Northwest Arkansas. Good homes that are fairly priced continue to sell. But since there are more houses on the market, competition among sellers is higher, so the key is to price one's home at market value (or less) if a quick sale is needed. For buyers, there's a lot more to choose from.

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