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The new Millken Report has NW Arkansas continuing in the top 10 nationally as a vibrant economic zone. However, there were two areas of concern for possible future trends in the area: a low rating on technology output growth (a positive rating on this factor leads to higher paying professional and high-skill jobs) and increased housing values, which are now at the national average. The two trends, together with the strong job growth rating, points to a strong economy with low unemployment. But that job growth is and will continue to be of lower paying jobs which require less education. This, in my mind, hints at salaries for the average working person not keeping up with the cost of housing, thus creating a potential crisis in affordable housing.
When NW Arkansas topped the Millken Report a few years ago ahead of Las Vegas, the region catapulted to the top of the national radar in many respects. In the real estate market all of a sudden, in addition to local investors, there appeared investors from all over the country looking for “reasonable” investment property, beginning the upward exponential curve in prices for low-end homes and multi-family properties.
What happened was that many of the older existing homes, previously priced under $100K, began creeping upward in price as investors competed with first-time and low-income home buyers. Homes in that price range became smaller and shabbier as prices continued to rise significantly over the past couple of years. Now it is almost impossible to find a livable home for under $130K. Most homes in that price range either need work or are very small or both.
Sometimes these small fixer-uppers are even priced higher per square foot than nicer, larger homes. As recently as 3-4 years ago (before NW Arkansas was #1 according to the Millken Report), an older home in Springdale usually was listed for and sold for under $55 per square foot in the under $100K price range. Now these same homes—many in barely livable condition—are listed for and sell for over $85 per square foot. Some even sell for over $100 per square foot if they are in excellent condition.
On the other hand, larger, older homes in the $150K-$200K price range--completely remodeled--are being listed and sold at between $75 and $85 per square foot. But a home like this is not a suitable “rent house” and there is still a lot of building going on in this price range. The law of supply and demand applies here.
A contributing factor is that because of escalating land prices and higher construction and development costs, almost no builders are making small “starter” homes any more. As these costs increase, the new starter homes are now larger than they were previously, but they also have significantly higher price tags. It is no longer possible to acquire a home like this for under $100K, whereas about 3-4 years ago there were several builders offering such new homes as low as $75K. But such homes are also great rent houses. With the increased competition from investors as well as the lack of construction of new homes at affordable prices, first-time and low-income home buyers are having a tougher time finding adequate housing.
Even rental prices are rising as a result. In 2002 an average newer duplex with 3 bedrooms on each side in east Springdale was listed and sold for about $120K or less, depending on condition. Rents for those duplexes were about $550-$575. Now rents have risen to between $600-$650 for those units, and those same duplexes are listed for sale at $175K or above and selling for a minimum of $165K. Even some 2-bedroom units are selling for $165K. And the new duplexes being built are listed at $200K or above. Supposedly these can be rented at $850 per side per month, but I wonder….
In any case, because home prices on the low end and multi-family properties are now so expensive due to increased demand and low supply, rents are also rising as units are sold.
Is affordable housing in NW Arkansas a thing of the past? I hope not.
Sunday, February 26, 2006
Expanded Region Slips to 8th Place in Milken Rating
Northwest Arkansas’ slip from No. 7 to No. 8 in the Milken Institute’s rating of the nation’s most vibrant economies for 2005 is a cause for celebration rather than concern, state economists say.
In the rankings released February 22, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area (MSA), which includes Bentonville, ranked in the top 10 of the largest 200 cities for the third year in a row. The area made the No. 1 spot in 2003, then dropped to No. 7 in 2004. In 2002, the MSA ranked 23 rd in the top cities list.
The nonprofit Santa Monica, Calif.-based think tank ranks the nation’s metropolitan statistical areas for the best overall economies each year. Researchers base the rankings on several criteria, including job and wage and salary growth over the past five years. The institute helps business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity, according to its Web site.
Lorna Wallace, a Milken Institute research fellow and senior staff member, attributed the drop to No. 8 to the U. S. Census Bureau’s addition of Madison County and McDonald County, Mo., to the MSA. The two counties were not considered in the Milken study last year. The Milken Institute relies on the Census Bureau’s definition of metropolitan statistical areas for its study groupings.
“The Fayetteville-Springdale-Rogers MSA has a robust economy that outshines the rest of the state and most of the country,” Wallace said. “Its job growth rate by far exceeds the national pace.”
Wallace cited Bentonville-based Wal-Mart Stores Inc. ’s heavy influence on the regional economy for both positive and possible future negative factors. She also cited the presence of other national-level employers such as J. B. Hunt Transport Services Inc. and Tyson Foods Inc. and the University of Arkansas, a strong research university, as positives for the area.
The next-highest ranked larger metropolitan area in Arkansas was Little Rock-North Little Rock, ranked No. 94 overall and up from No. 106 in 2004. The city’s lowest sector ranking was in job growth, at No. 168 with 0. 24 percent. Fort Smith also ranked higher this year, moving up to No. 154 from No. 155 in 2004.
Three Arkansas MSAs were included in the Milken listing of the best 179 small cities. Hot Springs was ranked at No. 69. It was not ranked in 2004. Jonesboro ranked No. 99, down from No. 64 in 2004. Pine Bluff was ranked at No. 144, down from No. 94 in 2004.
Mitch Chandler, director of communications for the Arkansas Department of Economic Development, said Northwest Arkansas ’ ranking for the third year shows that the area’s growth is a proven trend. “This shows the phenomenal and consistent growth of the area.” he said.
Job and wage growth are the strongest contributors to the listing, said Jeff Collins, director of the Center for Business and Economic Research at the Sam M. Walton College of Business.
The Walton College is part of the University of Arkansas at Fayetteville. “Job and wage growth is a 15- to 20-year trend, not a one- to two-year trend,” Collins said. “Given that this measures the entire country on the same data, it gives a lot of validation to be listed in the top 10 from year to year.” He predicts that the region will continue to do well with those growth drivers in place. The region scored its highest ranking in the five-year wage and salary growth category, taking the No. 3 spot. It was ranked 14th in one-year wage and salary growth. The five-year job growth ranking was 7th and the one-year job growth was ranked 23 rd.
WEAKEST LINK:
The region’s lowest ranking — No. 154 — was in the area of technology output growth. Collins said the high-tech industry is one in which the state traditionally performs poorly. “Employment opportunities for Arkansas seem to be overly weighted to the lower educated and lower-paying jobs,” he said. And added that even the University of Arkansas ’ efforts to push technology-based business is not enough to push the state out of the lowest levels of technology development. “We still don’t attract a lot of research and development activity, which is the precursor to higher-wage industries,” Collins said. “The UA is still too small in this area. Larger universities can get concentrations of engineers and scientists who can cooperate and collaborate on research.”
HOUSING CONCERNS:
Milken’s Wallace also cited the increased housing values as a growth factor in the region, a positive indicator of the present economy but a possible future concern. “Housing rates and values are near the national level,” she said. “That may pose a risk going forward.” Unless other economic indexes also rise to the national level, increased interest rates or a slowing of the construction rate will influence the affordability of housing in the region. Collins said the housing component is a relatively small sector in the Milken Institute’s ranking data. “But there is some disconnect between supply and demand in housing,” he said. “While I have some concerns about segments in the market, there is still opportunity for growth and profit in housing after careful planning and consideration.” He said the national housing values really don’t contribute much to the local housing market. “The people who are moving in here and buying houses are already paying the national rates,” he said. “This doesn’t affect them.”
Condensed from: NWA News, Arkansas Democrat Gazette, February 23, 2006
In the rankings released February 22, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area (MSA), which includes Bentonville, ranked in the top 10 of the largest 200 cities for the third year in a row. The area made the No. 1 spot in 2003, then dropped to No. 7 in 2004. In 2002, the MSA ranked 23 rd in the top cities list.
The nonprofit Santa Monica, Calif.-based think tank ranks the nation’s metropolitan statistical areas for the best overall economies each year. Researchers base the rankings on several criteria, including job and wage and salary growth over the past five years. The institute helps business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity, according to its Web site.
Lorna Wallace, a Milken Institute research fellow and senior staff member, attributed the drop to No. 8 to the U. S. Census Bureau’s addition of Madison County and McDonald County, Mo., to the MSA. The two counties were not considered in the Milken study last year. The Milken Institute relies on the Census Bureau’s definition of metropolitan statistical areas for its study groupings.
“The Fayetteville-Springdale-Rogers MSA has a robust economy that outshines the rest of the state and most of the country,” Wallace said. “Its job growth rate by far exceeds the national pace.”
Wallace cited Bentonville-based Wal-Mart Stores Inc. ’s heavy influence on the regional economy for both positive and possible future negative factors. She also cited the presence of other national-level employers such as J. B. Hunt Transport Services Inc. and Tyson Foods Inc. and the University of Arkansas, a strong research university, as positives for the area.
The next-highest ranked larger metropolitan area in Arkansas was Little Rock-North Little Rock, ranked No. 94 overall and up from No. 106 in 2004. The city’s lowest sector ranking was in job growth, at No. 168 with 0. 24 percent. Fort Smith also ranked higher this year, moving up to No. 154 from No. 155 in 2004.
Three Arkansas MSAs were included in the Milken listing of the best 179 small cities. Hot Springs was ranked at No. 69. It was not ranked in 2004. Jonesboro ranked No. 99, down from No. 64 in 2004. Pine Bluff was ranked at No. 144, down from No. 94 in 2004.
Mitch Chandler, director of communications for the Arkansas Department of Economic Development, said Northwest Arkansas ’ ranking for the third year shows that the area’s growth is a proven trend. “This shows the phenomenal and consistent growth of the area.” he said.
Job and wage growth are the strongest contributors to the listing, said Jeff Collins, director of the Center for Business and Economic Research at the Sam M. Walton College of Business.
The Walton College is part of the University of Arkansas at Fayetteville. “Job and wage growth is a 15- to 20-year trend, not a one- to two-year trend,” Collins said. “Given that this measures the entire country on the same data, it gives a lot of validation to be listed in the top 10 from year to year.” He predicts that the region will continue to do well with those growth drivers in place. The region scored its highest ranking in the five-year wage and salary growth category, taking the No. 3 spot. It was ranked 14th in one-year wage and salary growth. The five-year job growth ranking was 7th and the one-year job growth was ranked 23 rd.
WEAKEST LINK:
The region’s lowest ranking — No. 154 — was in the area of technology output growth. Collins said the high-tech industry is one in which the state traditionally performs poorly. “Employment opportunities for Arkansas seem to be overly weighted to the lower educated and lower-paying jobs,” he said. And added that even the University of Arkansas ’ efforts to push technology-based business is not enough to push the state out of the lowest levels of technology development. “We still don’t attract a lot of research and development activity, which is the precursor to higher-wage industries,” Collins said. “The UA is still too small in this area. Larger universities can get concentrations of engineers and scientists who can cooperate and collaborate on research.”
HOUSING CONCERNS:
Milken’s Wallace also cited the increased housing values as a growth factor in the region, a positive indicator of the present economy but a possible future concern. “Housing rates and values are near the national level,” she said. “That may pose a risk going forward.” Unless other economic indexes also rise to the national level, increased interest rates or a slowing of the construction rate will influence the affordability of housing in the region. Collins said the housing component is a relatively small sector in the Milken Institute’s ranking data. “But there is some disconnect between supply and demand in housing,” he said. “While I have some concerns about segments in the market, there is still opportunity for growth and profit in housing after careful planning and consideration.” He said the national housing values really don’t contribute much to the local housing market. “The people who are moving in here and buying houses are already paying the national rates,” he said. “This doesn’t affect them.”
Condensed from: NWA News, Arkansas Democrat Gazette, February 23, 2006
Academies Reinvent Local High Schools
Bentonville, which will soon be the largest high school in Arkansas with 3,000 students and a 600,000-square foot behemoth school, has decided to adopt the concept of the career academy to structure classes for students. This concept is important in an area striving to achieve excellence in public education. Many people move here from elsewhere and ask about the private schools. Our best schools are the public schools.
The academies come in two forms: wall-to-wall, where every student must enroll in an academy and there are many choices, and pocket academies, where enrollment is optional and there are fewer academies from which to choose. The Bentonville School District is following the wall-to-wall model for its academies. Ninth-graders will start in the freshmen academy, and will attend classes on the same floor and work with the same core group of 40 teachers. The program will focus on helping students decide which academy to join in their sophomore year. Some of the available disciplines are business, fine arts, mathematics, and human life sciences.
The career academy model for high schools has existed since 1969, but the concept wasn’t pioneered in Arkansas until 1998 when the Springdale School District opened a medical academy with 30 students. The trend spread in Northwest Arkansas, with Rogers and Fayetteville adopting the model. Administrators of at least 15 of the state’s biggest high schools are reinventing their schools through the academy approach, a trend educators say will continue. More than 1,500 career academies nationwide create schools within schools by centering students and instruction in focused, career-themed clusters. But they have not universally succeeded. The system floundered in Fayetteville, and it may be on the way out in Fort Smith.
There are pros and cons of academy models. Many principals and superintendents say that as a school grows larger, it becomes necessary to find ways to connect to individual students. Otherwise, it’s too easy for students to slip through the cracks. Large schools must search for ways to create smaller learning communities within the schools. The smaller learning communities allow students to take classes with the same group of peers and teachers. Proponents say career academies offer an alternative to the isolation that can accompany a mega-high school. Students become more interested in their courses and have greater success after graduation.
Opponents say career academies are too much like vocational programs, which traditionally do not receive a lot of community support. Some parents think the academies would not be good preparation for college. Other parents don’t want their kids to have to decide too early on a career path. However, a 2004 study by MDRC, a nonprofit, nonpartisan social policy organization based in New York, found that “Career academies are one of the few youth-focused interventions that have been found to improve the labor market prospects of young men.”
Administrators at Fayetteville High School introduced pocket academies in 2003, but then dropped the program two years later. Principal Randy Willison said only 80 students enrolled in an academy during the program’s second year. The academy needed a minimum of 120 participants to justify keeping it, Willison said.
Source www.nwanews.com February 12, 2006
The academies come in two forms: wall-to-wall, where every student must enroll in an academy and there are many choices, and pocket academies, where enrollment is optional and there are fewer academies from which to choose. The Bentonville School District is following the wall-to-wall model for its academies. Ninth-graders will start in the freshmen academy, and will attend classes on the same floor and work with the same core group of 40 teachers. The program will focus on helping students decide which academy to join in their sophomore year. Some of the available disciplines are business, fine arts, mathematics, and human life sciences.
The career academy model for high schools has existed since 1969, but the concept wasn’t pioneered in Arkansas until 1998 when the Springdale School District opened a medical academy with 30 students. The trend spread in Northwest Arkansas, with Rogers and Fayetteville adopting the model. Administrators of at least 15 of the state’s biggest high schools are reinventing their schools through the academy approach, a trend educators say will continue. More than 1,500 career academies nationwide create schools within schools by centering students and instruction in focused, career-themed clusters. But they have not universally succeeded. The system floundered in Fayetteville, and it may be on the way out in Fort Smith.
There are pros and cons of academy models. Many principals and superintendents say that as a school grows larger, it becomes necessary to find ways to connect to individual students. Otherwise, it’s too easy for students to slip through the cracks. Large schools must search for ways to create smaller learning communities within the schools. The smaller learning communities allow students to take classes with the same group of peers and teachers. Proponents say career academies offer an alternative to the isolation that can accompany a mega-high school. Students become more interested in their courses and have greater success after graduation.
Opponents say career academies are too much like vocational programs, which traditionally do not receive a lot of community support. Some parents think the academies would not be good preparation for college. Other parents don’t want their kids to have to decide too early on a career path. However, a 2004 study by MDRC, a nonprofit, nonpartisan social policy organization based in New York, found that “Career academies are one of the few youth-focused interventions that have been found to improve the labor market prospects of young men.”
Administrators at Fayetteville High School introduced pocket academies in 2003, but then dropped the program two years later. Principal Randy Willison said only 80 students enrolled in an academy during the program’s second year. The academy needed a minimum of 120 participants to justify keeping it, Willison said.
Source www.nwanews.com February 12, 2006
Arkansas Existing Home Sales up 30%
Arkansas continues to experience record growth in existing home sales, outpacing every other state in the country in the fourth quarter, according to a study by the National Association of Realtors. It was the second consecutive quarter that Arkansas’ rate was the best in the country. Arkansas has been among the top 10 states in sales of previously owned homes for each of the past five quarters.
Arkansas’ sales of previously owned homes were up almost 30 percent in the fourth quarter from a year earlier, the study showed. The third quarter of 2005 was also strong, with 32 percent growth. Nationally, existing home sales were flat in the fourth quarter, up just 0.3 percent.
In NW Arkansas, one explanation of these statistics could be the rapid increase in new-home prices, putting most of them beyond many people’s reach. Builders are no longer constructing small “starter” homes due to skyrocketing land costs and increased construction and development costs. As recently as about 3-4 years ago, the typical starter home was about 1000-1200 square feet and could be purchased for under $100K. The new starter home in NWA (particularly in the major towns of Fayetteville, Springdale, Rogers and Bentonville) is larger than that of the past, but prices are also significantly higher, starting at about $180K and going up from there. Salaries are not increasing at the same rate as home prices. Thus for people of modest means who don’t qualify for a new home of this type, the purchase of an existing home or paying rent are their only choices.
Source: Northwest Arkansas Times, February 17, 2006
Arkansas’ sales of previously owned homes were up almost 30 percent in the fourth quarter from a year earlier, the study showed. The third quarter of 2005 was also strong, with 32 percent growth. Nationally, existing home sales were flat in the fourth quarter, up just 0.3 percent.
In NW Arkansas, one explanation of these statistics could be the rapid increase in new-home prices, putting most of them beyond many people’s reach. Builders are no longer constructing small “starter” homes due to skyrocketing land costs and increased construction and development costs. As recently as about 3-4 years ago, the typical starter home was about 1000-1200 square feet and could be purchased for under $100K. The new starter home in NWA (particularly in the major towns of Fayetteville, Springdale, Rogers and Bentonville) is larger than that of the past, but prices are also significantly higher, starting at about $180K and going up from there. Salaries are not increasing at the same rate as home prices. Thus for people of modest means who don’t qualify for a new home of this type, the purchase of an existing home or paying rent are their only choices.
Source: Northwest Arkansas Times, February 17, 2006
Hispanic Parents Weigh in on New Rogers High School
The times, they are a-changing. Spanish-speaking parents gathered February 12 at St. Vincent de Paul Catholic Church for a question-and-answer session about a second high school scheduled to open in Rogers in August 2008. The meeting was the fifth held by the Rogers school district to gather input from the community and the first to be delivered entirely in Spanish.
The information meeting was scheduled to present to Hispanic parents the latest developments on facility plans for the new high school. Parents viewed a computer-generated model of what the new school will look like. According to an information sheet distributed at the meeting, the campus will grow from about 190,000 square feet to 325,000 square feet.
Feedback from the parents will be given to committees for consideration. The various committees will then report to the School Board, which will make final decisions about the new school.
To my knowledge, this is the first meeting of this type conducted totally in Spanish, and other school systems and public entities should follow suit. NW Arkansas’ Hispanic community continues to grow larger every day and is becoming an integral part of the fabric of NW Arkansas. The Rogers School system is to be commended for reaching out to the Spanish-speaking parents and listening to their concerns.
Source: Rogers Hometown News, February 15, 2006
The information meeting was scheduled to present to Hispanic parents the latest developments on facility plans for the new high school. Parents viewed a computer-generated model of what the new school will look like. According to an information sheet distributed at the meeting, the campus will grow from about 190,000 square feet to 325,000 square feet.
Feedback from the parents will be given to committees for consideration. The various committees will then report to the School Board, which will make final decisions about the new school.
To my knowledge, this is the first meeting of this type conducted totally in Spanish, and other school systems and public entities should follow suit. NW Arkansas’ Hispanic community continues to grow larger every day and is becoming an integral part of the fabric of NW Arkansas. The Rogers School system is to be commended for reaching out to the Spanish-speaking parents and listening to their concerns.
Source: Rogers Hometown News, February 15, 2006
Architects studying possibility of light rail in Northwest Arkansas
Studies through the University of Arkansas School of Architecture are being conducted to research how a light rail system might alter development in Northwest Arkansas. Teams have recently studied the Dallas Area Rapid Transit, the Fort Worth Transportation Authority, and the possibility of establishing a light rail system in the Washington, D. C. area.
A concept posed in the past for NW Arkansas would traverse 41.27 miles of rail with about 10 stations along the Interstate 540 corridor and a loop to the Northwest Arkansas Regional Airport. Buses could be used to tie more immediate areas to the rail, and high-occupancy lanes could be established along the interstate.
NW Arkansas needs something like this and needs it fast. Rush hour traffic is horrendous and daytime traffic is not too much better. Studies indicate that approximately 1000 additional people move to this area every month. Unfortunately, the infrastructure isn’t keeping up. Some sort of public transportation system is needed to alleviate the congestion on our roads.
Source: Northwest Arkansas Times, February 12, 2006
A concept posed in the past for NW Arkansas would traverse 41.27 miles of rail with about 10 stations along the Interstate 540 corridor and a loop to the Northwest Arkansas Regional Airport. Buses could be used to tie more immediate areas to the rail, and high-occupancy lanes could be established along the interstate.
NW Arkansas needs something like this and needs it fast. Rush hour traffic is horrendous and daytime traffic is not too much better. Studies indicate that approximately 1000 additional people move to this area every month. Unfortunately, the infrastructure isn’t keeping up. Some sort of public transportation system is needed to alleviate the congestion on our roads.
Source: Northwest Arkansas Times, February 12, 2006
New Books Tout Fayetteville as Great Place to Live
Career Press has recently published two books that add Fayetteville as one of the best places to live in America. "50 Fabulous Places to Raise Your Family" by Kathleen Shaput and "50 Fabulous Places to Retire in America" by Mary and Arthur Griffith, join a long line of such books and articles featured in Forbes, USA Today and others. Shaput and the Griffiths studied factors such as quality of life, safety, dining options, entertainment opportunities, medical facilities, accessibility and services for seniors, crime rate, education, public safety, taxes, real estate, and educational opportunities.
Listings for each community include information such as potential drawbacks, climate charts, tax rates, and real estate averages. Contacts for utility companies, newspapers, chambers of commerce, and a listing of activities and services for seniors are also included.
Fayetteville and NW Arkansas have long appeared on “best places to live” lists in various publications. However, with the increased urbanization, paralyzing traffic jams due to lagging infrastructure, and escalating home prices, the quality of life touted in these articles may be disappearing. Growth is great for the economy, but the increasing cost of living here (like sales taxes of over 9%) may make this area a “not so great” place to live in the near future.
Source: Northwest Arkansas Times, February 9, 2006
Listings for each community include information such as potential drawbacks, climate charts, tax rates, and real estate averages. Contacts for utility companies, newspapers, chambers of commerce, and a listing of activities and services for seniors are also included.
Fayetteville and NW Arkansas have long appeared on “best places to live” lists in various publications. However, with the increased urbanization, paralyzing traffic jams due to lagging infrastructure, and escalating home prices, the quality of life touted in these articles may be disappearing. Growth is great for the economy, but the increasing cost of living here (like sales taxes of over 9%) may make this area a “not so great” place to live in the near future.
Source: Northwest Arkansas Times, February 9, 2006
City limits and school district boundaries do not always match up
Homebuyers with school age children need to check which school district their new home is in. School boundaries were drawn decades ago, long before the cities expanded. When a city boundary changes, the existing school district boundaries remain as is. There are no plans to change the school district boundaries in the foreseeable future. Fayetteville, Springdale, Farmington, and Elkins are some of the local cities caught up in this situation.
To check which area a particular home is in, buyers should check the Fayetteville and Springdale School Maps or the Rogers and Bentonville School Lookup links at the right on this blog page. Another source of information would be the county assessor’s office or the school district offices.
Source Northwest Arkansas Times, February 11, 2006.
To check which area a particular home is in, buyers should check the Fayetteville and Springdale School Maps or the Rogers and Bentonville School Lookup links at the right on this blog page. Another source of information would be the county assessor’s office or the school district offices.
Source Northwest Arkansas Times, February 11, 2006.
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