If you build it, will they come? : Home sales fall, but construction continues
Posted on Wednesday, July 30, 2008
URL: http://www.nwanews.com/bvwv/News/6784/
The real-estate market seems to be moving at a snail’s pace in Bella Vista, at least to those who make their living buying and selling properties. And they all agree the number one culprit is a weak economy
According to Kathy Deck, director of the Center for Business and Economic Research at the Sam M. Walton College of Business University of Arkansas, people in northwest Arkansas aren’t buying because the real-estate market is uncertain, mortgage lending rules are stricter and employment growth has slowed down.
Potential buyers have a general lack of confidence in the value of real estate right now, Deck said. Consumers worry if they buy a house, it might not be worth what they have to pay, so they have developed a wait-and-see attitude.
Lenders have tightened up, and the effect is a diminishing demand, she said. Buyers who used to qualify for loans can’t get one now, she explained.
“ It’s the rule of supply and demand, ” said Eric Hutchinson, executive broker and director of marketing for Hutchinson Realty. “ There’s more supply than demand. ”
Hutchinson Realty has been in the area long enough to get a sense of the ebb and flow in housing sales. Since Cooper Communities Inc., has dropped out of home sales (the local office closed the first week of July after 56 years ), Hutchinson Realty may be one of the oldest realty company in Bella Vista, Eric Hutchinson said. His father, John Hutchinson, started the business 23 years ago.
Sales in other states affect local market
The downturn in sales in other states and cities has also affected the local market. Individuals can’t sell their homes and get their money back, so they are stuck, Deck explained.
David Paine, an executive broker for Century 21 A & B Village Realty, and an area Realtor for five years, agreed with Deck. The market here would be pretty good if buyers could sell their residences in Kansas City, Arizona, California, Las Vegas and Detroit, he said.
“ I’m busy waiting on homes to sell in other markets, ” he said. Northwest Arkansas isn’t
booming anymore The boom times for growth in the area have slowed, Deck said, adding employment growth used to be as high as six percent, but now it’s one percent. This is the number one reason people aren’t buying, she said. Additionally, incomes aren’t growing, she said. Prices for gas and food are rising far above other trends so people have less money to spend. “ All of us have budgets, ” she said. The higher gas prices are affecting the Bella Vista market, said Paine. Century 21 recently sold a home to a young couple who wanted to buy in Bella Vista, but who finally chose Bentonville because they would both be closer to work and wouldn’t have to spend as much money on commuting, Paine explained. New and existing home
sales drop Statistics indicate sales in new and existing homes have dropped in Bella Vista. The Architectural Control Committee issued 966 building permits in 2005, Selina Leigh, administrative assistant for the ACC, said. The ACC issued 596 permits in 2006 and 232 permits in 2007. So far in the first six months of the year, they have issued 54 permits, she said.
Statistics provided by Ethan C. Nobles, director of media relations for the Arkansas Realty Association, show sales in Bella Vista in all price ranges have dropped during the first five months of 2008 when compared to the same time in 2007.
About 10 percent fewer homes were sold on the lower end of the market, those priced up to $ 150, 000, he said.
The biggest drop in sales was in the $ 201, 000 to $ 250, 000 price range. Only half as many of these sold this year as last year, he said.
Builders overbuilt in this price range, Paine said.
The average price of all residences in Bella Vista has dropped about $ 10, 000, Nobles said.
The higher-end properties are more difficult to sell, he said.
A home that a few years ago would have listed $ 265, 000, or $ 275, 000, is now selling at $ 199, 000, Carolyn Mitchell, executive broker of McKimmey Associates, said.
The problem with the property is the original sales price had been set too high and had been kept high for too long, she said. Houses have to be priced right to sell within six months, she added. Setting prices is very challenging in this market, Paine said. “ We’re not here to give homes away. ”
Property can take six months or more to sell Along with decreasing sales prices, properties are sitting on the market longer. In the past, 30 to 90 days was the average length of time before a house sold, Paine said. Now, he said, most take 90 days, with some taking six to nine months to sell. The average is probably about six months, said Mitchell. However, both agreed there are exceptions. “ I have sold one in less than a month, ” Paine said. “ It’s still possible to have a quick sale if (a residence ) is priced aggressively. ” Mitchell said she listed one Monday and sold it Tuesday. She recommended her clients price it no higher $ 84, 000, and told them for a fast sale to price it under $ 80, 000. They decided on $ 75, 000 and got their full price, she said.
Foreclosures and vacant houses cause problems The slow sale of homes is causing more than just a high inventory of available
Foreclosures are literally becoming eyesores in the community.
Foreclosures are higher. In the May “ Skyline Report, ” Deck reported 502 foreclosures in Benton County, up from 370 in the first quarter of 2008.
Accurate figures for foreclosures are difficult to find because banks and mortgage companies don’t want to give out information about how many bad loans they have made, Deck said.
“ There’s a bunch of vacant homes, ” Bella Vista Mayor Frank Anderson said. He drives around the city investigating complaints about unsightly conditions and estimated about 20 to 30 percent of those are vacant or abandoned and in various stages of construction.
“ I’ve seen about 30 or 40, ” he said. In other cases, the weeds have grown up and hidden the foundations. “ You have to walk up to see them, ” Anderson said.
Opportunities still exist Along with all the negatives, some people see opportunities. When Cooper closed, Hutchinson said he felt lucky to be able to hire two very experienced and talented Realtors. Also, in this market, service is king, he said. Sales agents have to spend time with each individual
A couple of real estate investors are still high on Bella Vista.
Pinkley has six houses under construction, which he hopes to sell on speculation.
“ We’ve had a great year, ” he said.
He is building more on the east side because the area has more buyers with families and they want their
Paz and other directors and agents in the company “ visited Bella Vista and were impressed by the place, its people and their unique qualities. ” Paz said. The people his company are working with are very professional, he said. David “ Tony ” Scott, owner of Mosaic Inc., out of Centerton, is building a 1780-square-foot house on Chedder Lane, just off Arkansas 340 as an investment for Paz Fux Assets.
“ The views and panoramas around the area impressed us as magnificent and pastoral. “ We were also taken by the fact that Bella Vista enjoys the many advantages that nature has to offer on the one hand, as well as the comforts of its comprehensive community services, on the other hand. ” He said the privacy, wildlife and natural features set Bella Vista apart from other towns and cities and is one of the best sales tools the area has to offer. “ We have a lot more going for us, ” Mitchell said. “ People (in other places ) can’t get the privacy, wildlife and green space we have here. ”