Adjusting to Realty in the NW Arkansas Real Estate Market

As the real estate market continues its struggle, buyers and builders alike have to adjust. While driving around NW Arkansas these days, I see subdivisions in various stages of incompletion. Some have a few homes occupied, some subdivisions have been stopped dead in their tracks and the land put up for sale.

At the same time, other subdivisions have undergone revisions and homes are selling like hot cakes.

My take is that some of the higher-end, expensive subdivisions have a long way to go before they will be completed and occupied. Many are mostly empty or at the most half full, especially in Benton County. These were originally planned for large homes with all the amenities on large lots with many restrictive covenants to help maintain a buyer’s investment and life style.

In a concession to the reality of the housing market in NW Arkansas, some builders have revised sizes and costs downward. That’s a hard thing to accomplish. Not only is city approval usually required, but existing property owners have to agree to a relaxation of the covenants.

Smaller houses on smaller lots can affect the value of the larger homes that were built according to the tighter covenants. However, this can be accomplished without sacrificing the value of the larger home if it is done with thought and sensitivity.

I know of one subdivision, for example, where a developer purchased the land, received approval from the city to reduce minimum home size in the covenants, and is now building smaller, more affordable homes. The quality of these homes is excellent--all brick with many amenities of larger homes such as granite counter tops, fully sodded yards, etc., all for about $150K or less. These homes are "selling like hotcakes" in the midst of a supposedly a "slow" market.

Seems to me it’s far better for builders and developers to face reality, reduce costs, and sell homes than to be in a subdivision that sits empty save for one or two homeowners.

And for buyers, I would be leary of purchasing a home in a subdivision with a large number of empty lots or a subdivision where there are a lot of finished homes for sale but few or none have been sold. At some point in the future, a current buyer will want to sell that home, which will be difficult if new homes being built then are on the market and competing to be sold.

In this uncertain market with so many homes for sale, it's particularly important for a buyer to be represented by a knowledgeable buyer agent (like me for example ). In Arkansas, for homes listed by a realtor, there's no extra cost to the buyer to have his own agent, and the buyer's interests are protected.

Buyers should also ask their agents to do a market analysis, as well as to research the history of the home (and subdivision) they have selected, in order that they don't pay too much. Prices are not what they were a year ago, but some sellers haven't gotten the idea yet.

And there are a lot of bank-owned properties out there (foreclosures anyone?) where the home is sold "as-is". So-called "short sales" may be some good deals in this regard. The buyer's agent can advise the buyer how to proceed and what his rights are in the transaction.

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