Fayetteville Arkansas, University of Arkansas--Old Main Overview

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

Monday, October 22, 2007

Will Property Taxes Increase in NW Arkansas?

There’s been a lot of talk lately about the need to increase taxes in our area. The City of Fayetteville, Fayetteville School District, Benton County and Washington County have all mentioned the possibility of higher taxes and the talk seems to be getting louder all the time.

First, let me explain how taxes are determined in Arkansas. One mill is 1/10 of one cent ($.001). The value for tax assessment is 20% of fair market value, which is then multiplied by the effective millage rate. This applies to real estate (homes) and personal property (vehicles, boats and other similar items). A home with a market value of $100,000 would be valued at $20,000 for tax purposes. For example, property within Fayetteville School District and the City of Fayetteville in 2006 was taxed at 50.70 mills. Multiplying $20,000 x .05070 equals a tax of $1014.00.

The City of Fayetteville says it will probably need a 0.9-mill increase to compensate for falling sales tax revenue.

Fayetteville School District says it will need a millage increase of 4 to 10 mills in the not too distant future to build a new high school.

Washington County needs money to replace bridges, one of which has been closed to all traffic and three more bridges need major repairs. This has caused county officials to seriously consider raising the road tax to 3 mills, an increase of 1.9 mills.

Benton County is thinking about a sales tax increase to cover the expenses of moving juvenile detention and court facilities.

As you can see, there are many reasons for possible tax increases and just as many pros and cons. I don’t have the space here to go into all the ramifications, but quality of life has to be given serious consideration. Without street improvements, good schools, adequate police and fire protection, clean air, parks, etc., quality of life decreases.

Higher taxes make most people unhappy. No one ever asks how much more they should pay yet most of us complain about gridlock on the roads or not having immediate response when we need a police officer.

I read recently that Fayetteville City government may cut cost-of-living adjustments for employees in order to lower the tax increase. I have to agree with police and fire fighters – that’s not the best way to balance the budget. City employees deserve to have their wages keep up not only with inflation but also with pay scales in similar cities. We don’t want to lose good, experienced police, fire fighters, and city workers.

Washington County reassessed all real estate in 2007, which resulted in higher appraised values for nearly every parcel. The increased value will be reflected on next year’s tax bills and means higher taxes even if the millage rate is unchanged.

Sam’s Club moved from Springdale to Fayetteville just a few weeks ago. Naturally, that means more sales tax revenue for the city. Malco Movie Theater just opened its brand new, state-of-the-art, digital 12-screen theater in Fayetteville, which is also expected to bring in more sales taxes. But these two new sales tax sources will not make up for the reduced level of revenue from sales taxes in Fayetteville.

Another factor to keep in mind is that Fayetteville is the lowest taxing city of any of the major towns in NW Arkansas, according to Mayor Dan Coody. And a modest increase in the millage now may prevent a larger increase in the future.

Some government entities have money in reserve accounts. I know we have to have money in the “rainy-day fund,” but dark clouds are already gathering.

The needs are numerous, expensive, and easy to justify. Maybe we need to face reality and dig deeper into our wallets.

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Tuesday, October 16, 2007

NW Arkansas Real Estate Market Looking Up

The market in NW Arkansas is at or very near the bottom according to a local expert. And it’s a good thing—the recent doom and gloom in the media seems to be a self-fulfilling prophecy, especially with regard to NW Arkansas, where conditions are really not that bad when compared to other parts of the nation.

Here’s a brief summary with regard to the residential housing market which I heard at a recent breakfast meeting at the Springdale Holiday Inn, hosted by Jeff Collins and Tom Reed of Streetsmart Data Service of Fayetteville. Collins used to be the head of the Center for Business and Economic Research at the U of A (responsible for the Skyline report) before heading into the private sector to provide economic and other research related to the housing market in NW Arkansas. Streetsmart also analyzes commercial and multi-family real estate conditions.

Consumer confidence on a national level and banker confidence on a local level are two major factors affecting the market. Until recently, an aggressive lending environment existed where almost any developer could get a loan for a new project. Now that bankers have suffered some major losses, almost no one is being approved. We have gone from one extreme to another and in order to create a healthy market, a viable middle ground must be found.

One of the bright spots in the NW Arkansas market is that almost 7,000 new jobs have been created every year since 2003 and data indicates that trend will continue for at least the next five years. Obviously, new jobs bring new residents to the area and that helps fuel the demand for residential housing.

Sales of new homes in both Washington and Benton Counties during the second quarter of this year increased over second quarter 2006 new-home sales - but sales of existing homes declined from 2006 numbers.

Both counties have seen a significant decline in the number of building permits issued during the first 6 months of 2007 compared to the same period of 2006. It appears developers are acutely aware of market saturation and have decided to postpone building more units until existing homes are sold.

The price point for the majority of lots sold during the second quarter was approximately $40,000 and new home construction is now approximately $100 per square foot.

The decreased number of new single- and multi-family housing permits coupled with declining vacancies in multi-family housing are two major indicators that the market is very close to the bottom.

When you’re down, the only direction is up! It’s still a buyer’s market and many opportunities still exist so you may not want to hold out much longer. It’s actually a great time to buy a home.

For more information:


Saturday, October 06, 2007

Property taxes due this coming Wednesday

Just thought I would post a reminder that property and personal property taxes in Arkansas are due this Wednesday. If you don't pay on time, there will be a 10% late fee.

Many home owners pay their taxes as part of their monthly mortgage payment. The annual tax is divided into 12 and the home owner pays 1/12 each month. Then when tax bills are sent out, the bank pays the property tax, usually in April or May. These folks can rest easy, since their property taxes have already been paid.

But if your bank is not paying your property taxes as part of your mortgage and you didn't pay them last spring when the bills were sent out, then you only have a few more days to pay them. There are also those pesky personal property taxes. Those are also due now, if you haven't already paid them when you got your bill last spring.

One good thing if you don't want to stand in line at the county courthouse in Washington or Benton County--you can now pay them on line with a credit card or have them directly deducted from your checking account. But if you want to pay from your checking account in Washington County, make sure you have your tax bill handy, since you will need it for security purposes. There is also an extra charge in Washington County to pay on line. I'm not sure about Benton County, since I don't live there.

The web addresses for the two county websites are:


What’s the Mortgage Crisis All About?

That’s the question I’m being asked a lot these days. I’ll try to answer in layman’s terms.

First, most homeowners will not be directly affected by the current crisis in sub-prime mortgages. Homeowners with conventional, non-adjustable mortgages will continue making their mortgage payment and owning their home just as they always did.

Now a little history. The problems started a few years ago when lenders began making risky and expensive loans to buyers with less than desirable credit histories. Mortgages requiring no down payment or interest-only payments were given to almost anyone who asked. Some buyers were even permitted to borrow more than the current value of the home, justified by the idea that the value would surely increase.

Another practice by some predatory lenders is behind much of the current mortgage fiasco. These lenders offered extremely low “teaser” interest rates that would significantly increase at some point in the future.

The future is here! The interest rate on many of those mortgages has increased dramatically.

When a lender gives a mortgage, he in turn “bundles” that mortgage along with many others and resells them to investors. That’s common practice and it’s what’s causing jitters in the financial markets these days. Investors are nervous about recouping their costs on these risky mortgages – never mind making a profit.

The sub-prime mortgage has dried up and blown away. There are plenty of banks and mortgage companies still making fixed rate 15-30 year mortgages to credit worthy buyers. But unconventional mortgages being made to buyers with unsubstantiated income, poor work history, and poor credit are history.

Overall, this is a good thing. When things settle down, buyers will have safer, surer mortgages financing their homes.

As I said earlier, most homeowners will not be directly affected but everyone has been indirectly affected.

As buyers whose interest rates have jumped up cannot make the payments, a ripple effect sets in. That’s bad enough, but thousands more will face the same problem in the next couple of years as their interest rates reset.

When lenders foreclose and homes sit vacant, prices start to drift downward. That can affect all the houses in an area, particularly if that area had a large number of homes financed by sub-prime mortgages. When the inventory of homes for sale increases, prices dip even further.

Lenders have tightened credit standards. That translates into fewer eligible buyers, which can mean a greater supply of unsold inventory, both existing homes and new construction.

As the inventory of unsold homes increases, fewer new homes are built. Naturally, that means fewer paychecks going to construction workers and fewer purchases from wholesalers. Families have less disposable income and retail sales take a hit.

I’m sure you get the picture.

Here’s the good news. Activity in only seven states (Arizona, California, Florida, Indiana, Michigan, Nevada, and Ohio) accounts for the overall rise in delinquencies nationally.

The Federal Reserve Board recently lowered interest rates, thereby helping to stabilize financial markets.

Congress is considering revising rules that govern Fannie Mae and Freddie Mac, which buy nearly all prime mortgages under $417,000.

Treasury and HUD are looking to find ways to assist borrowers who are creditworthy, but who got caught in a pinch and are facing mortgage payments than they can no longer afford.

Best of all, do not be discouraged. There are plenty of banks and mortgage companies still making fixed rate 15-30 year mortgages to credit worthy buyers. Reputable, conservative lenders have money for mortgages to credit-worthy borrowers. Interest rates are favorable. There are lots of homes on the market; it’s a buyer’s market.

If I can help you buy a home, call me. It’s what I do full time. I would be happy to help you in these confusing times.

For more information: