April 26, 2023 - Originally posted by PulseofConway.com
Things may not be like they were before, but local real estate professionals would hardly call current market conditions a slowdown.
“The COVID years were unprecedented,” said Emily Walter, executive broker and realtor at Re/MAX Elite.
“Those years were anomalies,” said Keith Pike, owner of Re/MAX Elite. “There is talk like we’re in a complete crash, but we’re in line with pre-pandemic numbers.”
The numbers tend to back up this line of thinking.
Eighty-six homes were sold in January in Faulkner County, according to the Cooperative Arkansas Realtors MLS. That is down from 2020, 2021 and 2022, but in line with January 2019 when 82 homes were sold. Meanwhile, the median home value has increased from $165,000 to $223,450. The average listing price is also up from $187,266 in 2019 to $242,534 in 2023.
“The purchase market is still strong,” said Bart Shaw, manager of Lenders Title Company.
“We’re fortunate to have a strong economy that allows people still buy a home, move homes or build a dream home.”
The fact buyers can do this while average 30-year interest rates hover above 6% is another sign of a strong market, said Pike.
The Conway Bubble
“We don’t always get all of the big booms, but we also don’t get all of the big bads,” Shaw said of the cooling market. “We’re tempered as things move across the country.”
“When things hit, they hit here softer than in other markets,” Lori Quinn, realtor for Coldwell Banker RPM Group, said. “The market has changed, but the slowdown here is not as impactful as other parts of the country.”
Walter said part of that Conway bubble is attributed to the city’s three universities and strong school offerings.
“If there’s not a need for single-family homes and first-time buyers, there’s a need for investment properties and rentals,” Walter said. “It’s rare to find that.”
Pike said the area’s ability to attract industry also helps. This creates a cycle of attracting industry, which leads to more people, which leads to more industry, Pike said.
Invasion from the West
A growing trend for Conway, and the state as a whole, is new movers from the country’s western half, including states like California, Colorado, and Arizona. More and more local realtors have stories of families and individuals who are able to sell modest homes for upwards of $500,000 to $1 million out west and move to Conway for more space and more home, and considerably less money.
“Our average home price is around $250,000,” Pike said. “Half of the country hasn’t seen that for 10 or 15 years. Starter homes in Denver are $600,000.”
Karen Ferguson, executive broker and realtor at Re/MAX Elite, said she recently had two customers, a mother and daughter, who sold their California homes of around 1,200 square feet for $700,000 each and moved into larger homes in Conway for less than half their California sale price.
“Many were able to sell at the peak of the market in other states and come here and purchase more home for less,” Quinn said.
More Homes, More Homes, More Homes
One thing all realtors Pulse spoke to agree on is Conway needs more homes. But while agreeing more homes are needed, the realtors also empathized with the position local builders are in with the current market and costs associated with developing land for home building.
“It’s hard to do it,” Pike said.
Just purchasing a 70-acre tract of land could cost between $2 and $3 million, Pike said. Developing it can add another $8 to $10 million.
“Who can secure that financing?” Pike asked. “It used to not be that expensive. You could buy and develop the land needed for a subdivision with $2 or $3 million.”
Pike said it is an issue unique to Arkansas and other states that have not seen the introduction of government programs that spur land development.
“There’s a credit crunch,” he said.
“Conway has incredible builders, and we know they can build incredible homes,” Quinn said. “We have great single-family homes, and quality inventory in Conway and the surrounding area.”
The Current Conway Profile
“The profile of who we see selling right now are those that have to, whether it’s because of a growing family, a job move or something to that effect,” Pike said.
With a vast majority of homeowners having a sub-4% interest rate, those people aren’t entering the market currently, Pike added.
“If rates were still there, more would be looking for a different scenery or a bigger yard or kitchen,” he said. “People aren’t doing that right now.”
Not only has the seller market changed, but so has the buyer profile.
“It is only serious buyers out there,” Walter said. “There aren’t any more tire kickers.”
“We have low inventory with demand,” Quinn said. “It’s still a great time to sell. After living through the last three years, it’s also a less stressful time for buyers and sellers.”
There is more time for buyers to make a decision, Pike said.
“During COVID, if a house was listed at 7 p.m., you had to see it then because it wouldn’t last until the morning,” he said. “Now, it will last until the morning.”
“We’re seeing a few more days on the market,” Quinn said. “We’re also seeing buyers have more opportunity to look at a house. Buyers get the chance to look a second time before offering or look at multiple homes before offering.”
Stabilized, Lower Rates Coming
Interest rates are down from a high of 7.08% in October and November to 6.28% in the first week of April, according to the St. Louis Fed.
Several local realtors believe rates will continue to stabilize and should inch lower over the next 12 to 18 months.
“Rates have gotten better and are forecasted to continue to improve,” Ferguson said.
“It’s forecasted to reach 5.4% next year. We could see the return of some first-time home buyers and others who have priced out.”
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