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If you live in Northwest Arkansas, you are certainly aware that the area has seen explosive population growth over the past 10 years.  Per the US Census Bureau, the United States population grew 4.7% between April of 2010 through July of 2016.  During that same timeframe, key cities in Northwest Arkansas grew significantly faster.  There is no doubt we are experiencing phenomenal population growth across our area led by Bentonville at a whopping 33.5%.



The Reality of Realty in Northwest Arkansas: Are we headed back to the 2007 housing recession?

by Monica Whitaker


If you live in Northwest Arkansas, you are certainly aware that the area has seen explosive population growth over the past 10 years. Per the US Census Bureau, the United States population grew 4.7% between April of 2010 through July of 2016. During that timeframe however, key cities in Northwest Arkansas grew significantly faster.

There is no doubt we are experiencing phenomenal population growth across our area led by Bentonville at a whopping 33.5%. However, one can't help but acknowledge a shift in the community as we continue to see heacount changes in the retail sector within the higher income bracket. Much of that downsizing trickles down to the supplier community, impacting not only employment numbers but also spending, as those who remain become more risk adverse. Lastly, we see the impact on local businesses that support the segment of our community as spending tightens.

One topic beginning to gain more attention is housing. In Bentonville and Rogers, for example, one can't help but notice the influx of massive apartment rental properties and new single housing developments. Over the last few weeks we have seen residents unite to protest a newly proposed 6-story 650-unit apartment complex that will overlook Memorial Park in Bentonville (which the planning commission recently denied after resident feedback) along with another large complex announced for the property in front of the community center.

If you work in the retail or supplier community, you likely know someone struggling to sell their home. Some higher-end neighborhoods have literally stagnated over the last 12 months as inventories continue to rise. As one resident in Rogers remarked, "The fact that our home hasn't sold isn't the scary part... it is the fact that very few people are looking. We are averaging 1 person per month and they are often a realtor there to scout the property." A Bentonville resident also chimed in, "...we are in a higher demand neighborhood by new schools. Last summer, equivalent homes were selling quickly for $405-415k. Not only have very few people looked at our home this summer, but the one offer we got was $55k less than our listed price. When we declined, the buyer informed us they would rather wait on new constuction. Since that time we have reduced our price by $30k and continue to have very few buyers even look at our home. New construction around our neighborhood is depressing demand."

For those who lived through the local housing depression around the 2007 timeframe, a plethora of questions likely come to mind:

  • How does the housing market today compare with the housing recession of 2007?
  • How do home inventory levels compare to 2007?
  • Are there major differences in housing sales if we look at different price segments?
  • Is the growth today in NWA different today different from the growth of 5-10 year ago (e.g. younger, lower income, etc.)
  • Is there a shift as children leave home and professionals now find themselves as empty nesters looking to downsize out of large homes?

Since many of our friends and co-workers have the same questions, we decided to take a more retail based analytical approach to the real estate data in Benton County. Multiple measures over a 10 year period were analyzed, from Jan 2007 through July 2017.

Part 1: Total Home Sales

Note: Looking at TOTAL home sales data is just a weighted average of all the price segments. As you will see later in this article, the price segments vary dramatically so this total chart is primarily used a relative point of reference.

Total Housing Sales Observations:

  • The number of homes for sale (RED LINE) has risen 25% from the low point of 2012 and 2013, but has remained steady since 2015. Although homes inventory has risen, it is still 25% lower than the peak back in 2007.

  • Home Sales (GREEN LINE) have kept pace with inventory, trending slightly positive with between 12% - 14% of homes listed selling each month (GREEN DOTTED LINE) in 2017 vs only 6% per month sales rate back in 2007.

  • At a monthly sales rate of 14% of inventory, the average home would statistically be expected to be on the market just over 7 months (however we know each neighborhood can vary dramatically - so use this average as a relative point of reference as we move forward and look at the variances between price segments on future charts).

  • Conclusion: The overall total sales look neutral to positive. But the question remains: are there significant variations in the numbers are we look at each price segments differ?

Note: The % sold vs. inventory in the graph below is simply total homes sold each month divided by total home inventory that month. Why don't we use ADOM (average days on market)? Simply put, people take their homes off the market and then put them back up at a later date so ADOM numbers can be manipulated artificially.


Part 2: Price Segment Detail:


Real Estate under $150,000

  • Price segment represents 47% of the total listings.
  • Here we see the first departure from the total as inventory in the $150k and lower segment is flat today, and is actually 40% lower than the 2007 housing recession.
  • Home sales of this segment continue to strengthen as the percentage sold has risen steadily since 2007 - when only 4% of the inventory in this price point sold each month. Today, 14% percent of homes in this price range sell each month indicating stronger demand.
  • The 14% results in just over a 7 month average sales cycle.
  • Segment is a SELLERS MARKET.



Real Estate $150,001 - 250,000

  • Price segment represents 19% of the total listings.
  • This price point is absolutely on fire with significant growth beginning in early 2015 and continuing today.
  • Listed home inventories have doubled since the low in 2012 but are still 50% off their high in 2007.
  • Most amazing about this segment is the percentage of sales each month continues to track around 20%+ meaning a 5 month selling cycle average.
  • This $150k-$250k segment is by far the strongest price segment in the market today.
  • Segment is a SELLERS MARKET (demand is strong here, but the segment could shift more neutral if inventories continue to build with new construction)


Real Estate $250,001 - 350,000

  • Price segment represents 11% of the total listings.
  • This price segment is the 1st time we see inventories significantly higher than the 2007 levels, however, this is where many of the new homes are being built.
  • The good news is the percentage of sold homes is tracking steady around 15% over the last 24 months, which means this inventory is still moving well.
  • The 15% results in a 6.7 month selling cycle average.
  • Segment is a MIXED as inventories have climbed rapidly of latge, but % sales is holding steady.


Real Estate $350,001 - 450,000

  • Price segment represents 8% of the total listings.
  • Inventory has grown significantly since 2013 and is continuing to grow rapidly today.
  • The percentage of sales to listing has decreased 50% from the high in 2013 of 15%, but remains relatively steady at 10% which is still double the 2007 sales to inventory rate.
  • The 10% results in a 10 month average sales cycle.
  • Segment is leaning towards BUYERS market as inventories are climbing.


Real Estate $450,001 - 550,000

  • Price segment represents 4% of the total listings.
  • Inventory has grown 50% vs. the 2007 slowdown and over 100% since 2012/2013 levels.
  • Although the percentage of sales to listing averages 8%, the volatility of the averages from month to month range from as low as 5% up to 12%.
  • This is one of the price segments with the most uncertainty and volatility.
  • The 8% sales to inventory rate results in a 12.5 month average sales cycle.
  • Segment is a BUYERS market as inventories are climbing and sales % rate is volatile.


Real Estate $550,001 and up

  • Price segment represents 11% of the total listings.
  • Inventories in this segment are 50% above the 2007 slow down levels.
  • This is the only segment that hasn't seen substantial growth in percentage of homes sold compared to number of listings. The average percentage of sales has been hovering between 2.5% to 3.5% each month for over 4 years.
  • At a 3% average rate of sale each month, one can expect to hang on to these properties (on average) for ~2.5 years. Obviously, a $599k home will average a much different sales cycle than a $2MM home.
  • Segment is a BUYERS market as inventories are climbing and sales % rate is remaining flat at 2-3% each month.


Part 3: Conclusion:

So what can one gather from the information above?

  • The housing market is a mixed bag depending on price segment.
  • $350k and under are still showing strong demand and is a SELLERS market.
  • $350-450k range are mixed.
  • $450k and higher is seeing inventories continue to build and continuing to be a BUYERS market.


Monica Whitaker.  Writer for Firefly Marketing, LLC including SupplierLife.com and FamilyLifeNWA.com

Monica Whitaker, freelance writer with FamilyLifeNWA and certified K-6 Elementary Teacher