Bitter Cold Strikes NW Arkansas

I’m writing this Friday at lunchtime. The outside temperature is 7 degrees F. The wind chill is approaching 15 degrees below zero. There are light snowflakes hitting the ground and it is all highly unusual for NW Arkansas.

Our region had snow Sunday followed by cold, which created hazardous driving conditions. Then it got colder. In fact, it’s been brutally cold since late Wednesday night and the forecast calls for more of the same. On Sunday, if all goes as expected, the daytime temperature should warm up to 34 degrees F. and then get a little warmer each day next week.

I realize NW Arkansas is not alone in the cold. Much of the northern and eastern parts of the country are at least as cold and some are even colder. Right now northern Minnesota where I grew up is slightly warmer than Fayetteville, Arkansas. (The kind of cold that northern Minnesota experiences every winter is a major reason why I no longer live there.)

It has been more than 20 years since NW Arkansas had a deep freeze like this one (and I hope it will be another 20 years before it happens again.)

Unusual cold is more dangerous in places where homes and buildings were not designed to handle it. Buildings in places like Minneapolis, Detroit, New York state, and northern New England have more insulation and larger furnaces for heat. Northern states also have more equipment to remove snow and sand roads. Residents in those climates normally have more warm clothes.

This time of year NW Arkansas would expect temps in the 30s and 40s. A cold night might be 20 degrees.

The result of the Arctic air is many faceted. It’s been too dangerous for school buses to navigate icy rural roads, thus schools are closed. In fact, many schools have not reopened since the holiday break. People are cold, pipes are freezing, and cars won’t start. Some older homes don’t even have central heating. It takes a lot of wood to try to heat a home that isn’t properly insulated.

There is good news, however. Several agencies in NW Arkansas have opened warming centers where people can go to avoid frostbite and worse. Many are offering hot food and some have cots for sleeping. At least one agency I heard of is allowing people to bring their pets – because many folks simply will not leave their pet behind to freeze.

So stay inside if at all possible – this too shall pass. I can't wait...

Happy New Year

It's a good thing 2009 is almost over. Not a good year for a lot of people. Hopefully 2010 will bring recovery to the recession and more prosperity to all. And for all sellers out there, I hope your house sells wherever you are, so you can move to NW Arkansas and purchase a home here. ;-) Happy New Year.

Consumer Confidence Up in NW Arkansas? I hope so.

When I was out shopping before Christmas I encountered horrendous traffic near the malls and lots of people in the stores. My impression was that “consumer confidence” in NW Arkansas was back in force.

Now that some of the business reports are coming in, the numbers show my impression was correct. Basically my observations of are “anecdotal” evidence but I also pull data from local sources and the MLS. So when the economists trot out the statistics I look for those to validate my gut feelings and in this case they did just that.

As I have mentioned in the past, Americans are saving more than they did before the recession and that’s a good thing. But for a healthy economy, people need to spend money. Individuals don’t often realize the impact their personal spending habits have on the economy as a whole. But the truth is that consumer spending is a huge driving force on the economy and people need to spend money if the recovery is to gain momentum.

I’m happy that things are picking up at the retail level. It’s a positive sign of economic recovery. My hope is that the housing market responds in kind.

For more information:

http://www.arkansasbusiness.com/article.aspx?zone=AB_DailyReport_Monday&lID=&sID=&ms=&cID=Z&aID=119367.54928.131493&page=2

http://www.arkansasbusiness.com/article.aspx?zone=AB_DailyReport_Monday&lID=&sID=&ms=&cID=Z&aID=119366.54928.131492

Some Positive News for the NW Arkansas Housing Market

There are a couple of events that I try to attend on a regular basis, because I get validation for my “feelings” about the market gleaned from my own business and from anecdotal evidence from other realtors. It’s “my homework” so I can stay apprised of trends in the market (in addition to the data I pull from the NW Arkansas MLS) and the effects of the economy on our area.

One event is the quarterly Skyline breakfast that Arvest bank sponsors for realtors, developers, builders and others in the housing business in NW Arkansas. Kathy Deck from the Center for Business and Economic Research at the U of A provides information about new home construction, absorption, and the economy of NW Arkansas. Mostly the report for Arvest deals with residential real estate, but normally there are also segments on multifamily housing and commercial real estate as well.

A second similar event is the quarterly Streetsmart breakfast coffee hour sponsored by that organization. Streetsmart is a commercial venture which provides similar data for profit to developers, builders and other real estate investors. They tend to focus more on commercial real estate, but they gather all kinds of data on residential and multifamily as well.

The third is the quarterly economic breakfast sponsored by the Center for Business and Economic Research at the U of A. This provides more general information about the economy with only limited information about the housing market itself. But what’s happening in the local (and national) economy influences housing, so it also becomes important for my personal quest for information.

The 3rd quarter Skyline breakfast was held about 3 weeks ago. Kathy Deck, the director of Center for Business and Economic Research at the University of Arkansas, was cautiously optimistic about the residential housing market, but we’re not out of the woods yet because of national economic trends, which also influence us here.

Third quarter 2009 numbers show signs that demand is beginning to lower the number of new homes available (decreased inventory), but the absorption rate has slowed, not because of over-supply such as occurred at the peak of our housing bubble here a few years ago, but rather because there are fewer people moving into the area.

Kathy always starts her talks with unemployment figures, because job growth is what fuels the demand for housing. As long as there is positive job growth in NW Arkansas people will be drawn here and thus purchase homes. However, the number of people moving here is about 1/3 of what it was at the peak several years ago. Nationally there has been a loss of 8 million jobs in every sector except health services and education. The latter are strong sectors here and the only sectors which have shown positive job creation. There have been some job losses here but not on the scale of the nation as a whole.

Nevertheless, sales of new-but-never-occupied homes increased 30% in the third quarter over the second quarter of 2009. Correspondingly, the available inventory of complete but unoccupied homes fell by 27%. But this is partially because building permits are way down.
The average price of homes continued to decline in the third quarter. The average price per square foot of homes sold in Benton County was $80.26 in the third quarter compared to $97.16 in the third quarter of 2006. In Washington County, the average price fell from $103.63 to $86.28 per square foot.

Other factors in the economy nationally have also affected the housing market in NW Arkansas. These include consumer sentiment--people are saving their money instead of spending it in part because they are being forced to (credit is less available now than it was in the past). Loss of employment have also made people cautious, so they are not buying things. Normally this is a good thing, but if everyone does it (as they are now) then the economy suffers. Retailers are putting fewer products on the shelves, “rationalizing SKUs”, and home builders are not building a lot of new spec homes.

The positive numbers regarding home sales have been spurred by income tax credits of up to $8,000 for first-time homebuyers. These credits were due to expire November 30, 2009 but have now been extended into 2010. And now a new credit is available to current homeowners who wish to buy another home. (For more information on either of these credits, read my blog below, “Homebuyer Tax Credit Extended! Hurray!” posted November 15, 2009.

My suspicion that the multifamily and commercial sectors are suffering was borne out at the Streetsmart Coffee Hour held last week. Tom Reed of Streetsmart spoke and presented some additional economic data which basically supported what Kathy Deck had to say. Hotel/motel tax receipts are down, and those for restaurants are the same as for last year in the 3rd quarter. Job creation has declined—non-farm jobs in NW Arkansas are down by 1.4% or about 3000 jobs. This is better than the state and national figures (2.4% state decline in non-farm jobs and 4% national decline) but compared to past years when we had a job growth surplus, the decline is not good news.

For residential housing, building permits are down—there’s been a 23% decline when comparing Q1-3 of 2009 to Q1-3 of 2008. Also home prices have declined by 8.1% when Q3 of this year is compared to Q3 of last year in Benton County and by 6% in Washington County. However, the amount of decline is less than what it has been in previous quarters, leading one to believe that perhaps prices are leveling off. But the number of home sales is up.

An interesting fact mentioned by Reed was that there were a substantial number of home sales recorded in the county records which were not in the Multiple Listing Service. When asked to account for the large number of homes not listed or sold by a realtor, Reed speculated that these were sales by banks. Essentially the number of new home sales in the first three quarters of 2009 (as recorded in the MLS) was doubled when non-MLS sales recorded in the country records were counted: 287 new home sales reported by the MLS of 526 new home sales in active subdivisions recorded in the county records in Benton County and 170 new home sales reported by the MLS of 340 new home sales in active subdivisions recorded in the county records in Washington County.

According to Reed, the bottom line for residential home sales in the 3rd quarter showed new construction activity slow but building permit totals increased during the year. There will need to be some housing starts or the time will come when there are no new homes available. There was a continued reduction in inventory of complete but not occupied dwellings—the number of these decreased by 23.5% from the 2nd quarter. Interest rates remain low and the home buyer credit appears to be having an effect in increased buyer activity. Lot sales were up significantly in Q3.

For multifamily the situation is that there is an oversupply—in Fayetteville the vacancy rate is almost 18% due to a number of new apartment complexes which have come on line recently. Siloam Springs has a 16% vacancy rate, Springdale 14%, Rogers over 12% and Bentonville approximately 11%. Basically it is too high in all markets in NW Arkansas. Lower end homes for sale are competing with multifamily rentals. This could be an effect of the tax credit for first time buyers.

There is also an oversupply of commercial space. Nationally the vacancy rate for class A and B office space is about 15-16%. In NW Arkansas the vacancy rate is about 19-22% (varies by town). According to Reed, if office space to be absorbed, jobs need to be created. Office space is directly tied to job creation. The situation is similar for retail space. The vacancy rate for class A and B retail space nationally is about 11.5-12%. In NW Arkansas it is about 15-16%. And occupancy rates for hotels here is declining due to many new hotels constructed in the past few years.

Of particular concern in the commercial arena, according to Reed, is the amount of maturing commercial debt. Nationally, of $3.5 trillion of outstanding debt in mid-2009, $1.56 trillion of that debt will be coming due within the next 36 months, when loans will be re-set/refinanced. In past recessions, small businesses have been responsible for growth with a loss of only about 9% of jobs. In this recession there has been a 45% job loss in small businesses. Because of the linkage of small business with local community banks, small businesses will be in trouble if community banks cannot give them loans. Ultimately job creation must improve for absorption of vacant commercial space.

Bottom line from these two reports is that the increase I have noticed in residential activity is not a figment of my imagination. I would suspect that the 4th quarter numbers will show some more positive trends. As I mentioned at the beginning, we’re not out of the recession yet but the picture is not all doom and gloom.

For more information:

http://www.arkansasbusiness.com/article.aspx?zone=AB_ENEWS_EarlyLateBreaking&lID=&sID=&ms=&cID=PM&aID=118766.54928.130892

http://www.nwanews.com/news/2009/nov/24/little-progress-noted-housing-20091124/

Bikes, Blues and Barbecue Announces Charitable Contributions

$45,000 – that’s the amount Bikes, Blues and Barbecue Motorcycle Rally was able to donate to local charities last week. It comes at a time when many worthwhile causes are in great need due to the economic downturn.

The recipients include such well-known names as Big Brothers & Big Sisters, Habitat for Humanity, Humane Society of the Ozarks, Muscular Dystrophy, and the Jones Center for Families. Several more non-profit groups perhaps not as widely known but equally worthwhile include Peace at Home Shelter, Fayetteville Public Education Foundation, Horses for Healing, and CASA of Northwest Arkansas.

Bikes, Blues & Barbecue was not able to make any donations in 2008 because of expenses incurred to enlarge venues and other one-time expenses so it’s wonderful to see the rally back in the black.

Since 2000, BBB has given more than $500,000 to local charities.

Kudos for all you do!

For more information:

http://www.bikesbluesandbbq.org/charities.htm

Homebuyer Tax Credit Extended! Hurray!

Check out this video to get all of the details on the extension of the first time home buyers tax credit.

$8000 Home Buyer Tax Credit

Last Friday, President Obama signed the law to make the extension official, after the Senate gave its approval and the House of Representatives voted overwhelmingly to pass the legislation.

The $8,000 first-time homebuyer tax credit was supposed to expire Nov. 30, 2009, but now it will be extended for contracts signed before May 1, 2010 that close before July 1, 2010. First-time buyers, who are in the process of closing now, no longer have to worry about qualifying for the $8,000 tax credit if they do end up closing after the Nov. 30 deadline. The new legislation also increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the current level.

But not only a time-limit extension was part of the new bill. The tax credit was also extended to include home buyers who already own a home. They can apply for a $6,500 tax credit for the purchase of another home. To be eligible, the existing homeowners must have lived in their current residence for five of the prior eight years and the eligible homes must be worth $800,000 or less. Both credits are available only for primary residences, not second homes or investment properties. The legislation took effect November 7, 2009 and is not retroactive.

The original first-time homebuyer tax credit jump-started the housing market, driving home sales to the highest level in more than two years. The National Association REALTORS® reported sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2 percent higher than the 5.10 million-unit pace in September 2008.

News about News in Northwest Arkansas

I suppose it was inevitable, but the merger of the two major newspapers in Northwest Arkansas has saddened me. Readers and advertisers alike will no longer have a choice of newspapers. Competition is virtually good – keeps everyone on their toes and helps keep prices down.

The merger includes the Northwest Arkansas Times in Fayetteville, Benton County Daily Record in Bentonville, Morning News in Springdale plus several weekly or twice-weekly newspapers, a Spanish language weekly and a monthly magazine devoted to Arkansas Razorbacks athletics.

Another sad result of the merger is the loss of jobs. More than 500 people are employed either full- or part-time by both newspapers. At this point, no one is sure how many will still have a job when the dust settles.

I’m surprised this is all taking taking place so rapidly – Sunday, November 1. The proposed merger was announced less than two months ago (September 3, 2009). Seems like a huge effort and yet the pieces fell into place as soon as the U.S. Department of Justice concluded the proposed merger would not create any antitrust violations. The Justice Dept. used to feel differently about these things but faced with the reality that newspapers have suffered huge losses across the country, the merger was quickly approved.

All versions of the newspaper will include the Arkansas Democrat-Gazette but depending on locality, readers will also receive either the Northwest Arkansas Times, Benton County Daily Record, or the Morning News. It’s possible the Morning News will publish slightly different versions for Rogers and Springdale.

To access the versions not included in a particular area, readers will either have to drive to a newstand in that area or go online. Newspaper subscribers are permitted free access to websites but others must pay a monthly fee for the privilege.

I must say I’m a little put out about that. While I can sympathize with their plight (i.e., subscriptions and advertising way down), if two of the premier newspapers in the country (New York Times and Washington Post), among others, are still free, I sort of resent having to pay to read the local newspaper.

On the other hand, a lot of realtors no longer advertise in the newspaper (or magazines either), contributing to the problem. Statistics show that about 90% of home buyers now find their home on line. With home sales down and limited advertising dollars, the real estate industry is changing. The same is probably true for other industries. And unfortunately our local papers are paying the price.

C'est la vie.

For more information:

http://arkansasnews.com/2009/09/03/northwest-arkansas-newspapers-seek-joint-venture/

http://www.arkansasbusiness.com/article.aspx?zone=AB_DailyReport_Tuesday&lID=&sID=&ms=&cID=Z&aID=118172.54928.130298&view=all

http://www.arkansasbusiness.com/article.aspx?zone=AB_DailyReport_Tuesday&lID=&sID=&ms=&cID=Z&aID=118171.54928.130297

Good Economic News in NW Arkansas

Some thoughts from the Arkansas Economic Issues Breakfast meeting I attended a few weeks ago on September 30…

First, at little background: This was the first in a semi-annual series bringing together Arkansas’s business, community, education and government leaders via video conferencing. There were people gathered in 7 locations, and speakers at three of them. In Fayetteville, the gathering was held at the Sam Walton School of Business at the U of A. The series is sponsored by Arkansas Business to promote economic development by disseminating high-quality information and analyses.

Governor Mike Beebe in Little Rock kicked off the event with good news: "We've added 22,000 new manufacturing jobs in the last 20 months.” Beebe also said we are on the brink of several non-U.S. companies coming to Arkansas.

The general consensus is that Arkansas has endured the recession considerably better than many states. Unemployment rates here never came close to double digits and the housing market did not suffer the huge declines seen elsewhere.

Kathy Deck, director of the University of Arkansas (Fayetteville) Center for Business and Economic Research, stated the recession is technically over, while at the same time acknowledging that the average consumer may not yet be ready to agree. People are still worried about the future in general and continue to be concerned about possibility of unemployment and the decline in value of homes and 401(k) retirement accounts.

On a scale of 1 to 5, with 1 being much better and 5 being much worse, the Fayetteville area's economic condition was ranked 2, which is better than all other areas in the state.

To summarize, NW Arkansas appears to have come through the recession better than the rest of the state and Arkansas, better than many other states.

However, there is always room for improvement. Highway construction, transportation, education, improving job skills, and business investment and expansion are at the top of everyone’s list. Other concerns include the overbuilt real estate market and health care.

For more information:

http://www.arkansasbusiness.com/printable.asp?aid=117380

Deadline to Pay Property Taxes is October 13, 2009

The normal deadline for paying property taxes and personal property taxes is October 10th each year but because the 10th is a Saturday, 11th a Sunday, and Monday the 12th is a Holiday, there is a small reprieve.

Many homeowners pay their taxes as part of their monthly mortgage payment. The annual tax is divided into 12 and the homeowner pays 1/12 each month. The bank holds the tax portion of the payment and then pays the property tax when due. If this is your situation, you can relax since your property taxes have already been paid.

But if you don’t have a mortgage or don’t pay taxes as part of your mortgage, be aware October 13th is rapidly approaching.

When the bills were sent out last spring, they included an option to pay taxes in three payments. If you took advantage of that, don’t forget the third and final payment.

Personal property taxes on cars, trucks, boats, etc., are also due October 13th.

Late payments incur an automatic 10% penalty plus interest.

You can pay your taxes in person but in Washington County this year that is rather inconvenient due to very limited parking. The parking garage is being demolished and a new one will be operational next year. In addition to paying in person or mailing a check, both Benton and Washington Counties offer an ePayment Service. You can pay by Visa, MasterCard, Discover or American Express credit card. Washington County also accepts payment via eCheck - a method of debiting the funds electronically from your checking account just as though you had written a check.

However, be advised that if you use any of the methods just mentioned, you will incur a processing fee. The county websites state, “Because we are a governmental entity, all costs associated with the convenience of credit card usage and bank account transfers cannot be deducted from your tax amount due.”

The web addresses for paying online are:

https://www.ark.org/washingtoncounty/index.php
https://www.ark.org/bentoncounty/index.php

Bikes, Blues and Barbeque in Fayetteville, AR

What a party! The 10th annual Bikes, Blues and Barbeque Rally was held in Fayetteville September 23-26, 2009. If you weren’t there, you should have been. Hundreds of thousands of people made their way to the festivities for music, food, seeing and being seen, parade of power, poker run, and more.

There were all kinds of bike competitions: plenty of conversions, plenty of chrome, and all shining in the sunshine.

I couldn’t count all the bands and musicians that were on hand to provide music and dancing.

The Barbecue cook off saw 53 teams compete and was won by The Smokin Hills of Overland Park, Kansas.

The Ozark Mountain weather certainly contributed to the success of Bikes, Blues BBQ. We’d had quite an unusual spell of overcast weather leading up to opening day. As soon as the rally started, blue skies broke through and temps stayed in the low 70s. Just absolutely gorgeous weather.

The whole purpose of Bikes, Blues & BBQ is to conduct a safe, fun and family-friendly motorcycle rally and all profits go to local charities. It will take about a month for all expenses to be paid at which time the charitable donations will be announced.

Mark your calendar now for next year’s rally - September 29 – October 2, 2010.

For more information and pictures:

http://www.bikesbluesandbbq.org/

Back to the Drawing Board – Again – for Fayetteville High School

The voters of Fayetteville School District spoke clearly and loudly about the proposed 4.9 mil increase in their property taxes to build a new high school. The answer was a resounding NO!

Two huge factors unquestionably influenced the vote – the overall expense and calling for the election at a time when many people were already struggling to provide for their families.

I believe the large majority of residents agree that an updated facility is needed. So, it’s back to the drawing board for the school board. It took four years to reach the current point. How many more years for the next plan is anyone’s guess.

A few things to consider (or re-consider) based on some of the issues already on the table:

1. Reconsider the decision to add 9th graders to high school. Building a new high school for only grades 10-12 means a smaller, less costly school.

2. Reconsider the decision to demolish the 1991 addition because it’s “too old” to blend with new construction. It’s only 18 years old and it’s possible taxpayers are still paying for it. Several more millions of dollars saved. It could be that the most cost-effective solution is remodeling the current high school totally and making additions as necessary to accommodate future growth.

3. Reconsider remodeling the existing site and building a second high school on property the district already owns. In that case, I would divide the two schools by grade rather than by the part of town that students come from. This might bring the 9th grade back into the equation if one HS is for 9-10 grade and the “new” HS is for 11-12 grade (or vice versa). Creating two 4-year high schools in different parts of town could have unintended consequences as happened in Springdale, where a sort of “classist” divide has arisen between the old HS and the new Harber High, which has even affected property values in different parts of Springdale. This, despite the fact that the old Springdale High has been remodeled and has some innovative programs that the new Harber High doesn’t have.

4. Actually, while back at the drawing board, reconsider the decision to build a new school at the existing site. One of several reasons I heard for doing so was the nostalgia factor. Something like, “That’s where I went to school and we should keep the high school here.” I don’t understand that rationale. If all the buildings are demolished and a new school is constructed on that site, everything tangible – including the murals that many art students created over the years and which give the current HS a link to the past – is lost. All that’s left for fond memories is the dirt the school was built on.

As I’ve written previously, there are many valid justifications to build a new high school (or even a second high school or even just remodeling the existing school). Now that the millage proposal has failed, the school board must rethink their previous decisions, open the process to the people again because folks have learned much more about this issue than they knew even a few months ago, and move forward with an affordable plan. It can be done.

For more information:

http://www.nwaonline.net/articles/2009/09/15/news/091609fzelectionresults.txt

Vote Tuesday in Fayetteville!

Residents of Fayetteville School District have the opportunity to make their voices heard this Tuesday, September 15, regarding the proposal to increase property taxes by 4.9 mils to build a new high school.

This is just a reminder so no one will forget to vote on such an important matter.

I have written about this issue in the past, but I still have mixed feelings about the issue. Bottom line is that I think that Fayetteville needs a first class educational institution to continue to attract good people to live here. As a university town and cultural center of NW Arkansas, we provide a good education for our children. Fayetteville HS in the past has rated highly for academic excellence nationally, but the physical structure needs to keep up with the times and take us into the future. The issue involves the different ways to get there.

One the one hand, it seems that a first class facility could be obtained for less money. I didn’t follow the debate on whether the 9th grade should be included in the new school (basically I think it shouldn’t and a lot of money could be saved by not including them, but if that’s what has been decided through the democratic decision-making process, it’s no longer up to me).

But the big issue is paying higher taxes, and no one wants that unless there is a good reason.

On the other hand, there are some good things that can be said for a new HS.

Basically, Fayetteville voters need to decide about quality of life in the future, and the high school (even if one doesn’t have children who will be attending the school) is an important part of the equation. We need to attract new industry to the area, and people moving here want to know that their children will receive a good education. Fayetteville HS already has a great reputation and rates highly in terms of academics, even nationally. And whether to build a new HS has been through several years of eliciting public input on where and what will be built. What will be voted on is what has resulted from the public process. It’s what the people say they want. And I believe in letting the people decide.

In the interest of full disclosure, two things: 1) my son graduated from Fayetteville HS five years ago. I asked his opinion and he indicated that the physical plant probably needs some improvement. But surprisingly his main question had to do with what would happen with to great murals in the existing building. Those are part of the history of Fayetteville High and will probably be lost in the renovations. And that’s something no one has mentioned in the debate…. 2) I no longer live in Fayetteville, so whatever is decided won't affect me.

For more information, read my blog article dated July 11, 2009. Also there is a comprehensive article and some great letters to the editor in the Sunday (9/13/09) NW Arkansas Times. I’m not providing links any more because you now have to pay to read the Arkansas Democrat Gazette and all of its affiliate papers. The Morning News has an article on Sunday about how the different NW Arkansas school districts spend their money.

For both newspapers click on NW Arkansas Links on the home page of http://www.JudyLuna.com. Check the left column on the resulting page for the two newspapers.

Light Rail for NW Arkansas?

Picture working for Walmart, living in Fayetteville or Springdale and not having to fight traffic to get to and from work. Read the newspaper on the way (if they still exist) or keep up with your email. This could be the reality in 10 to 20 years in NW Arkansas.

Thursday the idea for light rail in NW Arkansas got a boost when the Washington County Quorum Court unanimously passed a resolution to implement a feasibility study on the issue. This is the first step toward getting federal funding for such a project.

This is welcome news to me, as I have been bemoaning the slowness of infrastructure improvements in NW Arkansas for a long time, especially for transportation. But the city of Fayetteville passed a similar resolution on July 7, and Springdale passed a similar resolution on August 25.

Some people think the idea is way too idealistic and can never come to pass, but a growing number of supporters say otherwise. Justice of the Peace Gary Carnahan, who brought forward the resolution is one of them. He compared the idea of light rail now to the development of the NW Arkansas Regional Airport and credited our “nice airport” to visionary people in the area.

For light rail, one of those visionaries is Stephen Luoni, director of the University of Arkansas Community Design Center in the Architecture Department. About a month ago, I heard Luoni speak at an informational meeting at the Fayetteville Public Library. It all made perfect sense to me since we already have the rails for a large part of the system. A majority of costs in other areas have been to acquire right of way, and we already have an underused rail system passing through all of our major towns.

The Community Design Center has already thought through many aspects of the project and compared it to similar projects in other parts of the country. Although NW Arkansas is not a major city, such projects in other less populated regions have met with success.

The poster child for light rail projects has been Dallas, where similar objections were voiced two decades ago. Now the Dallas rail system is considered to be one of the best in the country and has generated more than $1 billion in mixed-use, high quality urban development.

The NW Arkansas system would extend from the Fayetteville airport north through Fayetteville, Johnson, Springdale, Lowell, Rogers and Bentonville and end at the NW Arkansas Regional Airport. It could stimulate economic development, create new housing and commercial projects revitalizing central areas of our towns, and provide sustainable “green” growth instead of the sprawl that results from new highway construction. It would be a less expensive way to move more people, and it could enhance our already-famous quality of life indices.

Other advantages are that it would allow more parts of NW Arkansas to stay “natural” and create so-called Transit-Oriented Development (TOD). This type of development creates a lifestyle not just a transportation system, and it guides smart growth. I could go on, but there’s too much for just a blog article.

For the feasibility study to actually take place, federal funding must be pursued by the NW Arkansas Regional Planning Commission, the Northwest Arkansas Regional Mobility Authority, and the Northwest Arkansas Council.

I hope they start the process soon. It’s going to take a long time for all of this to happen so we need to start now.

For more information about the system envisioned, visit the U of A Community Design Center website at http://uacdc.uark.edu/. Download a nifty book about the envisioned transit system, or for a small fee, have them mail you a copy.

It’s Almost Time for Bikes, Blues and Barbecue in Fayetteville Arkansas!

Mark September 23-26 on your calendar and come to Fayetteville for the big BBB event. Each year it grows bigger and better.

What’s to do, you ask?

Show off your motorcycle, ride it in the Parade of Power or the Poker Run. If you don’t have a bike, there will be thousands of them to look at. Most of the major motorcycle companies will be present and some will offer demo rides.

Eat some of the best barbecue around or help decide the People’s Choice Award. The Kansas City Barbeque Society has added BBB to its 2009 Great American BBQ Tour.

Listen to great music – free.

Enjoy breathing good, clean air. Enjoy good, clean family fun. Enjoy the beautiful Ozarks.

And if all this isn’t enough, how about the fact that the proceeds go to local charities and no taxpayer funds are used to host the event. Hundreds of volunteers make it happen.

See you there?

For more information:

http://www.bikesbluesandbbq.org/

Sometimes “No Vacancy” is Good News

There’s been many a time while traveling that I saw “No Vacancy” signs and wished the “No” part wasn’t lighted. But according to the Arkansas Business Journal, hotels in Fayetteville and the surrounding area are happy to report “no vacancy” for both the Razorback football team’s opening game on September 19 and the big Bikes, Blues and BBQ shindig September 23-26 (more on that later).

I keep hearing pieces of good news in various sectors and one has to wonder if indeed the worst is over. I honestly don’t know about that but then, who does?

I do know to having sell-out crowds descend on Fayetteville is extremely good news. Let’s hope everyone has a wonderful September in NW Arkansas. We’ll tell them “Y’all come back real soon!”

P.S. If you haven’t made reservations yet for those two weekends, you might want to get on the phone or on line to do so.

For more information:

http://www.arkansasbusiness.com/article.aspx?zone=AB_ENEWS_EarlyLateBreaking&lID=&sID=&ms=&cID=PM&aID=116238.54928.128364

Benton County Property Taxes Lowered for Some

Benton County has lowered values on some residential real estate by more than $2.5 million dollars. That means about 38,000 people will see their tax bills lowered for 2009. Note that 2008 taxes, which must be paid in full by October 10, 2009 will not be affected.

The move was a result of a report by an independent appraiser that Benton County had hired due to the public outcry on reassessments. The adjustments were limited to residences in towns and cities, not business or commercial properties or rural residences, since the majority of devaluations were residential properties located in cities, according to the report.

The county is under no obligation to send notices of the adjustments to owners via U.S. Mail. To find out if your property is affected, you need to go online http://www.co.benton.ar.us/BentonCountyNews.aspx?id=22 and fill out a short form.

If you wish to appeal the assessment on your home, you need to contact the Benton County Assessor at 479-271-1000 between July 20 and August 17 to make an appointment with the board of equalization.

Washington County property owners take heart. The county assessor is seeking permission to begin a similar process. If she receives the go-ahead, it’s possible homeowners and landlords may see tax relief next year.

You can call the Washington County Assessor’s Office now at 479-444-1500 if you wish to appeal the appraised value on your property.

For more information:

http://www.nwaonline.net/articles/2009/07/08/news/070909bzequalization.txt

Mixed Feelings About Proposal for Fayetteville’s New High School

I have mixed feelings about the proposal to build a new high school for some 3,000 future students on the site of the existing high school in Fayetteville - and the 4.9 mill tax increase it will take to build it. Perhaps the best way to express my feelings is in the form of questions…

Given the current economic factors, what are the chances of taxpayers approving a measure that would increase their property taxes by almost $165 annually? The Washington County Assessor says taxes on an average house in Fayetteville (valued at $166,075) are currently $1425. The last time I checked, Fayetteville school taxes were the highest in NW Arkansas.

It’s expected those 4.9 mills will be on the tax bills for 30 years and when the economy improves and property values start increasing again, the $165 will go up in accordingly.

The strange thing about taxes is that they seldom if ever go down. By the time 30 years has passed no one seems to remember the increase was scheduled to stop. It’s usually a case of “Let’s continue those mils because we have many needs to fulfill.”

Fayetteville voters have, in recent years, been reluctant to pass millage increases. The largest millage increase passed by voters in the past 20+ years was 4% and many a proposal has been defeated.

Is it truly in the best interest of all parties to build the new school on the current site? I know public meetings were held with all sorts of factors and wishes considered but I sometimes think a better choice would be to build on a more level site to lower costs and remove disruptive construction activities while classes are in session.

I also think many taxpayers will readily recall the fact that the Fayetteville school board had the opportunity to sell the existing high school site to University of Arkansas for $50 million – money that would have gone a long way towards the cost of a new school at a different location and a much lower tax increase.

Fayetteville always wants something better than surrounding areas to set it apart - but at what cost? Is it really necessary to demolish the addition built in 1991 because to remodel it is not good enough for Fayetteville? Rogers used part of an existing site when it built a new high school and saved their taxpayers a good piece of change.

But the most interesting aspect of the entire proposal is this: $83 million to build the school but the school district is asking for $113 million – a difference of $30 million they say is needed for furnishings, specialized construction of classrooms, technology, staffing, and other operation costs.

Fayetteville’s proposal to build five smaller, friendlier buildings instead of one big building also adds to the cost plus the district says it will need more staffing for five buildings than it would for one large school.

Let’s look at the cost per student of Fayetteville’s proposal. At $83 million amount, that’s estimated to be $27,667 per student. At $113 million, that’s $37,667 per student. Springdale’s cost per student was $18,619, Rogers was $15,600 per student, and Bentonville came in at $17,534.

How much extra will it cost to make the new school LEED (Leadership in Energy and Environmental Design) compliant? The LEED Council says schools built to their standards use approximately 1/3 less energy and water and create some 75% less solid waste. The Council estimates building to LEED standards adds about 2% to construction costs. Everyone is thinking about the environment these days and Fayetteville as a whole is trying to go ‘green,’ so the LEED certification certainly seems desirable.

No one wants higher property taxes but everyone wants the best school possible. Now that I’ve just written that sentence, it screams out at me – COMPROMISE! Let’s build the best school we can afford!

Fayetteville is a great place to live, work and raise a family but does it need the most expensive public school ever built in our state? I really have trouble justifying the money it will take to earn that distinction.

I think the district has much hard work ahead to sell this proposal to the taxpayers. There’s a lot to consider before the September election.

For more information:

http://www.nwarktimes.com/nwat/News/77657
http://www.nwaonline.net/articles/2009/06/25/news/062609fzfayschlbrd.txt
http://www.nwaonline.net/articles/2009/06/18/columns/brenda_blagg/061909blagg.txt
http://www.nwarktimes.com/nwat/News/77779
http://www.fayar.net/community/p21ccharetteinfo.html
http://www.nwarktimes.com/nwat/News/77972/
http://www.nrdc.org/buildinggreen/leed.asp

Points to Ponder Regarding “Short Sales” and Foreclosures in NW Arkansas

This post is somewhat long—but the topic is complicated. Be patient and bear with me.

A lot of what’s on the market right now in NW Arkansas is either a short sale or a foreclosure (REO). This type of property is called a “distressed” property, and is very common across the country as well as in NW Arkansas.

When a home is sold for less than what the seller owes the lender, it is called a “short sale.”
In that case, the seller’s lender must approve the sale. But this is not as easy as it sounds.

Short sales were originally seen as a good deal for homeowners who found themselves in the sad position of owing more than their home was worth in the current market. It seemed simple enough for those sellers who were being relocated or absolutely had to sell for other reasons--get the mortgage holder (bank or other lender) to sign off on the sale, and everything would be over and done with. The seller would list and sell for less than what was owed, get a recordation of release or Satisfaction of Mortgage from the mortgage lender upon receipt of funds.

However, to sell a home as a short sale requires that the seller have a bona fide emergency (i.e. medical emergency, etc.) and not be able to sell his/her home under normal circumstances. This is a pre-foreclosure measure to try to protect the seller’s credit. But there is a lot of paperwork involved (including a “hardship letter”), and the banks are extremely slow to approve this type of transaction, despite recent government incentives to do so. Also, unlike REO or foreclosure properties, procedures for dealing with short sales within financial institutions have not yet been established and often take a long time. Thus even agents who specialize in short sales often have trouble getting the banks of their sellers to agree.

Ultimately if a seller has other assets (which would allow him to pay off his mortgage), is current on his payments, or is in the process of bankruptcy, the seller may not qualify for a short sale. Just being “upside down” with regard to selling one’s home is not enough.

On top of it all, it often turns out that buried in some fine print somewhere, mortgage holders have the right to pursue the difference between what was owed and the sales price. If the property has a second mortgage, a separate negotiation with that lender would also be required.

Lawsuits are becoming more frequent as lenders pursue every option to recoup their losses, especially if they determine the seller has other assets as opposed to being bankrupt.

Another aspect of short sales that was frequently overlooked is the income tax due on the amount of forgiven debt. In the past, IRS ruled that the amount of the discharged indebtedness had to be added to gross income for that year.

Now the feds have given a temporary break to most homeowners who sell short. A special form, Form 982-Reduction of Tax Attributes Due to Discharge of Indebtedness, needs to be filed with IRS.

Not to be overlooked is how state tax commissions will treat the situation. I highly recommend that anyone in this position consult with a tax professional, not to mention a real estate professional who specializes in this type of transaction.

If this all seems to be too complicated, the most important thing that people, who are behind on their mortgages, can do is talk to their lenders. It may take some doing to find the right person to talk to, but sometimes arrangements can be made for paying back their loans on new terms, etc. (i.e., loan modifications), so as to avoid a short sale or foreclosure. Basically the first step for people who want to remain in their homes is to contact their lender to see if there is a way to make an arrangement. They should not avoid calls from their lender when they are behind on their payments.

There are also important issues for buyers of properties listed as “potential” short sales.

Getting approval from the seller’s lender in a short sale situation often takes a long time – average about 90 days, and sometimes more. Thus if a buyer needs to "lock in" his interest rate for a 30- or 45-day period, there’s a good chance the short sale will not be able to close in that time.

From my point of view as a buyer agent, purchasing foreclosed properties (many of which are listed by realtors) may be easier and quicker than purchasing a property as a short sale. Those properties have already passed through the foreclosure process and can usually close in a normal time frame.

But there are also pitfalls there. First, foreclosure properties are normally sold “as-is, where-is”, which means that what you see is what you get. The seller (bank or other financial entity) will not be doing any repairs.

According to the normal Arkansas real estate contracts from the Arkansas Realtors Association, a buyer has 10 business days to have an inspection. If issues that make the buyer not want to purchase the home arise, the buyer can get out of the contract and get his earnest money back. There will be no repairs on the property, but at least the buyer will know what it will take to bring the property back to livable condition.

But in a recent training course which I attended on “distressed” properties, the instructors recommended that buyers take the inspector with them when they view the property even before making their first offer. If there is a major issue which will require extensive repairs, the inspector (without a written report and at a lesser price than a normal inspection) may be able to give an indication of what is wrong with the house before even making an offer. This would influence the offering price, while taking into account the cost to fix the problem.

Another aspect of foreclosures having to do with problems financing the foreclosed home, especially if it needs extensive work to make it livable and thus make it possible for the buyer’s loan to be approved. Banks and other financial institutions, who own the properties in question, do not want to make repairs, so if a home needs work, there may be a problem to get the buyer’s loan approved.

Normally mortgage loans permit buyers to purchase homes in livable condition. If the foreclosed home needs extensive repairs to put it in livable condition, there are a number of alternatives. If the home is a Fannie Mae owned home it may be eligible for Homepath Financing which will allow financing for the repairs. Freddie Mac has a program called Home Steps financing for homes owned by them.

If the home is not Fannie Mae or Freddie Mac owned, the FHA 203K program may provide a solution. This type of loan allows for funds to make repairs and bring the home into livable condition. However, most banks do not do this type of loan, so make sure the loan originator is familiar with the new “streamlined” version of this loan and can get it closed. Your realtor can help with recommendations in this regard.

The current real estate market situation is extremely complicated for sellers, especially those with problem mortgages. Often it depends on who “owns” your mortgage if you are having a problem. The people you make your payments to may not own your mortgage, but rather only be the “servicer”. If you are a seller wanting to sell your home, check with your realtor and your lender, especially if you are having problems.

The easiest solution ultimately (if you are a buyer) is when you can find a “normal” property, which is priced to compete with short sales and foreclosed properties. Normal properties at excellent prices are available and the buyer is less apt to run into title or other problems that more frequently rear their ugly heads on foreclosed properties or lengthy negotiations with lenders involved in a short sales.

The important thing is to have a buyer agent, knowledgeable about the market. Your agent can do a market analysis of recent sales in the area so you don’t pay too much and check on the history of the home to determine “wiggle room” for a potential offer.

And if you are a seller who does not have to sell and can continue to pay your mortgage, it is best that you do so and not put your home on the market now. This market will not last forever.

It’s a great time to purchase a home now, but not necessarily a great time to sell—except if you can save more money on the buying side compared to what you are losing on the seller’s side. And if you are an investor, there are some phenomenal “deals” out there now.

Your experienced real estate agent can guide you through the pitfalls of the current complicated market whether you are a buyer or a seller.

Look for a new forthcoming section about foreclosures and short sales on my main website at www.JudyLuna.com. I hope to have it up in a week or two. There will be more detailed information there.

For more information:

http://online.wsj.com/article/SB124104990739271023.html
http://www.fanniemae.com/homepath/homebuyers/buying_fanniemaeowned.jhtml
http://www.freddiemac.com
http://www.hud.gov

More Good News for NW Arkansas

NW Arkansas was ranked 2nd best in the country on Forbes Magazine’s recent list of best and worst cities for recession recovery. Forbes projected Northwest Arkansas' gross domestic product to grow from $13.9 billion to $14.5 billion by 2010.

It’s always refreshing to see good news about our area and to know that prestigious organizations recognize the good things happening here.

Of course, this is not the first time for such recognition. NW Arkansas frequently receives excellent ratings in such areas as Best Places to Retire and Best Places to Raise a Family by Sperling’s and Kiplinger as well as Forbes.

Just a few weeks ago, Forbes ranked our area as 4th Best Place in the country for business and careers.

And we continue to add about 100 new jobs each month - admittedly fewer jobs than a couple of years ago but is still a positive figure by anyone’s standards.

Other news reports this week continued the encouraging news.

Arkansas surpassed all but six states in personal income growth in the first quarter. Only 11 states were able to report a rise in income. Average for the whole country was a negative ½ of 1%.

Arkansas had the largest drop of all states in initial unemployment claims for the week ending June 6, a decline of 1,206 claims compared with the previous week, the department said.

I’m not saying everything is rosy – we all know it could be better. But good news is good news and these days anything good is worth knowing.

For more information:

http://www.forbes.com/2009/06/09/recession-economy-cities-business-beltway-recovery-cities_slide_3.html

http://www.nwarktimes.com/adg/National/262305/

http://www.arkansasbusiness.com/article.aspx?zone=AB_DailyReport_Thursday&lID=&sID=&ms=&cID=Z&aID=115496.54928.127622&page=2

http://www.nwarktimes.com:80/adg/News/262123

Open House Today 2-4 p.m.

Open house today at 2427 Summeroak in the Pinewood Subdivision north of Springdale. This home has everything that most folks want--over 3000 sf, 4 bedrooms plus office, 3.5 baths, 3-car garage, granite counters, 2 living areas, wood floors, crown molding, covered patio and more. $322,000. Pinewood subdivison is conveniently located and has a community pool and clubhouse, playground, and a pond for catch and release fishing. Smith Elementary and Harber High.

Directions: From I-540, take the Elm Springs exit, go east on Elm Springs Road, turn left (north) on 40th St., turn left (west on Falcon), turn right (north) on Pinewood. Turn right into subdivision. Turn right at T. House is toward the end of Summeroak on the right.