Fayetteville Arkansas, University of Arkansas--Old Main Overview

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

Sunday, March 21, 2010

Crystal Ball Look into the NW Arkansas Housing Market

Predicting what's going to happen in the NW Arkansas housing market is somewhat difficult. People always ask me if the market has hit bottom yet, but I can't really tell them, since generally speaking, prices are still declining.

For those who want to get the "best" deal, there are several factors consider:

1. If you are waiting for the market to hit bottom in NW Arkansas, I think it's close, but not necessarily there yet. It also varies by town.

2. Interest rates are still very low, but predictions are that they will rise this year. What this means is that if a house is cheaper a few months from now, but the interest rates are higher, the monthly payment may still be the same. If home prices begin to rise, and interest rates rise as well, buyers may not be able to purchase as nice a home for the amount they have qualified for. Thus, buyers who are serious about purchasing a home may want to do so sooner rather than later if they find a home they really like.

3. The first time home buyers tax credit of up to $8000 was extended at the end of last year, but to get it, buyers must have an accepted offer by April 30 and close by June 30. Buyers who already have a home and want to purchase another as their principal residence may get a tax credit of up to $6500. They must have lived in their current home for at least 5 of the past 8 years. Check the IRS website to get specific information about these programs.

4. Real estate purchases are normally considered to be long-term investments. During the recent housing bubble, investors and other speculators treated them as short-term investments because they could--prices were appreciating by double digit percentages. Now that is not the case, market adjustments have occurred or are occuring, and buyers need to plan to hold on to their real estate purchases for a longer time before selling.

Which brings me to an interesting article from CNN Money about
homes prices in NW Arkansas and whether it's a good time to purchase a home here.

According to their data, the market in NW Arkansas will hit bottom in the 3rd quarter of 2011 (i.e. next year). Also that there will be a 3.1% decline in prices from the first quarter of this year to the first quarter of 2011. A couple of observations about this data:

1. It refers to all of NW Arkansas, or the Fayetteville-Springdale-Rogers Metropolitan Statistical Area, which also includes part of SW Missouri and Madison County, in addition to Washington and Benton Counties.

2. I'm not sure where Moody's gets their data from, but according to sales in the NW Arkansas MLS (Multiple Listing Service), the peak was different in Washington and Benton Counties, and also differed by town. According to my data from the NW Arkansas MLS, Washington County median home prices peaked in the 3rd-4th quarter of 2006 whereas Benton County's peaked in early 2007. I suppose that if they got their data from county records and/or other sources which also includes homes not listed by a realtor, the aggregate could have been the third quarter of 2006.

Who knows when the bottom will occur? In any case, we won't know it happened until after the fact and we can look at the data. And then it will be too late--prices will already have begun to rise, and who knows about interest rates?

For more current data and an ongoing look at the housing market in NW Arkansas and nationally check out Judy Luna's daily "real estate tidbits" on her Facebook business page.

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