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

Beaver Lake is Rising but Water Conservation Still in Effect in Bentonville and Rogers

Northwest Arkansas has received several inches of much needed rain in the past couple of weeks but more is needed to get back to normal levels. It would appear that the major drought affecting this area has been alleviated for the time being.

As I write this article, the water level in Beaver Lake is in excess of 1113 feet above sea level. If memory serves me correctly, that is some eight feet above the low we experienced earlier this year. The optimum level is 1120 feet above sea level.

We are very fortunate to have the Beaver Water District to meet the needs of the people and businesses in this area. BWD currently has sufficient water and treatment facilities to supply up to 100 million gallons of treated water per day. So far that is well above the highest demand. The district has on-going expansion plans and resources to stay ahead of our growing population’s demand.

Getting the water to the users is the problem for Bentonville and Rogers. The two cities now share two water transmission lines, one 24 inches wide, the other 30 inches. Together, the lines can transport a maximum of 29.5 million gallons of water a day to the two cities.

Bentonville has started construction of a 48-inch water line which is scheduled to go on line in April or May 2007. When Bentonville’s new water line is complete, Rogers will purchase the two older lines and take over as sole user.

Until then, water conservation is the rule for both cities. Procedures, consisting of six stages of conservation, were put into place in 2005. Water usage drops during the winter months so the conservation rules were temporarily relaxed.

With summer returning and the population continuing to swell, it would seem likely that even more water conservation will be needed this summer.

The first two stages of conservation are considered voluntary and consist mainly of common sense – limit time in the shower, run the dishwasher and washing machine only when full, reduce outdoor usage and so forth. From there, the stages continue through moderate mandatory measures all the way up to and including water rationing.

For more information:

Beaver Water District information and links to many other resources:
http://beaverwaterdistrict.org/

City of Rogers Water Utilities:
http://rwu.org/conservation.htm

City of Bentonville water conservation ordinance: http://www.bentonvillear.com/docs/utility/water_conservation_ordinance.pdf

Will Your Taxes Be Higher or Lower in Arkansas?

Everyone asks me about taxes here in NW Arkansas compared to where they are moving from. It’s a hard question to answer, since it depends on where the person is moving from, and it depends on the situation of the person moving to NW Arkansas. I recently came across an article on the Internet (see below) that said Arkansas ranked in the middle of most to least tax-friendly states. According to this article, an Arkansan’s tax burden is 10.3% of his/her per capita income, which makes Arkansas #27 on the list.

Like most statistics, this list may or may not mean much to any one individual. It does take into consideration property tax, state sales and luxury taxes, state income taxes, fuel taxes, and more. But it does not consider many other types of taxes, such as city and local sales tax, excise tax, and estate and inheritance taxes. Nor has it considered tax credits you may qualify for or the type of income you have.

Last but not least, by its very nature it cannot consider those things that are most important to you and your family. Are you moving to Arkansas to take on a new position? Are you recently retired and looking for an agreeable climate where you can live without treacherous snow and ice for several months of the year? Do you need to move closer to family so you can help them or they can help you? How important is the cultural scene to you? Perhaps you’re more interested in beautiful scenery and good, clean air to breath than Broadway shows. These are all personal decisions that would hold more weight in a decision about where you want to live. Tax-friendliness of a state is much further down on the list for most people.

Different types of income have different tax consequences. Arkansas does not tax Social Security benefits, VA benefits, Workers’ Compensation, Unemployment Compensation, or Railroad Retirement benefits. Arkansas does not tax the first $9,000 of U.S. Military Enlisted compensation. The first $6,000 of U.S. Military Officer’s compensation is also exempt from state income tax.

The first $6,000 received from an employer-sponsored retirement plan and/or from an IRA distribution is exempt from Arkansas income tax. Arkansas also allows a direct credit of $21 against state income tax for everyone. If you are over 65, the credit is doubled. When the above factors are executed, many retirees find they have zero (0) state income tax to pay in Arkansas.

In every state, property taxes will vary according to the city, county, school district, library district, fire district, etc., where the property is located. The rule of thumb that we (realtors) use in Washington and Benton Counties is that property taxes will be slightly less than 1% of the purchase price, less the $300 Homestead Tax credit. This will vary according to municipality (i.e. their mil rate), and homes outside of city limits will have a mil rate less than those in a town.

According to Kiplinger’s Magazine, Arkansans pay very little property tax, $321 per capita. Only residents of Kentucky at $286, New Mexico at $283 and Alabama at $210 pay less. It’s not surprising that residents of two states that do not levy income taxes on earned income do pay considerably higher property taxes. New Jersey residents pay $1,591 per capita, New Hampshire residents pay $1,555 per capita and Texans pay $852.

Homeowners in Arkansas have who are at least 65 years age qualify to have their appraised evaluation capped. This provision helps senior citizens remain in their homes instead of being taxed out of them as evaluations increase. In addition, a property tax credit of up to $300 per year is available on a person’s principal place of residence, regardless of age.

And still another good point to note about Arkansas: it is heir-friendly. There is no estate tax in Arkansas.

The bottom line is that all political entities need revenue to provide services and that money must come from the people. All in all, I think Arkansas is very tax friendly compared to some other areas of the country.


For more information:

Washington and Benton County Property Millage Rates:

http://www.co.benton.ar.us/Administration/BCCollect/index.htm (scroll down and click on Current Millage Rates)
http://www.co.washington.ar.us (click on Information and then on Millage rates)

General Information about Taxes in Arkansas:

http://money.cnn.com/2006/04/10/pf/taxes/taxfriendly_states_2006/index.htm
http://www.bankrate.com/brm/itax/news/20051107a1.asp?caret=21
http://www.bankrate.com/brm/itax/state/state_tax_home.asp
http://www.bankrate.com/brm/itax/news/20051107b1.asp
http://www.retirementliving.com/RLtaxes.html
http://www.keepmedia.com/pubs/KiplingersRetirementReport/2002/07/01/129139?extID=10032&oliID=213
http://www.keepmedia.com/pubs/KiplingersRetirementReport/2001/03/01/128658?ba=a&bi=0&bp=97
http://www.taxadmin.org/fta/rate/tax_stru.html
http://www.forbes.com/free_forbes/2004/0315/171sidebar.html

Arkansas Increases Minimum Wage

When Arkansas enacted legislation recently increasing the minimum wage from $5.15 to $6.25 per hour, it seemed everyone I talked with had an opinion of the benefits or the negative repercussions of such a move.

I’m going to pass along some of the comments, but first some facts:

Some of our neighboring states, namely Texas, Oklahoma, and Missouri, have done nothing to increase the minimum wage in their states above the Federal minimum of $5.15. Other neighbors – Tennessee, Louisiana, and Mississippi - don’t even have a minimum wage law. Kansas is the only state below the Federal minimum – a miniscule $2.65.

About half the states have minimum wage rates the same as the Federal rate. The state of Washington is currently the highest at $7.63 and that amount will increase periodically because it is pegged to inflation. Most of California is set at $6.75 but in the San Francisco area, it is $8.50. Minnesota is $6.15, Illinois $6.50, Massachusetts and New York are $6.75, and Oregon $7.50. The other states have rates between Washington’s and the Federal rate of $5.15.

Now for a sampling of the conflicting comments:

“Increasing the minimum wage will increase inflation and unemployment.”

“This will help the poorest paid workers in our state.”

“This will help the economy by giving workers more disposable income.”

“It will be harder for young people to find a job.”

Arkansas’ $1.10 increase becomes effective October 1, 2006. Only time will prove the whether the effects of this increase are beneficial or detrimental.

Click Comments below to let us know your thoughts.

For more information:
http://www.dol.gov/esa/minwage/america.htm
http://en.wikipedia.org/wiki/Minimum_wage
http://www.stateaction.org/blog/?p=140

What is Infrastructure Anyhow? Effects of Growth on NW Arkansas

Hardly a day goes by that a new sign doesn’t appear somewhere in Washington or Benton County proclaiming that a new subdivision will soon appear on former agricultural land. Land costs have escalated so much that most new subdivisions will automatically be high density.

What does that mean to you and me? It means further stretching of the infrastructure in an area that until a few years ago was rural. Everyone agrees the population of Washington and Benton counties is growing so fast the infrastructure can’t keep up.

What do you think of when you hear the word infrastructure? Most people say traffic or transportation, and public schools. The daily commute to work and back home keeps traffic congestion on everyone’s mind but the list of needs is much longer and more complicated than that.

High-density subdivisions generally have small yards. Where will the children and adults play and exercise? Parks, recreation and open space will be needed.

More schools will have to be built and staffed. More school buses will be on the roads, not to mention the amazing number of parents who drive their children to school in the morning and reverse the procedure in the afternoon. It’s not unusual now to see streets and even highways blocked by vehicles waiting in line to drive onto the school grounds to pick up their child.

Water must be available. Beaver Water District currently has authority to use up to 120 million gallons of water a day from Beaver Lake. At what point does that amount become insufficient?

Increased population equals more sewage. Rural areas are generally not connected to a municipal sewer. When homes were being built on an acre or more of land, septic tanks were a viable solution. High-density subdivisions in rural areas have to take a different approach. Decentralized systems are replacing the traditional septic tank, serving hundreds of homes with one on-site system rather than one septic tank per home. My concern is the future. Who will maintain these systems when the developer has moved on and the homeowner hasn’t even thought about where his sewage goes?

We all want adequate police protection. As the population increases, more officers must be hired and trained. Increased staff will be required back at the station. Overcrowded courts and jails will have to be expanded.

Unincorporated areas usually have volunteer fire departments. Personnel have been trained to fight brush and grass fires and may be called upon occasionally to fight a structure fire.

A high-density subdivision alters the scenario. Consider this: a home is on fire and a call goes out to 911. The volunteers must first rush to the station to get the equipment before they can get to the fire. When they arrive, they are faced with a structure burning that has other homes close by on two sides. Depending on the wind factor, they may even have to protect homes across or down the road. Is there an adequate water supply available to fight the fire? Does the subdivision have hydrants? Does the fire department have the training and equipment to combat such a situation?

Libraries are often taken for granted but contribute greatly to our way of life. Free libraries are as American as apple pie and I, for one, would not want to think about a lack of excellent libraries. More people means more resources will be needed to meet demand. Buildings, employees, books, computers, audio/visual materials – all will need to expand.

The list of infrastructure requirements is almost endless. People are drawn to Northwest Arkansas for the quality of life here but the crush of people is threatening that very quality. The equation is simple: more residents = increased need for infrastructure = additional funding needed. Where is it coming from?

For more information:
http://www.nwanews.com/nwat/News/39618/
http://www.nwanews.com/adg/News/152416/

Immigration Reform Protests and NW Arkansas

The massive demonstrations by Hispanics throughout the nation on the issue of immigration reform are a demonstration that this growing segment of the population may finally be coming of age politically. There have been immigration reform bills in the past, but the public outpouring by the Hispanic community has never been so great. There were no protests here in NW Arkansas, but the effect of the protests may eventually be felt here.

Immigration of people from other nations and cultures are what has made the US a great and dynamic nation, and although laws are necessary, I don't think they should be racist and restrictive. As the granddaughter of immigrants from Finland and Sweden, I have experienced first hand how people from other nations make our own nation stronger. The strong work ethic and emphasis on education made the northeastern Minnesota area where I grew up a dynamic community of many cultures where education was prized. Our public schools there were far superior to those in other parts of the state until the mining boom there dissipated in the past 25 years or so. The desire to assimilate spurred the new citizens to raise their children to surpass their own educational and professional achievements and contribute to their communities in a positive manner. The original arrivals could not speak English when they arrived and most worked at menial jobs. Their children all spoke English, worked at better jobs than their parents had, and many encouraged their children, in turn, to obtain college educations to become professionals.

In the past, various ethnic groups have provided massive migrations to our shores. Many of these groups were discriminated against when they first arrived, but now they have become part of the fabric of our nation. The Irish and Italians who arrived in the late 19th and early 20th century are typical of this pattern. Many of the Irish became policemen in the Eastern cities where they settled. And in NW Arkansas the Italians who settled here have created traditions which continue to enrich the area culture and economy (for example, the Tontitown Grape Festival, restaurants, and home-grown industries), even as their children and grandchildren have assimilated and prospered.

For northwest Arkansas, the continued development of the area depends on immigrants. Our area is in a new initial phase of the typical immigration pattern for newly arrived groups. There are increasing numbers of Asians and Pacific Islanders as well as Hispanics moving to the area. Many of the latter are first generation arrivals who don't speak much English. Some are illegal. But their children all attend our public schools and enrich the cultural environment, enhancing the world view of the native Arkansan children. With time these families will assimilate, just as previous generations have done. And our area will be richer for their presence.

The economy of our area also depends on these new arrivals. Much of the new construction of area housing, as well as factory jobs, is made possible by these new arrivals. Many builders now prefer Hispanic crews--they work hard and they take pride in their work, creating beautiful homes for residents and others who are relocating here because of Wal-mart and other major businesses in the area. Many of these new immigrants also work in jobs--for example, in the poultry plants--that local people do not want. They pay taxes and pay into the social security system, helping to assure that when baby boomers and even their children retire, there will be money for the system to be able to pay social security benefits. Without them, our area would not be the driving economic engine that it is.

For additional information, see also:
http://immigration.about.com/b/a/255666.htm
http://www.msnbc.msn.com/id/10704013
http://www.cnn.com/2006/POLITICS/03/27/immigration.rallies.ap/
http://www.npr.org/templates/story/story.php?storyId=5308394&ft=1&f=1001
http://www.usimmigrationsupport.org/
http://teacher.scholastic.com/scholasticnews/news/article_thu.asp

Property tax relief for Arkansas homeowners

The words tax and relief aren’t often found in the same sentence but Arkansas has some provisions to help relieve the property tax burden on homeowners. With income taxes on most people’s minds this time of year and property tax bills now arriving in mail boxes, I thought this would be a good time to mention some of these benefits.

The technical name is Amendment 79 but it's frequently referred to as the "homestead exemption." The benefits are easy to understand and easy to get.

A credit of $300 per year is available to lower property taxes on a person’s principal place of residence. Notify your county assessor once and the credit will be applied to your tax bill every year as long as the property remains your principal residence. There is a short form which must be filled out (see below).

Another provision allows homeowners age 65 and up to have their appraised evaluation capped. The result is that taxes on your home will never increase due to a reappraisal. But bear in mind, a major improvement to your property can increase the appraised value and a change in the millage rate will also affect the amount of tax you must pay. To have your evaluation capped, you must be age 65 or older on January 1 of the year you apply, complete a simple form and send it with proof of age to your county assessor.

Homeowners who are disabled as defined by the Social Security Administration also qualify for the cap on appraised value regardless of age.

For more details, go to http://www.arkansas.gov/acd/faqs.html.

The Washington County assessor has an explanation of Amendment 79 at http://www.co.washington.ar.us/Assessor/Am79.htm. This is a one-page website and if you read the paragraph above the assessors address, you’ll find a link to the claim form or go directly to http://www.co.washington.ar.us/Assessor/forms/hswbform.pdf.

If your home is located in Benton County, you can access the form at http://www.co.benton.ar.us/Administration/BCAssessor/HomesteadApp.pdf.

Crystal Bridges Museum of American Art

Northwest Arkansas in general and Bentonville in particular will take on a new personality when Crystal Bridges Museum of American Art opens. Benton County is already facing phenomenal growth with homes, offices, businesses, huge shopping malls, and a brand new hospital popping up all over former agricultural land.

Crystal Bridges Museum of American Art plans to open in 2009 on 100 acres in Bentonville, not far from Sam Walton’s original 5- and 10-cent store. The museum will house the private collection of American art that Sam’s daughter, Alice Walton, has been quietly collecting for years.

It is estimated that each year approximately 250,000 visitors will come to see not only this fabulous collection but also sculpture gardens and collections on loan from other museums.

Just think: once-quiet Bentonville will become a destination for art lovers. I’m sure the museum and its programs will provide cultural, educational and economic benefits to the area that would have been unthinkable just a few years ago. With the population of our area of NW Arkansas expected to reach a million people by the year 2025, Crystal Bridges Museum of American Art promises to become an incredible asset.

For a glimpse of the planned building and some of the art, go to the museum's website http://www.crystalbridges.org/

Bella Vista – will it remain a village or incorporate as a city?

Bella Vista is another area of booming NW Arkansas that has seen its own share of incredible growth. The village, as it is still known, was started some 40 years ago as a place for retirees to enjoy living among lakes, trees and golf courses. It is located north of Bentonville, just south of the Missouri border.

Since inception the quiet village has grown tremendously. It is estimated there are some 24,000 residents now – up from 16,500 in 2000. No one sees growth slowing anytime soon.

Roads have improved and Bella Vista is increasingly becoming home to families with children. Rush hour traffic clogs the streets as residents commute to jobs in surrounding cities.

The question now on everyone’s mind is whether to incorporate. The issue will be on the November 2006 ballot. As an individual, I can't influence the issue one way or another, but it occurs to me that a community the size of Bella Vista should be a municipal entity, not a private one. The people currently support their entire infrastructure by paying monthly assessments - police, fire department, roads, library, recreational facilities, and much more. The majority of the taxes they pay are not returned to the village because it is not incorporated. The incorporation issue is of paramount importance and I urge all current and potential residents to learn all they can before the election.

For more information go to http://en.wikipedia.org/wiki/Bella_Vista%2C_Arkansas or http://www.incorporatebellavista.com

Good News/Bad News for the Springdale Northern Bypass

The U.S. 412 bypass of Springdale has received a record of decision from the Federal Highway Administration. Now all that needs to be done is to figure out how to pay for it! The estimated cost currently stands at some $300 million with only $31 million in combined federal and state funds earmarked for the 20-mile highway.

Ten years have passed since a study of alternatives for the bypass began in 1996 and it will be many more years before it is even partially constructed. With the escalating price of land in the area it seems obvious that costs will only go one way – up. “This project has to have federal money,” said John McLarty, transportation planner for the Northwest Arkansas Regional Planning Commission. “It’s just too big.”

Highway 412 is a major east-west route through Springdale for traffic coming to and from Tulsa area as well as off Interstate 540. No one argues the need for the bypass, which is expected to channel much of the truck traffic around the city. However, it appears the bypass will have to be built in segments, as funding becomes available. It may take until the year 2030 before the road nears completion.

As I mentioned in my posting March 6, “A Western By-Pass? Great Idea!” (scroll down to read the article) other roads are being planned to alleviate gridlock in Northwest Arkansas, but the 412 bypass is scheduled to come first. We must find a way to get moving on all these projects, the sooner the better.

For more information:http://www.nwanews.com/adg/News/147680/

New Mall in Rogers, How Development Has Occurred

An interesting special report in the NW Arkansas edition of the Arkansas Democrat Gazette last Sunday, March 5, details the who and how of all of the construction going on with regard to the new mall and surrounding development. This mall promises to be a “shopping mecca” for the area, and there is certainly a lot of dirt being moved around as well as buildings popping out of the ground at a rapid pace. In a sense, it is the essence of the growth happening in Benton County, as subdivisions spring up almost daily. And in the near future people living in those subdivisions will have convenient shopping, without having to drive to the NW Arkansas Mall and surrounding stores in Fayetteville. Good for consumers in Benton County, maybe not so good for owners of the shops in the Fayetteville Mall.

For the complete article: http://www.nwanews.com/adg/News/147652

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/

Water Supply--Another Challenge for NW Arkansas Growth

Officials say there’s enough water in Beaver Lake to satisfy the area’s needs to between 2031 and 2049. The challenge will be getting that water to the homes and businesses of the thousands of people who are flocking to the area every year.

Beaver Water District, the primary water source for Northwest Arkansas, supplies water to Fayetteville, Springdale, Bentonville and Rogers and surrounding areas. The mandate of the district is simple but exacting; “We have to provide the water that people demand,” Beaver Water District Chief Executive Officer Alan Fortenberry said.

In an effort to provide clean water to its customers, the district is working with counties surrounding Beaver Lake to restrict development in the watershed to ensure development doesn’t endanger the water quality. Some oppose the restrictions because land for development is in demand. But Fortenberry said not protecting the water supply from pollution would require the district to increase treatment, which would increase the cost of water charged to customers.

The water situation affects not only the major towns but also some of the smaller communities of the area. For example, Bentonville is about to begin a $15 million project to lay 13.77 miles of 48-inch water line to bring in water from Beaver Lake by the summer of 2007, city utilities director Britt Vance said. Bentonville and Rogers now share two water transmission lines, one 24 inches wide, the other 30 inches. Together, they can transport up to 29.5 million gallons of water a day to the two cities, which limits the amount of water that can be pumped to each. Completion of Bentonville’s project will help alleviate Rogers problems because Rogers plans to pay Bentonville $7.4 million to take over as the sole user of the 24- and 30-inch lines after the Bentonville project is completed.

For smaller communities, a good example is Lincoln. In February 1995, 270 rural residents signed up for water from Lincoln, which would require about 85 miles of water lines. In March 2001, when the town got funding from the Agriculture Department’s Rural Development, the project included 462 households and 106 miles of pipeline. Now the project embraces more than 800 households and requires 135 miles of water line at a cost of around $7.5 million, and by the time the project is completed, Public Works director Chuck Wood said there could be as many as 900 families drawing water from the new lines. Towns like Gentry, Gravette and Harrison have also just finished large similar pipeline projects to provide more water for their rural neighbors, he said. “This whole area is just booming,” Wood said. “The only thing that we can do is build more infrastructure to get water to them.”

For more information: http://nwanews.com/adg/News/147078/

A Western By-Pass? Great Idea!

Planners and elected officials in Northwest Arkansas are eyeing a four-lane highway to cut through western Benton and Washington counties and avoid additional gridlock on Interstate 540. It doesn’t have an exact location, nor money to pay for it--yet.

The Northwest Arkansas Council, which includes some of the region’s wealthiest and most influential people, has placed the proposed highway on its list of road projects it deems important to the region’s future. And a committee of the Northwest Arkansas Regional Planning Commission has included the highway, known as the western bypass, in the draft of a 2030 long-range transportation plan the commission will hand over to the Arkansas Highway and Transportation Department next month.

The proposed highway wouldn’t be constructed until after a western bypass of the Bella Vista stretch of I-540 and a U.S. 412 bypass north of Springdale are completed, according to John McLarty, the transportation planner for the regional planning commission. “But it’s not too early to begin planning the road.”

The western freeway is a great idea, and it’s encouraging to note that planners are starting to think in longer terms. It takes years to go from identifying the need to completing the project, and it is essential to get this project in place while there is still sufficient, undeveloped land available. The 412 bypass has been delayed again and again by impact studies while the areas where the original three proposed routes might have been built have been filled up with new homes. And since the 412 bypass won’t be built for many years due to funding deficits, maybe these planners can begin getting their proposal to legislators so that when the project is ready, the funding will be there.

In the meantime, there will have to be improvements and additions to I-540. Twenty-five years is a long time for the western bypass to become a reality. But knowing that planners are even thinking about it is a start.

For more information: http://nwanews.com/adg/News/147123/

GROWTH - Outward or Upward?

OUTWARD GROWTH is the current norm along the Interstate 540 corridor in Benton and Washington counties, and this worries some city planners and elected officials. They want to see developers build upward, filling in existing city space with denser developments such as multistory apartments.

Dense, upward development leads to more people living per square mile, less cost to the cities to provide water, roads and other services, and less need for outward development of rural land, said Steve Luoni, director of the Community Design Center in the School of Architecture of the University of Arkansas at Fayetteville.

But people have been slow to embrace UPWARD GROWTH according to Fayetteville’s Senior Planner Jeremy Pate, “It’s going to take a while to slow down outward development. People want to live at the end of a cul-de-sac.”

Developers say they are building houses outward from the cities instead of upward with denser apartments and condominiums because that’s what people want and that’s where they can make a profit. They built 36,201 new housing units in the four major cities from 1990 to 2004. About 63 percent of those were single-family dwellings, according to statistics from the Northwest Arkansas Regional Planning Commission.

“Primarily, that’s what the market demands. People don’t want ‘up’ — not around here,” said Gary Brandon, who is building several subdivisions on the western edge of the I-540 corridor, including one of 117 acres between Lowell and Cave Springs and another of 54 acres on the outskirts of Tontitown. “They’re not that keen on condos yet.”

Kathy Deck, associate director of the UA Center for Business and Economic Research, said the growing population will continue to demand homes on the outskirts of town. Condos will not appeal to families until the price of gasoline becomes too high or traffic becomes too congested to commute from outlying communities, she said.

Richard Alexander, a developer of condominiums and mixed-use buildings in central Fayetteville, would agree. He said his market is based on the downtown location of the projects and will appeal to people because they won’t have to drive to go shopping or to the university. “There is that niche looking for a lack of a commute,” said Alexander.

Even though cities are spreading, some officials say the finite supply of land and market forces eventually will make upward growth the norm in Northwest Arkansas. “Our land space is dwindling,” said Rogers Alderman Mark Kruger. “At some point we will run out of space, and up will be the only way to go.”

For more information: http://nwanews.com/adg/News/147079/

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.

Expanded Region Slips to 8th Place in Milken Rating

Northwest Arkansas’ slip from No. 7 to No. 8 in the Milken Institute’s rating of the nation’s most vibrant economies for 2005 is a cause for celebration rather than concern, state economists say.
In the rankings released February 22, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area (MSA), which includes Bentonville, ranked in the top 10 of the largest 200 cities for the third year in a row. The area made the No. 1 spot in 2003, then dropped to No. 7 in 2004. In 2002, the MSA ranked 23 rd in the top cities list.

The nonprofit Santa Monica, Calif.-based think tank ranks the nation’s metropolitan statistical areas for the best overall economies each year. Researchers base the rankings on several criteria, including job and wage and salary growth over the past five years. The institute helps business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity, according to its Web site.

Lorna Wallace, a Milken Institute research fellow and senior staff member, attributed the drop to No. 8 to the U. S. Census Bureau’s addition of Madison County and McDonald County, Mo., to the MSA. The two counties were not considered in the Milken study last year. The Milken Institute relies on the Census Bureau’s definition of metropolitan statistical areas for its study groupings.

“The Fayetteville-Springdale-Rogers MSA has a robust economy that outshines the rest of the state and most of the country,” Wallace said. “Its job growth rate by far exceeds the national pace.”

Wallace cited Bentonville-based Wal-Mart Stores Inc. ’s heavy influence on the regional economy for both positive and possible future negative factors. She also cited the presence of other national-level employers such as J. B. Hunt Transport Services Inc. and Tyson Foods Inc. and the University of Arkansas, a strong research university, as positives for the area.
The next-highest ranked larger metropolitan area in Arkansas was Little Rock-North Little Rock, ranked No. 94 overall and up from No. 106 in 2004. The city’s lowest sector ranking was in job growth, at No. 168 with 0. 24 percent. Fort Smith also ranked higher this year, moving up to No. 154 from No. 155 in 2004.

Three Arkansas MSAs were included in the Milken listing of the best 179 small cities. Hot Springs was ranked at No. 69. It was not ranked in 2004. Jonesboro ranked No. 99, down from No. 64 in 2004. Pine Bluff was ranked at No. 144, down from No. 94 in 2004.
Mitch Chandler, director of communications for the Arkansas Department of Economic Development, said Northwest Arkansas ’ ranking for the third year shows that the area’s growth is a proven trend. “This shows the phenomenal and consistent growth of the area.” he said.

Job and wage growth are the strongest contributors to the listing, said Jeff Collins, director of the Center for Business and Economic Research at the Sam M. Walton College of Business.
The Walton College is part of the University of Arkansas at Fayetteville. “Job and wage growth is a 15- to 20-year trend, not a one- to two-year trend,” Collins said. “Given that this measures the entire country on the same data, it gives a lot of validation to be listed in the top 10 from year to year.” He predicts that the region will continue to do well with those growth drivers in place. The region scored its highest ranking in the five-year wage and salary growth category, taking the No. 3 spot. It was ranked 14th in one-year wage and salary growth. The five-year job growth ranking was 7th and the one-year job growth was ranked 23 rd.

WEAKEST LINK:
The region’s lowest ranking — No. 154 — was in the area of technology output growth. Collins said the high-tech industry is one in which the state traditionally performs poorly. “Employment opportunities for Arkansas seem to be overly weighted to the lower educated and lower-paying jobs,” he said. And added that even the University of Arkansas ’ efforts to push technology-based business is not enough to push the state out of the lowest levels of technology development. “We still don’t attract a lot of research and development activity, which is the precursor to higher-wage industries,” Collins said. “The UA is still too small in this area. Larger universities can get concentrations of engineers and scientists who can cooperate and collaborate on research.”

HOUSING CONCERNS:
Milken’s Wallace also cited the increased housing values as a growth factor in the region, a positive indicator of the present economy but a possible future concern. “Housing rates and values are near the national level,” she said. “That may pose a risk going forward.” Unless other economic indexes also rise to the national level, increased interest rates or a slowing of the construction rate will influence the affordability of housing in the region. Collins said the housing component is a relatively small sector in the Milken Institute’s ranking data. “But there is some disconnect between supply and demand in housing,” he said. “While I have some concerns about segments in the market, there is still opportunity for growth and profit in housing after careful planning and consideration.” He said the national housing values really don’t contribute much to the local housing market. “The people who are moving in here and buying houses are already paying the national rates,” he said. “This doesn’t affect them.”

Condensed from: NWA News, Arkansas Democrat Gazette, February 23, 2006

Academies Reinvent Local High Schools

Bentonville, which will soon be the largest high school in Arkansas with 3,000 students and a 600,000-square foot behemoth school, has decided to adopt the concept of the career academy to structure classes for students. This concept is important in an area striving to achieve excellence in public education. Many people move here from elsewhere and ask about the private schools. Our best schools are the public schools.

The academies come in two forms: wall-to-wall, where every student must enroll in an academy and there are many choices, and pocket academies, where enrollment is optional and there are fewer academies from which to choose. The Bentonville School District is following the wall-to-wall model for its academies. Ninth-graders will start in the freshmen academy, and will attend classes on the same floor and work with the same core group of 40 teachers. The program will focus on helping students decide which academy to join in their sophomore year. Some of the available disciplines are business, fine arts, mathematics, and human life sciences.

The career academy model for high schools has existed since 1969, but the concept wasn’t pioneered in Arkansas until 1998 when the Springdale School District opened a medical academy with 30 students. The trend spread in Northwest Arkansas, with Rogers and Fayetteville adopting the model. Administrators of at least 15 of the state’s biggest high schools are reinventing their schools through the academy approach, a trend educators say will continue. More than 1,500 career academies nationwide create schools within schools by centering students and instruction in focused, career-themed clusters. But they have not universally succeeded. The system floundered in Fayetteville, and it may be on the way out in Fort Smith.

There are pros and cons of academy models. Many principals and superintendents say that as a school grows larger, it becomes necessary to find ways to connect to individual students. Otherwise, it’s too easy for students to slip through the cracks. Large schools must search for ways to create smaller learning communities within the schools. The smaller learning communities allow students to take classes with the same group of peers and teachers. Proponents say career academies offer an alternative to the isolation that can accompany a mega-high school. Students become more interested in their courses and have greater success after graduation.

Opponents say career academies are too much like vocational programs, which traditionally do not receive a lot of community support. Some parents think the academies would not be good preparation for college. Other parents don’t want their kids to have to decide too early on a career path. However, a 2004 study by MDRC, a nonprofit, nonpartisan social policy organization based in New York, found that “Career academies are one of the few youth-focused interventions that have been found to improve the labor market prospects of young men.”

Administrators at Fayetteville High School introduced pocket academies in 2003, but then dropped the program two years later. Principal Randy Willison said only 80 students enrolled in an academy during the program’s second year. The academy needed a minimum of 120 participants to justify keeping it, Willison said.

Source www.nwanews.com February 12, 2006

Arkansas Existing Home Sales up 30%

Arkansas continues to experience record growth in existing home sales, outpacing every other state in the country in the fourth quarter, according to a study by the National Association of Realtors. It was the second consecutive quarter that Arkansas’ rate was the best in the country. Arkansas has been among the top 10 states in sales of previously owned homes for each of the past five quarters.

Arkansas’ sales of previously owned homes were up almost 30 percent in the fourth quarter from a year earlier, the study showed. The third quarter of 2005 was also strong, with 32 percent growth. Nationally, existing home sales were flat in the fourth quarter, up just 0.3 percent.

In NW Arkansas, one explanation of these statistics could be the rapid increase in new-home prices, putting most of them beyond many people’s reach. Builders are no longer constructing small “starter” homes due to skyrocketing land costs and increased construction and development costs. As recently as about 3-4 years ago, the typical starter home was about 1000-1200 square feet and could be purchased for under $100K. The new starter home in NWA (particularly in the major towns of Fayetteville, Springdale, Rogers and Bentonville) is larger than that of the past, but prices are also significantly higher, starting at about $180K and going up from there. Salaries are not increasing at the same rate as home prices. Thus for people of modest means who don’t qualify for a new home of this type, the purchase of an existing home or paying rent are their only choices.

Source: Northwest Arkansas Times, February 17, 2006

Hispanic Parents Weigh in on New Rogers High School

The times, they are a-changing. Spanish-speaking parents gathered February 12 at St. Vincent de Paul Catholic Church for a question-and-answer session about a second high school scheduled to open in Rogers in August 2008. The meeting was the fifth held by the Rogers school district to gather input from the community and the first to be delivered entirely in Spanish.

The information meeting was scheduled to present to Hispanic parents the latest developments on facility plans for the new high school. Parents viewed a computer-generated model of what the new school will look like. According to an information sheet distributed at the meeting, the campus will grow from about 190,000 square feet to 325,000 square feet.

Feedback from the parents will be given to committees for consideration. The various committees will then report to the School Board, which will make final decisions about the new school.

To my knowledge, this is the first meeting of this type conducted totally in Spanish, and other school systems and public entities should follow suit. NW Arkansas’ Hispanic community continues to grow larger every day and is becoming an integral part of the fabric of NW Arkansas. The Rogers School system is to be commended for reaching out to the Spanish-speaking parents and listening to their concerns.

Source: Rogers Hometown News, February 15, 2006