The Little Rock real estate market has become the beneficiary of several progressive indicators: increased equity, high affordability, well-developed infrastructures, low business costs and a high per capita income rate. Due largely, in part, to these factors, Little Rock’s recovery has accelerated over the past several months.
The current median home price for the Little Rock real estate market is $131,800. The national average, on the other hand, is $203,867. With such a large difference in home values, it may surprise some to find out that the appreciation rates in Little Rock and across the country over the course of last year were very similar, 6.0 percent and 6.7 percent respectively. In fact, both have seen encouraging rises in home prices in the last 12 months. However, the same wasn’t the case over a three-year span. While the national appreciation rate was almost 30 percent, Little Rock did not exceed 2 percent. Nonetheless, the Little Rock housing market has made significant strides in the recent recovery.
Experts over at Zillow have already forecasted a 2 percent increase in home values over the next year.
After three consecutive years of appreciation, Little Rock real estate has extended its trend of positive price growth. Homeowners in the area are more than excited to see the return of equity, and the Little Rock real estate investing community should share a similar sentiment. Increases in equity will only help the whole of the Little Rock economy. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Little Rock housing market one year ago have appreciated, on average, by $9,379. The national average was $15,753 over the same period.
- Homes purchased in the Little Rock housing market three years ago have appreciated, on average, by $9,059. The national average was $53,565 over the same period.
- Homes purchased in the Little Rock housing market five years ago have appreciated, on average, by $11,906. The national average was $47,444 over the same period.
- Homes purchased in the Little Rock housing market seven years ago have appreciated, on average, by $16,962. The national average was $17,200 over the same period.
- Homes purchased in the Little Rock housing market nine years ago have appreciated, on average, by $23,679. The national average actually decreased $100 over the same period.
The influx of equity into the Little Rock housing market, while integral to the city’s growth, is not the only positive indicator for the area. In fact, Little Rock real estate is still very affordable in the face of rising prices. The city has found a sweet spot between affordability and growing home values. Those interested in Little Rock real estate investing may want to start making moves.
On average, homeowners across the U.S. spend 14.4 percent of their income on monthly mortgage obligations. However, residents of Little Rock spend considerably less on housing, 6.3 percent to be exact. Affordability in the Little Rock housing market is higher than most markets across the country, and is historically strong.
Of course, Little Rock may be in the good position it is in because of efforts to develop a diverse business community. In fact, many believe that Little Rock avoided the most volatile parts of the recession because of its business infrastructure. Experts attribute the strength of the Little Rock’s nationally recognized economy to a number of diverse businesses.
Low business costs have brought in several large companies, which in turn has generated a high per capita income – at least compared to the rest of Arkansas. Payroll employment is closing in on its precession peak, driven by growth in the public sector. Moreover, unemployment continues to make progress, dropping from 5.8 percent one year ago to 5.1 percent today. That is better than the national average and improving.
Little Rock real estate investing is benefiting from a healthy economy, just like individual homeowners. However, investors are attracted to an entirely different part of the Little Rock housing market: distressed properties. According to RealtyTrac, there are about 200 homes in some state of foreclosure: default, bank-owned or foreclosure. While the month-over-month numbers suggest a 45 percent drop in foreclosures, distressed home filings increased 47 percent in the last year.
Of the distressed properties currently on the market, 66.7 percent are bank-owned. The majority of these properties has already been repossessed, and is now sitting on the books of banks as non-performing loans. Each one represents a potential deal for Little Rock real estate investors. The remaining 33.3 percent are going to be placed up for auction. Again, another scenario in which the Little Rock real estate investing community can capitalize on.
Of course, the availability of distressed properties is one thing, but the discount they offer is another. Distressed properties in the area sell for about $87,000 less than non-distressed ones. That is a savings of 56.2 percent per home. The median sales price of a non-distressed home was $154,400. The median sales price of a foreclosure home was $67,575.
The Little Rock housing market is certainly in a good place. While it has yet to boast the gaudy numbers of places like Miami or San Francisco, it is doing very well for itself. Not only did Little Rock avoid the recession for the most part, but it has also improved its economic standing in the wake of it. A strong business infrastructure, in association with high per capita incomes and affordability, make the Little Rock housing market a very attractive area for both investors and homeowners.
Little Rock Housing Market Summary:
- Current Median Home Price: $131,800
- 1-Year Appreciation Rate: 6%
- Unemployment Rate: 5.1%
- 1-Year Job Growth Rate: 0.9%
- Population: 197,357
- Median Household Income: $48,304