Arvest Bank recently released Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the first half of 2022.
The two most important numbers in the reports are 2.3% and 26.8%. The first, 2.3%, is the overall vacancy rate for multifamily housing units. The second, 26.8%, is the increase in the average selling price of homes listed through MLS compared to one year ago.
According to Mervin Jebaraj, director of the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas, the 2.3% overall vacancy rate for apartments is so low as to be “functionally zero.” In CBER’s discussions with multifamily developers, many apartment complexes in Northwest Arkansas now have waiting lists. This is further illustrated when looking closer at the vacancy rates by apartment size, where the most popular units are one-bedrooms with a vacancy rate of 0.8% and two-bedrooms with a rate of 1.0%. Low inventories are also driving up lease rates, which rose 12.0% from the first half of 2021 and 61.3% since the first half of 2012.
The market for residential single-family homes saw an increase in available inventory with 1,193 homes listed for sale on MLS compared to 642 one year ago, an increase of 85.8%. But this did nothing to slow down the continued increase in home prices as the average selling price of a home listed on MLS rose 26.8% from a year ago, from $304,235 to $385,821. From a decade ago, this average selling price has risen 128.4%, far outpacing the national rate of inflation in the last decade of 29.04%.
“The Northwest Arkansas region is being challenged to provide affordable housing options for the continued increase in population,” Jebaraj said. “The pace of new home construction is slowing because of supply chain issues as builders are having difficulty getting new homes completed because of a lack of appliances, while some new subdivisions can’t get the approvals they need because they can’t get the transformers needed to provide electricity. Hopefully these are temporary issues that will get resolved soon. However, offering more affordable housing than other desirable metros is a competitive advantage that we are beginning to lose with the pace of price increases.
“This issue will not resolve itself, so I am hoping that the Regional Workforce Council will help by encouraging housing policy coordination between cities in the region. We simply have to increase the amount of housing options for current and new residents if we are to continue growing,” Jebaraj concluded.
Mark Ryan, loan manager for Arvest in Benton County, said one of the primary reasons we sponsor the Skyline Report is so that we have a regular, comprehensive view of the overall real estate market.
“This specific report shows the value of this effort,” he said. “As the region’s largest real estate lender, our real estate development and mortgage lending teams are ready to provide the insight, guidance and investment capital needed to meet the demand for additional housing.”
The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multifamily residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by CBER.