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I want to commend the City of Fayetteville and developer Hank Broyles and his partners, John Nock and Lex Broyles, for their cooperative efforts to create affordable housing for city employees. As you know affordable housing is one of my "pet" subjects in this blog.
Some expensive road realignments were called for at Broyles’ new Holcomb Heights subdivision of 105 homes. The city agreed to pay up to $50,000 towards the costs if Broyles would agree to lower the price on some of the homes.
The least expensive homes in the subdivision were expected to cost $131,000. With the city’s financial help on the road expenses, Broyles said he would be able to lower the cost to $120,000 on six homes. Broyles said he would market the homes directly to city employees because the average city worker would be able to quality for a mortgage on a $120,000 home.
It is important to note, however, buyers do not have to be employed by the city. The homes will be sold to anyone who qualifies.
We all know that municipal workers are needed and appreciated. Police officers, firefighters, office staff, meter readers, park workers, sewer maintenance people - none are over paid by any standard. Without these workers, the city would be a disaster.
Currently more than 50% of the city’s employees live outside the Fayetteville city limits. It is generally believed they cannot afford to live in the city.
It’s refreshing to see what can be accomplished when all parties cooperate. While this innovative cooperation between a developer and the city will lower the cost on only six homes, it is a beginning. It is also a clear example of what might be accomplished in the future.
For more information:
http://www.nwanews.com/nwat/News/52303/
Showing posts with label Affordable Housing. Show all posts
Showing posts with label Affordable Housing. Show all posts
Friday, May 11, 2007
Sunday, April 22, 2007
Fayetteville’s Impact Fee Election Results Somewhat Uncertain
When I posted my blog entry April 1 about the upcoming special election on impact fees, I fully expected to post a follow up the day after the April 10 election to state the results. Well, as some of you already know, results are somewhat murky.
The morning after the election the unofficial count was tight, to say the least. Supporters of the fees had a one-vote lead. (Once again, I say, “Don’t ever think your one vote doesn’t matter.)
The major holdup at that point was 15 outstanding absentee ballots. The ballots would be counted if they were received by April 20, the day the election was to be certified.
When the absentee ballots were added to the earlier results, the election was a tie, 2015 votes for and 2015 votes against. Elections have to be won by a majority so the tie means the impact fee increase failed.
As if an election that close isn’t interesting in itself, here’s the really unusual part.
One of the absentee ballots may ultimately be thrown out on technicalities. It seems the overseas voter did not use the same exact address on the application for the ballot as he did on the statement accompanying the ballot.
That particular ballot was a No vote. It was the vote that created the tie. It was included in the final certification.
If that ballot is challenged and subsequently removed from the official count, the election will have been approved by one vote.
Washington County Attorney George Butler is researching the situation but said he expects to find little precedent to resolve the matter.
Because the law is generally against disenfranchising voters, Butler encouraged the Washington County Election Commission to count the ballot in question. Butler stated further that the commission may file an amended certification reversing the election if that becomes necessary.
For more information:
http://www.nwaonline.net/articles/2007/04/21/news/042107fzroadfees.txt
http://www.nwanews.com/nwat/News/52331/
http://www.nwanews.com/nwat/News/52304/
The morning after the election the unofficial count was tight, to say the least. Supporters of the fees had a one-vote lead. (Once again, I say, “Don’t ever think your one vote doesn’t matter.)
The major holdup at that point was 15 outstanding absentee ballots. The ballots would be counted if they were received by April 20, the day the election was to be certified.
When the absentee ballots were added to the earlier results, the election was a tie, 2015 votes for and 2015 votes against. Elections have to be won by a majority so the tie means the impact fee increase failed.
As if an election that close isn’t interesting in itself, here’s the really unusual part.
One of the absentee ballots may ultimately be thrown out on technicalities. It seems the overseas voter did not use the same exact address on the application for the ballot as he did on the statement accompanying the ballot.
That particular ballot was a No vote. It was the vote that created the tie. It was included in the final certification.
If that ballot is challenged and subsequently removed from the official count, the election will have been approved by one vote.
Washington County Attorney George Butler is researching the situation but said he expects to find little precedent to resolve the matter.
Because the law is generally against disenfranchising voters, Butler encouraged the Washington County Election Commission to count the ballot in question. Butler stated further that the commission may file an amended certification reversing the election if that becomes necessary.
For more information:
http://www.nwaonline.net/articles/2007/04/21/news/042107fzroadfees.txt
http://www.nwanews.com/nwat/News/52331/
http://www.nwanews.com/nwat/News/52304/
Sunday, April 08, 2007
Affordable Housing May Still be Possible in NW Arkansas
Good news! Builders and cities are beginning to realize that the majority of people cannot afford a mansion to house their families.
I have maintained for considerable time now that there is a shortage of affordable homes. Land prices have increased dramatically while wages have not kept pace.
When builders have to pay more for land they generally build a more expensive home in order to recoup the cost. Fancy bathrooms, gigantic master bedrooms, granite counter tops, top-of-the-line appliances, and 3-car garages are all very nice – but not affordable for the average wage earner.
Three bedrooms, 2 baths, ceramic tile in the wet areas, and 1,000–1,200 square feet are perfectly serviceable homes for many people. These “starter homes” are more important now than ever before.
When homebuyers are forced farther away from the major municipalities to find a home on lower cost land, their cost of commuting to work increases. At the same time, infrastructure is strained and traffic congestion increases.
Now, I’m happy to say, some builders and cities are cooperating in an effort to create affordable housing. Homes can be built with smaller set backs and less space between homes.
One builder is planning to build 1,000 square foot homes in Rogers with an expected sales price of about $110,000.
Building on empty land where the infrastructure is already in place is another way to lower the overall cost of the home. This is called “in-filling” and helps reduce urban sprawl.
Each year NW Arkansas homebuilders showcase their homes in the Parade of Homes. The parade has traditionally featured homes for the more affluent buyer. This year, some builders may highlight less affordable homes, a trend I hope will continue.
The Parade of Homes is open to the public and will take place the weekend of June 22-24.
For more information:
http://www.nwanews.com/story.php?paper=brog§ion=News&storyid=43179
http://www.nwanews.com/story.php?paper=adg§ion=Business_Matters&storyid=180267
I have maintained for considerable time now that there is a shortage of affordable homes. Land prices have increased dramatically while wages have not kept pace.
When builders have to pay more for land they generally build a more expensive home in order to recoup the cost. Fancy bathrooms, gigantic master bedrooms, granite counter tops, top-of-the-line appliances, and 3-car garages are all very nice – but not affordable for the average wage earner.
Three bedrooms, 2 baths, ceramic tile in the wet areas, and 1,000–1,200 square feet are perfectly serviceable homes for many people. These “starter homes” are more important now than ever before.
When homebuyers are forced farther away from the major municipalities to find a home on lower cost land, their cost of commuting to work increases. At the same time, infrastructure is strained and traffic congestion increases.
Now, I’m happy to say, some builders and cities are cooperating in an effort to create affordable housing. Homes can be built with smaller set backs and less space between homes.
One builder is planning to build 1,000 square foot homes in Rogers with an expected sales price of about $110,000.
Building on empty land where the infrastructure is already in place is another way to lower the overall cost of the home. This is called “in-filling” and helps reduce urban sprawl.
Each year NW Arkansas homebuilders showcase their homes in the Parade of Homes. The parade has traditionally featured homes for the more affluent buyer. This year, some builders may highlight less affordable homes, a trend I hope will continue.
The Parade of Homes is open to the public and will take place the weekend of June 22-24.
For more information:
http://www.nwanews.com/story.php?paper=brog§ion=News&storyid=43179
http://www.nwanews.com/story.php?paper=adg§ion=Business_Matters&storyid=180267
Friday, March 16, 2007
Springdale Limits Parking Cars in Front Yards
The City of Springdale has passed some common-sense (but difficult to enforce) rules to reduce the number of vehicles parked in front yards.
An ordinance adopted by the City Council earlier this year will now begin to be enforced. It gives residents the opportunity to build one additional parking space no larger than 9 feet by 19 feet in their front yard. The new space must be landscaped and adjacent and parallel to an existing driveway. Residents are also allowed to pave up to 40% of their front yard for parking, and homes with existing gravel driveways will not be required to pave them.
Violators will be issued a citation on the first offense. After that fines of up to $500 for each offense and $250 per day for continued offenses will be assessed.
At first thought this may seem a bit unnecessary, but drive around the city and you will quickly understand the need for the ordinance. There are many neighborhoods where cars and trucks are parked all over the property. Sometimes the vehicle has a “For Sale” sign on it, other times it is simply a matter of too many vehicles for the size of the driveway. Worse yet are the vehicles in various stages of repair or those that will never again run on their own power.
On the other hand, the large number of vehicles in the yard in some neighborhoods is a reflection of the times. Many older homes and duplexes, for example, have only one-car garages. This may have been adequate in the past, when each family had only one car. But now, many families have more than one breadwinner and multiple vehicles. Older children may also have their own vehicle. There is simply no room to park all of them without parking on the lawn or blocking the street.
Another issue is that in rental areas, landlords could be asked to build additional parking spaces to accommodate their tenants’ needs. Concrete work is not cheap, so to build even one additional park pad can be prohibitively expensive. Also less affluent homeowners may not be able to do so. Luckily the Springdale ordinance allows for homeowners to apply for a variance with the Springdale Planning Commission in hardship cases.
And all of this is related to the issue of affordable housing (or the lack thereof). Increasingly low income area dwellings are home to multiple families, who share the dwelling in order to be able to afford the rent or mortgage payments. And with multiple families come multiple vehicles.
Overall, I think eliminating this eyesore will help maintain property values. But my question is WHERE (for multi-vehicle families in rental or low-income areas) the additional vehicles will be parked if the home’s owner is unwilling or unable to afford to build an additional park pad.
Enforcing this new ordinance is going to be difficult, if not impossible. If vehicles cannot be parked in the yard, they may end up being parked in the street, causing difficulty for traffic. They won’t go away, and fining property owners or tenants will not necessarily solve the problem.
Rogers is considering a similar ordinance.
For more information:
http://www.nwanews.com/story.php?paper=adg§ion=News&storyid=181226
http://www.nwaonline.net/articles/2007/03/11/news/031207rzcounciladv.txt
An ordinance adopted by the City Council earlier this year will now begin to be enforced. It gives residents the opportunity to build one additional parking space no larger than 9 feet by 19 feet in their front yard. The new space must be landscaped and adjacent and parallel to an existing driveway. Residents are also allowed to pave up to 40% of their front yard for parking, and homes with existing gravel driveways will not be required to pave them.
Violators will be issued a citation on the first offense. After that fines of up to $500 for each offense and $250 per day for continued offenses will be assessed.
At first thought this may seem a bit unnecessary, but drive around the city and you will quickly understand the need for the ordinance. There are many neighborhoods where cars and trucks are parked all over the property. Sometimes the vehicle has a “For Sale” sign on it, other times it is simply a matter of too many vehicles for the size of the driveway. Worse yet are the vehicles in various stages of repair or those that will never again run on their own power.
On the other hand, the large number of vehicles in the yard in some neighborhoods is a reflection of the times. Many older homes and duplexes, for example, have only one-car garages. This may have been adequate in the past, when each family had only one car. But now, many families have more than one breadwinner and multiple vehicles. Older children may also have their own vehicle. There is simply no room to park all of them without parking on the lawn or blocking the street.
Another issue is that in rental areas, landlords could be asked to build additional parking spaces to accommodate their tenants’ needs. Concrete work is not cheap, so to build even one additional park pad can be prohibitively expensive. Also less affluent homeowners may not be able to do so. Luckily the Springdale ordinance allows for homeowners to apply for a variance with the Springdale Planning Commission in hardship cases.
And all of this is related to the issue of affordable housing (or the lack thereof). Increasingly low income area dwellings are home to multiple families, who share the dwelling in order to be able to afford the rent or mortgage payments. And with multiple families come multiple vehicles.
Overall, I think eliminating this eyesore will help maintain property values. But my question is WHERE (for multi-vehicle families in rental or low-income areas) the additional vehicles will be parked if the home’s owner is unwilling or unable to afford to build an additional park pad.
Enforcing this new ordinance is going to be difficult, if not impossible. If vehicles cannot be parked in the yard, they may end up being parked in the street, causing difficulty for traffic. They won’t go away, and fining property owners or tenants will not necessarily solve the problem.
Rogers is considering a similar ordinance.
For more information:
http://www.nwanews.com/story.php?paper=adg§ion=News&storyid=181226
http://www.nwaonline.net/articles/2007/03/11/news/031207rzcounciladv.txt
Monday, December 04, 2006
Manufactured Housing Could Help the Reduce the Shortage of Affordable Housing
Whether you call manufactured homes by their proper designation or still refer to them as mobile homes (or even trailers), there continues to be a stigma attached to them. On the other hand, with the increasing urbanization of Washington and Benton Counties, formerly rural areas are now becoming high-end subdivisions, so that the old mobiles in the area now detract from the value of the new housing being built.
It’s a “Catch 22.” We need affordable housing. Land prices have skyrocketed so that new “stick-built” homes are too expensive for many workers whose salaries have not kept pace with the cost of housing. Manufactured housing might provide a lower-cost alternative. But the current climate of development with regard to manufactured housing is “not in my backyard.” The old attitudes still apply.
New manufactured homes are built to an exacting Federal construction code implemented in 1974, known as the HUD Code. They are transported and installed under state and local laws and regulations. The HUD Code encompasses construction and performance of heating, air conditioning, ventilation, plumbing, thermal and electrical systems. Many manufacturers view the HUD Code as minimum performance standards and exceed those standards in their basic designs plus offer upgrades for increased energy efficiency and overall performance. And if such a home has a bank-approved permanent foundation, it is eligible for regular mortgages, rather than high-interest loans, and it has a decidedly increased re-sale value.
Some parts of the country (Arizona being a good example) have lovely parks, especially for retirees, where people can either rent a space for their manufactured home or buy their land in a park. Many of these parks offer swimming pools, community centers with large kitchens, pool tables and meeting spaces, etc. To assure ongoing aesthetics, regulations usually cover everything from maintenance of the exterior of the home to pets, fences, parking and clotheslines. Residents frequently become close friends with their neighbors and feel a deep sense of security because they care about and look out for each other.
I am sorry to say, this type of park does not exist in NW Arkansas. Most here are meccas for lower income dwellers, and they don’t have a lot of amenities such as those described above. But they do often develop a sense of community, according to local owners of existing mobile home parks. And they do provide a low-cost alternative for residents who cannot afford a “stick-built” home.
Let’s analyze the situation for a moment. The cause of the bad reputation of manufactured homes is not the quality of construction; it is what some people who live in manufactured homes do to their home sites. One does not have to go very far in NW Arkansas to find old trailers, mobile homes, and even newer manufactured homes surrounded by junk—the term for this is “trailer trash.” I have never been able to understand why some people prefer to decorate their yards with old washing machines, sofas, and vehicles that haven’t been usable for many years.
However, I must say that owners of manufactured homes do not have an exclusive on that type of décor. I have also observed many older homes where residents of stick-built homes do the same thing. A couple of these come immediately to mind. One has gone so far as to not only leave his junked vehicles and dead refrigerators in the front yard, he has even imported other refrigerators and freezers to keep them company. The other one is definitely a Ford man – every pickup he has owned in the past 30 years is parked in his yard where he can see them and be reminded daily of their past lives.
But there are many good things about manufactured homes that should not be overlooked. Foremost is affordability. With the escalating price of land in NW Arkansas, builders can no longer afford to construct "starter" homes for under $100K as was possible even a few years ago. So-called "moderately priced housing" now starts at about $140K because of escalating land prices.
The latest information I have from Northwest Arkansas Regional Planning Commission defines affordable housing as a single-family home with a permit value under $75,000 (this does not include the land or lot). In NW Arkansas only 2.1 percent of housing units added in 2004 were valued below $75,000, and in the past couple of years the situation has worsened. It is easy to see a huge gap between what is being built and what is affordable for many families.
Prices are more affordable in the far western part of Washington and Benton Counties, and in the southern part of Washington County. Madison County and other more rural areas continue to be somewhat affordable but living that far out means longer commute times and increased travel expenses to the major NW Arkansas towns, where most of the jobs are.
Another problem is zoning regulations. Arkansas’ Affordable Housing Accessibility Act took effect October 1, 2003. It requires cities to allow prefabricated homes in at least one residential zoning district but implementation has been slow. The fear (and unfortunately, the reality) is that the new, often up-scale homes will be devalued by the mobile homes next door. Fayetteville and Bentonville have already changed their ordinances to conform to the new law. Fayetteville now allows them in an agricultural-residential district, and Bentonville has one residential manufactured housing district.
Since there has been no real zoning in the unincorporated areas of Washington and Benton Counties, the rural areas are where most manufactured homes are found. However in recent years, many people with land for sale place have placed deed restrictions on the land prohibiting mobiles/manufactured homes of any kind. It is increasingly difficult, even in rural areas, to find land where manufactured homes may be placed. Perhaps one answer (with the advent of zoning rules for Washington County) would be to designate some areas and/or rules for manufactured housing.
As more and more land is gobbled up for apartment buildings and stick-built homes, spaces in existing parks for manufactured homes have become ever more scarce. I can’t think of any new parks being built in NW Arkansas recently, although several have disappeared. Several existing mobile home parks have a zero occupancy rate, so the demand is there.
The challenge becomes more acute as NW Arkansas grows from being a predominantly rural area with a scattering of small towns to an urbanized metropolitan area. Now many people simply cannot afford the average stick-built home. Should they be forced to pay rent forever? Should they be forced to move somewhere else more affordable?
We need workers if we hope to sustain and grow the economy of NW Arkansas. The workers deserve a place to live – and a home they can call their own IS the “American Dream.” Our city officials must consider affordable housing alternatives in a realistic fashion and overcome traditional stereotypes. If manufactured housing is not included by planners, then what is the alternative?
For more information:
http://www.amha.net/enter/questions.htm
http://www.nwanews.com/story.php?paper=adg§ion=Business_Matters&storyid=127513
http://www.nwanews.com/story.php?paper=adg§ion=News&storyid=37130
http://en.wikipedia.org/wiki/Mobile_homes
http://publicarticles.info/articles/mobile_homes/index.asp
http://www.hud.gov/homes/manufactured.cfm
It’s a “Catch 22.” We need affordable housing. Land prices have skyrocketed so that new “stick-built” homes are too expensive for many workers whose salaries have not kept pace with the cost of housing. Manufactured housing might provide a lower-cost alternative. But the current climate of development with regard to manufactured housing is “not in my backyard.” The old attitudes still apply.
New manufactured homes are built to an exacting Federal construction code implemented in 1974, known as the HUD Code. They are transported and installed under state and local laws and regulations. The HUD Code encompasses construction and performance of heating, air conditioning, ventilation, plumbing, thermal and electrical systems. Many manufacturers view the HUD Code as minimum performance standards and exceed those standards in their basic designs plus offer upgrades for increased energy efficiency and overall performance. And if such a home has a bank-approved permanent foundation, it is eligible for regular mortgages, rather than high-interest loans, and it has a decidedly increased re-sale value.
Some parts of the country (Arizona being a good example) have lovely parks, especially for retirees, where people can either rent a space for their manufactured home or buy their land in a park. Many of these parks offer swimming pools, community centers with large kitchens, pool tables and meeting spaces, etc. To assure ongoing aesthetics, regulations usually cover everything from maintenance of the exterior of the home to pets, fences, parking and clotheslines. Residents frequently become close friends with their neighbors and feel a deep sense of security because they care about and look out for each other.
I am sorry to say, this type of park does not exist in NW Arkansas. Most here are meccas for lower income dwellers, and they don’t have a lot of amenities such as those described above. But they do often develop a sense of community, according to local owners of existing mobile home parks. And they do provide a low-cost alternative for residents who cannot afford a “stick-built” home.
Let’s analyze the situation for a moment. The cause of the bad reputation of manufactured homes is not the quality of construction; it is what some people who live in manufactured homes do to their home sites. One does not have to go very far in NW Arkansas to find old trailers, mobile homes, and even newer manufactured homes surrounded by junk—the term for this is “trailer trash.” I have never been able to understand why some people prefer to decorate their yards with old washing machines, sofas, and vehicles that haven’t been usable for many years.
However, I must say that owners of manufactured homes do not have an exclusive on that type of décor. I have also observed many older homes where residents of stick-built homes do the same thing. A couple of these come immediately to mind. One has gone so far as to not only leave his junked vehicles and dead refrigerators in the front yard, he has even imported other refrigerators and freezers to keep them company. The other one is definitely a Ford man – every pickup he has owned in the past 30 years is parked in his yard where he can see them and be reminded daily of their past lives.
But there are many good things about manufactured homes that should not be overlooked. Foremost is affordability. With the escalating price of land in NW Arkansas, builders can no longer afford to construct "starter" homes for under $100K as was possible even a few years ago. So-called "moderately priced housing" now starts at about $140K because of escalating land prices.
The latest information I have from Northwest Arkansas Regional Planning Commission defines affordable housing as a single-family home with a permit value under $75,000 (this does not include the land or lot). In NW Arkansas only 2.1 percent of housing units added in 2004 were valued below $75,000, and in the past couple of years the situation has worsened. It is easy to see a huge gap between what is being built and what is affordable for many families.
Prices are more affordable in the far western part of Washington and Benton Counties, and in the southern part of Washington County. Madison County and other more rural areas continue to be somewhat affordable but living that far out means longer commute times and increased travel expenses to the major NW Arkansas towns, where most of the jobs are.
Another problem is zoning regulations. Arkansas’ Affordable Housing Accessibility Act took effect October 1, 2003. It requires cities to allow prefabricated homes in at least one residential zoning district but implementation has been slow. The fear (and unfortunately, the reality) is that the new, often up-scale homes will be devalued by the mobile homes next door. Fayetteville and Bentonville have already changed their ordinances to conform to the new law. Fayetteville now allows them in an agricultural-residential district, and Bentonville has one residential manufactured housing district.
Since there has been no real zoning in the unincorporated areas of Washington and Benton Counties, the rural areas are where most manufactured homes are found. However in recent years, many people with land for sale place have placed deed restrictions on the land prohibiting mobiles/manufactured homes of any kind. It is increasingly difficult, even in rural areas, to find land where manufactured homes may be placed. Perhaps one answer (with the advent of zoning rules for Washington County) would be to designate some areas and/or rules for manufactured housing.
As more and more land is gobbled up for apartment buildings and stick-built homes, spaces in existing parks for manufactured homes have become ever more scarce. I can’t think of any new parks being built in NW Arkansas recently, although several have disappeared. Several existing mobile home parks have a zero occupancy rate, so the demand is there.
The challenge becomes more acute as NW Arkansas grows from being a predominantly rural area with a scattering of small towns to an urbanized metropolitan area. Now many people simply cannot afford the average stick-built home. Should they be forced to pay rent forever? Should they be forced to move somewhere else more affordable?
We need workers if we hope to sustain and grow the economy of NW Arkansas. The workers deserve a place to live – and a home they can call their own IS the “American Dream.” Our city officials must consider affordable housing alternatives in a realistic fashion and overcome traditional stereotypes. If manufactured housing is not included by planners, then what is the alternative?
For more information:
http://www.amha.net/enter/questions.htm
http://www.nwanews.com/story.php?paper=adg§ion=Business_Matters&storyid=127513
http://www.nwanews.com/story.php?paper=adg§ion=News&storyid=37130
http://en.wikipedia.org/wiki/Mobile_homes
http://publicarticles.info/articles/mobile_homes/index.asp
http://www.hud.gov/homes/manufactured.cfm
Tuesday, September 19, 2006
IS HOUSING AFFORDABLE AND ATTAINABLE IN NW ARKANSAS?
I am becoming increasingly concerned about the difficulties many working people are encountering in their quest for the American dream – home ownership.
Probably the most important factor is, as I have mentioned previously, wages have not kept up with land and construction costs. But there are additional factors that enter the picture – zoning regulations, density requirements, impact fees, and lack of incentives for developers to build smaller, more affordable homes. Several weeks ago, there was a feature article in the NW Arkansas times about this issue in Fayetteville, but the problem stretches across NW Arkansas.
In Fayetteville, a contributing factor is tree canopy regulations. I agree that an essential part of Fayetteville's flavor is the trees. On the one hand, the rules that developers must follow make sense to me. But conversely, following those rules costs a lot of money that gets added to the sales price of the home.
Impact fees provide the funding for roads, water and sewers, police and fire protection, public parks, etc. No one argues the necessity for this infrastructure but the impact fees add several thousand dollars to the cost of each and every new home built, regardless of the value of the home. Essentially this is a regressive tax. Why not have a sliding scale for impact fees? Lower the fees for an affordable home and increase the fees as the value of home increases.
If NW Arkansas is to continue growing and prospering, we must find a way for the average worker to own an average home. Lack of attainable housing for workers puts serious constraints on growth. Employers cannot fill jobs if the workers cannot afford to live within a reasonable distance of their workplace.
I frequently hear complaints from residents who don’t want lower-cost higher-density neighborhoods built next to their more affluent neighborhood. But let’s face facts, folks, not everyone has a high-paying job. We need people who are willing and able to work at ALL of the available jobs. We need truck drivers to bring food to stores, we need factory workers to build products, we need hospital and restaurant workers, janitors, daycare workers, construction workers, store clerks and thousands of other workers. Without these people, very few of us would want to live here. Let’s be realistic – the average worker needs and wants a home just as much as a more affluent person.
It is imperative that cities establish criteria and develop policies that will encourage and enable builders to build more modest homes. This situation deserves serious consideration and action now. Let’s not waste several more years while we just talk about the problem.
There are many ways to make housing more attainable for working people. Perhaps it’s time to consider neighborhoods with row houses. Or, consider detached homes with less space between each one. Duplexes or quadplexes would be another idea. Built more as permanent homes instead of basic rental units, these multi-unit homes would be affordable because the owners could live in one unit while rental income would provide funds for the mortgage payment.
Condos can be another affordable way to own a home. Developers, especially in Fayetteville, are building condos at a record pace, but I can’t think of any that will be for the average working person. In many other parts of the country condos are affordable and desirable. Building costs are less per square foot, outside maintenance is usually taken care of by the homeowner’s association, and many condo communities share amenities such as a swimming pool that the average person could not otherwise afford.
However, after all this is said, housing is available in NW Arkansas if you know how to find it. Currently, there are some 150 homes available for less than $150,000. This includes lovely, desirable resale homes and even some brand new homes. You can get more information about them by going to my home search websites at http://www.findfayettevillehomes.com/ or http://www.nwarkansashomesearch.com/.
To find out how much home you can afford based on your annual salary, go to http://www.findfayettevillehomes.com/ and click on "Home Buying Calculator" in the Info Center at the right of the home page. Take a look at some of the other information and calculators while you’re there.
I can help you find a home – this is exactly what I do. It’s my full-time career. I am a Accredited Buyer Representative® (ABR®) and I represent buyers at no extra cost (commissions for homes listed by a Realtor® are included in the selling price of the home.)
Contact me at judy@judyluna.com. Helping people find a home they want and can afford is the most satisfying part of my job. I would be happy to help you do the same.
For more information:
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43758
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43754
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43753
Probably the most important factor is, as I have mentioned previously, wages have not kept up with land and construction costs. But there are additional factors that enter the picture – zoning regulations, density requirements, impact fees, and lack of incentives for developers to build smaller, more affordable homes. Several weeks ago, there was a feature article in the NW Arkansas times about this issue in Fayetteville, but the problem stretches across NW Arkansas.
In Fayetteville, a contributing factor is tree canopy regulations. I agree that an essential part of Fayetteville's flavor is the trees. On the one hand, the rules that developers must follow make sense to me. But conversely, following those rules costs a lot of money that gets added to the sales price of the home.
Impact fees provide the funding for roads, water and sewers, police and fire protection, public parks, etc. No one argues the necessity for this infrastructure but the impact fees add several thousand dollars to the cost of each and every new home built, regardless of the value of the home. Essentially this is a regressive tax. Why not have a sliding scale for impact fees? Lower the fees for an affordable home and increase the fees as the value of home increases.
If NW Arkansas is to continue growing and prospering, we must find a way for the average worker to own an average home. Lack of attainable housing for workers puts serious constraints on growth. Employers cannot fill jobs if the workers cannot afford to live within a reasonable distance of their workplace.
I frequently hear complaints from residents who don’t want lower-cost higher-density neighborhoods built next to their more affluent neighborhood. But let’s face facts, folks, not everyone has a high-paying job. We need people who are willing and able to work at ALL of the available jobs. We need truck drivers to bring food to stores, we need factory workers to build products, we need hospital and restaurant workers, janitors, daycare workers, construction workers, store clerks and thousands of other workers. Without these people, very few of us would want to live here. Let’s be realistic – the average worker needs and wants a home just as much as a more affluent person.
It is imperative that cities establish criteria and develop policies that will encourage and enable builders to build more modest homes. This situation deserves serious consideration and action now. Let’s not waste several more years while we just talk about the problem.
There are many ways to make housing more attainable for working people. Perhaps it’s time to consider neighborhoods with row houses. Or, consider detached homes with less space between each one. Duplexes or quadplexes would be another idea. Built more as permanent homes instead of basic rental units, these multi-unit homes would be affordable because the owners could live in one unit while rental income would provide funds for the mortgage payment.
Condos can be another affordable way to own a home. Developers, especially in Fayetteville, are building condos at a record pace, but I can’t think of any that will be for the average working person. In many other parts of the country condos are affordable and desirable. Building costs are less per square foot, outside maintenance is usually taken care of by the homeowner’s association, and many condo communities share amenities such as a swimming pool that the average person could not otherwise afford.
However, after all this is said, housing is available in NW Arkansas if you know how to find it. Currently, there are some 150 homes available for less than $150,000. This includes lovely, desirable resale homes and even some brand new homes. You can get more information about them by going to my home search websites at http://www.findfayettevillehomes.com/ or http://www.nwarkansashomesearch.com/.
To find out how much home you can afford based on your annual salary, go to http://www.findfayettevillehomes.com/ and click on "Home Buying Calculator" in the Info Center at the right of the home page. Take a look at some of the other information and calculators while you’re there.
I can help you find a home – this is exactly what I do. It’s my full-time career. I am a Accredited Buyer Representative® (ABR®) and I represent buyers at no extra cost (commissions for homes listed by a Realtor® are included in the selling price of the home.)
Contact me at judy@judyluna.com. Helping people find a home they want and can afford is the most satisfying part of my job. I would be happy to help you do the same.
For more information:
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43758
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43754
http://www.nwanews.com/story.php?paper=nwat§ion=News&storyid=43753
Wednesday, August 02, 2006
Arkansas Has Budget Surplus of $402 Million
The bad news is: Arkansas has a reputation as a relatively poor state with a long list of needs from roads, sewers, and infrastructure in general to improvements in education, helping the needy, and everything in-between.
The good news is: Arkansas has a budget surplus of more than $402 million for the fiscal year ended June 30, 2006. As you can imagine, everyone wants a piece of the pie.
Many of the ideas are worthy of consideration. Using part of the surplus to create a “rainy day fund” is certainly an excellent idea. Just because income exceeded expenses this year doesn’t necessarily mean next year will as rosy.
Governor Mike Huckabee believes a good portion of the surplus should be refunded to taxpayers. The governor says the refund could be handled in various ways: state income tax reduction, reducing or eliminating the sales tax on food, or even a direct rebate to taxpayers. So far the legislature has been in no hurry to do anything.
Arkansas has become increasingly dependent on the sales tax. Arkansans pay sales tax on just about everything except medical care and prescriptions. The bare essentials - food, clothing, and utilities - are taxed by the state, county, and city. Add those taxes together and you will quickly see that cities such as Fayetteville and Springdale have sales tax rates in excess of 9%.
As we all know, the sales tax is regressive. Poor people need essentials just as much as their more affluent neighbors but they have to pay a proportionately higher percentage of their income for them.
I’ve also heard talk about eliminating the sales tax that manufacturers pay on utilities. Most states do not have a similar tax so this makes Arkansas less attractive to manufacturers who may be considering a move.
Education is another high priority. In recent years, we’ve spent a lot of money for improvements from kindergarten through university levels but capital improvements have been falling through the cracks. It’s reasonable to assume the entire surplus could be spent for education without fulfilling every need.
Other ideas also have merit, especially for NW Arkansas: infrastructure and affordable housing. I have written previously about both subjects but I can’t say it too often. NW Arkansas is in gridlock. New roads, widening of existing roads, toll roads, overpasses, bypasses, etc., no matter what you call it, we need to build it. Large projects such as the Highway 412 bypass are only dreams at this point. Funding does not exist to even buy the land.
NW Arkansas has a growing population of homeless people and affordable housing is practically non-existent. Part of the surplus could be used to help feed and train people so they can get jobs. Then help them with down payments and/or subsidized interest rates to get them off the streets and into housing.
As I understand it, the state used to give turnback funds to the cities, but they have not been awarded since 1986, when cities were allowed to enact local sales taxes to add on to the state sales tax.
Perhaps it is time to turn back some or all or the surplus to the cities to use as they see fit. They know better than the state what is needed at the local level.
While I know it cannot happen, I would love to see the entire surplus sent to NW Arkansas. NW Arkansas’ booming economy helps the entire state. We pay a proportionately higher percentage of taxes to the state than the other areas. We need help with infrastructure now if our economy is to continue expanding.
For more information:
http://www.nwaonline.net/articles/2006/07/06/news/05lrrevenuereport.txt
http://www.nwaonline.net/articles/2006/07/08/news/03lrhuck.txt
http://nwanews.com/bcdr/News/33242/
The good news is: Arkansas has a budget surplus of more than $402 million for the fiscal year ended June 30, 2006. As you can imagine, everyone wants a piece of the pie.
Many of the ideas are worthy of consideration. Using part of the surplus to create a “rainy day fund” is certainly an excellent idea. Just because income exceeded expenses this year doesn’t necessarily mean next year will as rosy.
Governor Mike Huckabee believes a good portion of the surplus should be refunded to taxpayers. The governor says the refund could be handled in various ways: state income tax reduction, reducing or eliminating the sales tax on food, or even a direct rebate to taxpayers. So far the legislature has been in no hurry to do anything.
Arkansas has become increasingly dependent on the sales tax. Arkansans pay sales tax on just about everything except medical care and prescriptions. The bare essentials - food, clothing, and utilities - are taxed by the state, county, and city. Add those taxes together and you will quickly see that cities such as Fayetteville and Springdale have sales tax rates in excess of 9%.
As we all know, the sales tax is regressive. Poor people need essentials just as much as their more affluent neighbors but they have to pay a proportionately higher percentage of their income for them.
I’ve also heard talk about eliminating the sales tax that manufacturers pay on utilities. Most states do not have a similar tax so this makes Arkansas less attractive to manufacturers who may be considering a move.
Education is another high priority. In recent years, we’ve spent a lot of money for improvements from kindergarten through university levels but capital improvements have been falling through the cracks. It’s reasonable to assume the entire surplus could be spent for education without fulfilling every need.
Other ideas also have merit, especially for NW Arkansas: infrastructure and affordable housing. I have written previously about both subjects but I can’t say it too often. NW Arkansas is in gridlock. New roads, widening of existing roads, toll roads, overpasses, bypasses, etc., no matter what you call it, we need to build it. Large projects such as the Highway 412 bypass are only dreams at this point. Funding does not exist to even buy the land.
NW Arkansas has a growing population of homeless people and affordable housing is practically non-existent. Part of the surplus could be used to help feed and train people so they can get jobs. Then help them with down payments and/or subsidized interest rates to get them off the streets and into housing.
As I understand it, the state used to give turnback funds to the cities, but they have not been awarded since 1986, when cities were allowed to enact local sales taxes to add on to the state sales tax.
Perhaps it is time to turn back some or all or the surplus to the cities to use as they see fit. They know better than the state what is needed at the local level.
While I know it cannot happen, I would love to see the entire surplus sent to NW Arkansas. NW Arkansas’ booming economy helps the entire state. We pay a proportionately higher percentage of taxes to the state than the other areas. We need help with infrastructure now if our economy is to continue expanding.
For more information:
http://www.nwaonline.net/articles/2006/07/06/news/05lrrevenuereport.txt
http://www.nwaonline.net/articles/2006/07/08/news/03lrhuck.txt
http://nwanews.com/bcdr/News/33242/
Affordable Housing
Recent studies indicate that the term “affordable housing” is becoming an oxymoron.
The National Association of Realtors® surveyed 1000 people in June 2006. By a 2-1 ratio, respondents believed that high monthly payments were the biggest obstacle to buying a home.
The perception used to be that the down payment and closing costs were the biggest obstacles to home ownership. Now people are worried that monthly income cannot be stretched to meet monthly bills.
In addition to the mortgage payment itself, people worry about the cost of putting gasoline in their car, the ever-increasing price of utilities, rising property taxes, escalating healthcare costs, and higher insurance premiums.
If they have an adjustable rate mortgage, they know that soon that payment will also be higher.
For Middle Americans, home ownership is not only their dream but also the surest way to build wealth. Many feel that dream is no longer reachable.
The hurdles to home ownership are complex. However, Los Angeles Mayor Antonio Villaraigosa succinctly summed up a large part of the problem, “…the fact that wages haven't kept up with the cost of real estate." While average hourly wages have risen about 20% since 2000, the national median home price has soared 55%.
Another large part of the problem is escalating land prices in most of the country, and NW Arkansas is no exception. Even as recently as 3-4 years ago, a few local builders were still building so-called "starter" homes. These were somewhat basic, but usually had about 1000-1200 square feet, 3 bedrooms, 2 baths, and ceramic tile in the wet areas. These were usually available in outlying areas like Elkins and other smaller towns. Even in some of the major towns, there were homes for under $100,000. I can remember some new homes costing even significantly less than that.
Builders are no longer able to build “starter homes.” Because land is so expensive, builders are forced to build a larger home on a smaller lot and charge more for it. The new "affordable" homes start at about $150K to $160K in the major towns of NW Arkansas, although it is possible to purchase a less expensive, smaller home in some of the outlying areas, such as Siloam Springs, Lincoln, and Gravette, etc.
Another reason for higher home prices is the impact fees many communities charge to help pay for everything from roads and sewers to police and fire protection to parks and other municipal facilities. The fees, which amount to several thousands of dollars, are passed on to the homebuyer.
Thus, for people of modest means, increasingly this means they must choose whether to live in their own home farther from their work or pay rent and live closer. But with gas prices so high, living farther away means extra transportation costs and that increases monthly expenses. People who would have purchased a home in the past no longer qualify for these more expensive homes.
In the meantime, the glut of high-end homes continues.
For more information:
http://realtytimes.com/rtmcrcond/Arkansas~Springdale~judyluna
http://www.realtor.org/housopp.nsf/pages/pulsesurvey2006
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/NatlHsgOpPulseSurvey
http://www.usatoday.com/money/economy/housing/2006-06-26-affordable-homes-usat_x.htm
The National Association of Realtors® surveyed 1000 people in June 2006. By a 2-1 ratio, respondents believed that high monthly payments were the biggest obstacle to buying a home.
The perception used to be that the down payment and closing costs were the biggest obstacles to home ownership. Now people are worried that monthly income cannot be stretched to meet monthly bills.
In addition to the mortgage payment itself, people worry about the cost of putting gasoline in their car, the ever-increasing price of utilities, rising property taxes, escalating healthcare costs, and higher insurance premiums.
If they have an adjustable rate mortgage, they know that soon that payment will also be higher.
For Middle Americans, home ownership is not only their dream but also the surest way to build wealth. Many feel that dream is no longer reachable.
The hurdles to home ownership are complex. However, Los Angeles Mayor Antonio Villaraigosa succinctly summed up a large part of the problem, “…the fact that wages haven't kept up with the cost of real estate." While average hourly wages have risen about 20% since 2000, the national median home price has soared 55%.
Another large part of the problem is escalating land prices in most of the country, and NW Arkansas is no exception. Even as recently as 3-4 years ago, a few local builders were still building so-called "starter" homes. These were somewhat basic, but usually had about 1000-1200 square feet, 3 bedrooms, 2 baths, and ceramic tile in the wet areas. These were usually available in outlying areas like Elkins and other smaller towns. Even in some of the major towns, there were homes for under $100,000. I can remember some new homes costing even significantly less than that.
Builders are no longer able to build “starter homes.” Because land is so expensive, builders are forced to build a larger home on a smaller lot and charge more for it. The new "affordable" homes start at about $150K to $160K in the major towns of NW Arkansas, although it is possible to purchase a less expensive, smaller home in some of the outlying areas, such as Siloam Springs, Lincoln, and Gravette, etc.
Another reason for higher home prices is the impact fees many communities charge to help pay for everything from roads and sewers to police and fire protection to parks and other municipal facilities. The fees, which amount to several thousands of dollars, are passed on to the homebuyer.
Thus, for people of modest means, increasingly this means they must choose whether to live in their own home farther from their work or pay rent and live closer. But with gas prices so high, living farther away means extra transportation costs and that increases monthly expenses. People who would have purchased a home in the past no longer qualify for these more expensive homes.
In the meantime, the glut of high-end homes continues.
For more information:
http://realtytimes.com/rtmcrcond/Arkansas~Springdale~judyluna
http://www.realtor.org/housopp.nsf/pages/pulsesurvey2006
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/NatlHsgOpPulseSurvey
http://www.usatoday.com/money/economy/housing/2006-06-26-affordable-homes-usat_x.htm
Tuesday, May 16, 2006
Are Home Prices Coming Down? Probably Not, but Future Construction May Be More Affordable
If you are in the market for a big, beautiful home with all the upgrades you can imagine, now is a good time to start some serious shopping. There is a glut of expensive homes available, especially in Bentonville, but also throughout all of Northwest Arkansas.
In the first quarter of 2006, there were 2,084 complete but unoccupied new houses in Benton County. That’s an increase of 160 percent in available complete inventory from the first quarter of 2005, with a 63 percent increase in the most recent quarter alone. Washington County experienced a smaller inventory increase of 71 percent over the past year – still a sizable increase.
Excluding the completed homes, there were 19,206 lots in the 269 active subdivisions in NW Arkansas in the first quarter of 2006. Using the most recent annual absorption rate implies that the supply of remaining lots in NW Arkansas active subdivisions is sufficient for 35.9 months (or 3 years). There were an additional 19,200 residential lots that have been at least preliminarily approved in NW Arkansas communities.
For too long now, builders seemed willing to pay exorbitant prices for land to build new homes, and land speculators did their part to see that prices went consistently up. Hopefully those days are over, at least for the time being.
Builders use a general rule-of-thumb that says the cost of the land should be approximately 20% of the price of the new home. If the builder pays $75,000 for a lot, he will probably build a $350,000 house on it. Thus the asking price will be $425,000. That is a lot of money – far more than the average family can afford.
If the builder can’t sell his new homes in a timely manner, he can easily find himself in financial difficulties. He must continue paying his construction loans whether the homes are selling or not. It doesn’t require a crystal ball to see that the price of lots will have to come down or the homes built on them will stay on the market longer than many builders can tolerate financially. It is also possible that some builders will be forced out of business.
The average homebuyer in this area can easily qualify for a $100,000 home – but there are few available. Even if he qualifies for a $150,000 home, the selection is extremely limited, mostly older re-sale homes. Smaller, more affordable homes sell more quickly. The American dream of owning your own home is not yet dead, but it is seriously ill in NW Arkansas. Builders must cut back on 3,000 sq. ft. homes with every amenity a person can think of and start building what people can afford to buy. And there is some evidence that this trend might be starting.
In looking at the various reports and accompanying statistics that cross my desk every week, I’m beginning to see some signs that cut back may be beginning. One of these indicators is a -1.7% change in building permit values. While economists might see this as a "negative", I see this as a positive thing. With the glut of expensive homes on the market, a negative value here could possibly reflect the necessary adjustment for building more modestly priced homes in the near future.
Another indicator shows that construction employment in the area increased by 1.1%, which might indicate more construction is under way. Taken together, these statistics tell me that construction is increasing, but the value of what is being built is less—not altogether a bad thing from the point of view of affordability.
For more information:
http://www.nwaonline.net/articles/2006/05/07/business/01cleansing.txt
http://www.nwaonline.net/articles/2006/05/09/business/01skylineresidential.txt
In the first quarter of 2006, there were 2,084 complete but unoccupied new houses in Benton County. That’s an increase of 160 percent in available complete inventory from the first quarter of 2005, with a 63 percent increase in the most recent quarter alone. Washington County experienced a smaller inventory increase of 71 percent over the past year – still a sizable increase.
Excluding the completed homes, there were 19,206 lots in the 269 active subdivisions in NW Arkansas in the first quarter of 2006. Using the most recent annual absorption rate implies that the supply of remaining lots in NW Arkansas active subdivisions is sufficient for 35.9 months (or 3 years). There were an additional 19,200 residential lots that have been at least preliminarily approved in NW Arkansas communities.
For too long now, builders seemed willing to pay exorbitant prices for land to build new homes, and land speculators did their part to see that prices went consistently up. Hopefully those days are over, at least for the time being.
Builders use a general rule-of-thumb that says the cost of the land should be approximately 20% of the price of the new home. If the builder pays $75,000 for a lot, he will probably build a $350,000 house on it. Thus the asking price will be $425,000. That is a lot of money – far more than the average family can afford.
If the builder can’t sell his new homes in a timely manner, he can easily find himself in financial difficulties. He must continue paying his construction loans whether the homes are selling or not. It doesn’t require a crystal ball to see that the price of lots will have to come down or the homes built on them will stay on the market longer than many builders can tolerate financially. It is also possible that some builders will be forced out of business.
The average homebuyer in this area can easily qualify for a $100,000 home – but there are few available. Even if he qualifies for a $150,000 home, the selection is extremely limited, mostly older re-sale homes. Smaller, more affordable homes sell more quickly. The American dream of owning your own home is not yet dead, but it is seriously ill in NW Arkansas. Builders must cut back on 3,000 sq. ft. homes with every amenity a person can think of and start building what people can afford to buy. And there is some evidence that this trend might be starting.
In looking at the various reports and accompanying statistics that cross my desk every week, I’m beginning to see some signs that cut back may be beginning. One of these indicators is a -1.7% change in building permit values. While economists might see this as a "negative", I see this as a positive thing. With the glut of expensive homes on the market, a negative value here could possibly reflect the necessary adjustment for building more modestly priced homes in the near future.
Another indicator shows that construction employment in the area increased by 1.1%, which might indicate more construction is under way. Taken together, these statistics tell me that construction is increasing, but the value of what is being built is less—not altogether a bad thing from the point of view of affordability.
For more information:
http://www.nwaonline.net/articles/2006/05/07/business/01cleansing.txt
http://www.nwaonline.net/articles/2006/05/09/business/01skylineresidential.txt
Monday, March 06, 2006
High prices drive homebuyers to outlying areas
Living outside the main areas of employment and having to spend time and money commuting has long been a way of life for many people nationwide. And increasingly, Northwest Arkansas is no exception. Finding a nice home for less than $150,000 in Fayetteville, Springdale, Rogers or Bentonville is nearly impossible these days. That means people have to choose between renting, which offers no hope of equity or appreciation, and commuting to and from one of the outlying “bedroom” communities. For example, Rogers issued 375 building permits in the last 3 months of 2005 for homes with an average price of $177,989. Compare that to the average prices for homes in Gravette ($91,186), Decatur ($65,000), and Gentry ($77,500). With the cost of gasoline still at record high prices, the commute may be a trade-off, but with affordable homes rapidly disappearing in the 4 major towns of NW Arkansas, these outlying areas are the only hope for those wishing to purchase a home, building equity for the future, and acquiring a piece of the American Dream.
For more information: http://nwanews.com/adg/News/147089/
For more information: http://nwanews.com/adg/News/147089/
Sunday, February 26, 2006
My Take on the New Millken Report (see below)
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.
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.
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