Home Prices Slide Amid Weak Sales
Last updated Monday, November 17, 2008 5:45 PM CST in Business
By Kim Souza
THE MORNING NEWS
SPRINGDALE -- Following declining home sales in Northwest Arkansas, regional prices dipped an average of 8 percent in October when compared with 2007, according to Mountdata.com, a real estate marketing company owned by Paul Bynum in Benton County.
Residential prices are under downward pressure from rising foreclosures, excess inventory, tepid buyer demand which relates to slower employment growth, and an underlying fear from consumers about the health of the economy, said Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas.
She said lower home prices are a sign of the times. Nationally the average price decline is about 19.4 percent, according to the Case Shiller Index.
"This would be a worst-case scenario and includes markets like Las Vegas and Phoenix, where prices were overheated due to the bubble-effect," Deck said.
She expects home prices in some local areas could continue to experience downward pressure before the market rebounds.
Tighter lending standards and the recent end of several popular seller down-payment assistance programs has further restricted the pool of buyers, local agents said.
"Lenders want homeowners to have skin in the game, because statistics bear out these loans are less likely to undergo foreclosures," Deck said.
Local mortgage lenders said while it's a little tougher to get a loan today than in the recent years, there are still at least four funding options available. Two require no down payment -- Veterans Administration and Rural Development loans.
"There is some down-payment assistance available for low-to-moderate income families through the Arkansas Development Finance Authority with Federal Housing Administration mortgages," said J.P. Sexton, president of the Northwest Arkansas Chapter of the Mortgage Bankers Association.
Sexton, a mortgage lender with Liberty Bank, said the American Dream Initiative is another program that helps first-time home buyers with down payment grants.
Despite unprecedented swings in mortgage rates in recent weeks, Sexton said a 6-percent, 30-year fixed rate is still attainable for buyers who qualify.
Sexton said he has seen a few first-time home buyers taking the plunge in recent weeks, negotiating some pretty good values. But in a declining market only time will tell the extent of those values, he added.
In Benton County, home prices fell 8 percent -- from $87- to $80-per-square-foot in the past year among existing homes and from $99- to $91-per-square-foot among new construction, Bynum reported.
Washington County fared similarly, with existing homes prices sliding 9.3 percent to $87 in the year-over-year period. New construction prices averaged $100-per-square-foot in October, down 4.7 percent from a year ago.
Lower home prices work against sellers. Pat Molle, an agent with Lindsey & Associates, recommends that sellers price their homes right. She said well-maintained homes with attractive presentations garner faster sales.
In October, Mountdata reported it took an average of 83 days from listing to pending contract.
Agents agree that buyers in this market are looking for the best values they can find. Molle said there is still a disconnect between buyer and seller expectations that agents often most negotiate.
Through the first 10 months of 2008, Mountdata reported home sales in Northwest Arkansas are down 23 percent, with 4,495 homes sold or pending at the end of October. Corresponding sales volume for the period was $822.9 million, tumbling 25 percent from 2007, and 34 percent from 2006.
The slumping home sales hit local agent coffers to the tune of $16.8 million in fewer commissions this year when compared with last year.
AT A GLANCE
Median Home Prices
(Year-over-year through October)
City $/Sq. Ft % Change
Fayetteville $102 -1.4
Rogers $94 -3
Farmington $90 -8.5
Bentonville $89 -9.6
Springdale $87 -12.1
Bella Vista $83 -5.4
Centerton $80 -13.4
Source: Mountdata.com
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