Hawks’ View - Report on Central AR

May 13-19, 2024

By Spencer Hawks

 

Here’s a moment of candor.  My golf game isn’t wonderful. I do enjoy playing a scramble from time-to-time when I can put the right team together, which generally means I have at least two ringers that can balance out my short drives and awkward putts. When I put the right team together, we get the job done and have a pretty good time playing. This market continues to be the same way. When you put the right pieces together, you can make these deals work. Some are still in shock with what can be done with higher interest rates and little cash on hand, just like landing that eagle on a long par five. I’ve never done that by the way, but I know a guy. 

 

Central Arkansas continues to pull out the stops and is headed into what looks to be a solid Summer for real estate in spite of the Fed having led everyone on earlier about cutting rates. Market exposure for residential units under $300,000 consistently go under contract in under thirty days. Average days on market for properties exceeding $800,000 is only a little more than a couple of months. Pulaski County had over a third of the properties selling over the $800,000 mark with Faulkner County coming in a distant second. Let’s note the size difference of the two counties though. Pulaski County is around 400,000 people and neighboring Faulkner County is somewhere around 125,000. Saline and Garland County also both had properties sell for over the $800,000 mark this past month.

 

Transactions continue to come through and close. However, as mentioned in previous articles there is still shifting, moving, and negotiating after the property is under contract before these transactions often close. One transaction this past month had dances with closing costs and price changes and then a subsequent appraisal issue. The buyer would then find out that they made too much to qualify for a Rural Development loan and would have to receive a gift from relatives to have the amount necessary to utilize an FHA option. This story continues to be the consistent song of this mortgage market. Simply put Americans have not been incentivized to save for years. Those who’ve been in the asset class for some time and have seen appreciation in their assets have access to capital while others are simply trying to keep up with the inflation which the asset class is in part benefitting.

 

During this last golf scramble my new associate Landen Haas, who’s a dynamite agent by the way, asked me what I thought a particular property on the course would sell for if it hit the market. This question brings me back to the properties discussed in the paragraph before the last one. What type of property is selling for these prices? So let’s start from the top on the aforementioned list of properties. The highest priced property to sell over the last month was 13900 Beau Vue Drive in Little Rock at $2,550,000. The square footage and acreage in CARMLS is 5775 square feet on 5.5 acres. The only other home to sell for over $2,000,000 in CARMLS over the last month was 2514 N. Fillmore Street, also in Little Rock. In fact, every home in the MLS in my central Arkansas search that sold for over a million dollars in the last month was in Pulaski County. 

 

These homes are obviously not the homes that the buyers trying to break into the asset class are buying though. The RD transaction that switched to FHA mentioned in this article was  $215,000, 1411 square feet,  3/2 home right outside of Conway. The home had been nicely remodeled before being put on the market. There were also seller concessions for closing costs in this transaction. We had the home under contract in less than 24 hours. As I write this, I’m preparing to list a smaller home of just over 1000 square feet in the heart of Conway for $169,000, and already have some interest before the official listing. The home is also a remodeled 3/2. These are homes that an investor would have gobbled up as rental properties a couple of years ago, but now with higher rates first time home buyers have a shot at them again. The cash on hand element is still a problem though and may be for the next couple years as we hedge off inflation and encourage savings. 

 

Investors are still highly engaged in the central Arkansas market in properties under $200,000 per the MLS. Out of the 336 properties that sold over the last month under $200,000 in central Arkansas, only 125 utilized FHA, VA, or RD financing. Many under $150,000 were sold for cash or marked bank financing. Not all investors are created equal though, I currently have buyers looking at homes being flipped and buyers who are looking to flip homes. Maybe I should hook these folks up! All that to say, these investors may not be buying to hold, but rather buying to flip and turn a quick profit. 

 

Before playing that last scramble we sat in the clubhouse and waited out the rain. As people do we talked about parts of our lives and reflected on different memories. Intrigue about this market continued to prevail in our conversations, the stability of the market in the midst of such great change. Yet food and shelter both fall under Maslow’s Physiological Needs, and adequacy is measured personally more often than not when it comes to property. So, put your team together and enjoy the game!