Arkansas Real Estate Market Trends & Analysis


The Arkansas real estate market is amongst the most affordable markets in the country. With an attractively low price-to-rent ratio, the majority of real estate in Arkansas is actually cheaper to own than to rent. That, combined with an improving economy and promising job growth opportunities, should facilitate increasing demand for the foreseeable future.

Perhaps even more importantly, prices will rise, which bodes well for local investors. If for nothing else, real estate is still relatively affordable, and investors who get into the market sooner rather than later could benefit from rising home prices.

The Top Arkansas Real Estate Markets


While the best real estate market in Arkansas is up for debate, here’s a list of the cities investors may want to pay special considerations to:

Arkansas Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Title Agents, Attorneys
Conveyance: Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method: Judicial & Non-Judicial
Process Period: 4 - 5 months
Notice of Sale: Trustee
Redemption Period: Up to 12 Months

Taxes

Income Tax: 0.9% - 6.9%
Corporate Tax: 1 - 6.5%
Sales Tax: 6.50%
Estate Tax: No
Inheritance Tax: No
Median Property Tax: 0.52%
Property Taxes by County: http://www.tax-rates.org/arkansas/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,420
Transfer Fee: 0.33%
Origination Fee: $1,815.00

Overview

  • Median Home Value: $128,400

  • 1-Year Appreciation Rate: +5.2%

  • Median Home Value (1-Year Forecast): +2.6%

  • Median Rent Price: $1,100

  • Price-To-Rent Ratio: 9.72

  • Average Days On Market: 74

  • Percent With Negative Equity: 14.1%

  • Unemployment Rate: 3.4% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 3,013,825 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $43,813 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 14.09%

  • Foreclosure Rate: 1 in every 6,735 (1.4%)

Median Home Prices In Arkansas


The median home price in Arkansas is approximately $128,400. To put things into perspective, the median home value across the United States is $229,600, according to Zillow’s Home Value Index. Despite the dramatic differences in median home values, real estate in Arkansas has appreciated at a faster rate than the national average in recent history. Since the start of 2019, the median home value in Arkansas has increased slightly more than the national average—1.9% and 1.5%, respectively. Over the course of an entire year (August 2018 to September 2019), in fact, appreciation rates in Arkansas outpaced national trends. Whereas real estate in Arkansas appreciated 5.2% in the last 12 months, U.S. real estate increased 4.9%.

There is no doubt about it: Arkansas’ appreciation rates have outpaced the national real estate market in recent history. It is worth noting, however, that median home values in the United States have fared better since the latest recession. Since the Arkansas real estate market bottomed out around April 2012, prices have increased 37.6%. Real estate prices across the United States, on the other hand, averaged increases somewhere in the neighborhood of 54.0%.

Despite nearly eight consecutive years of appreciation, it looks as if the Arkansas real estate market still has room for growth. Thanks to improving economic conditions, stable demand, low mortgage rates and a lack of available inventory, real estate in Arkansas should continue to appreciate—albeit at a tempered rate. In the next year, there’s nothing to suggest Arkansas real estate trends won’t facilitate at least a 2.6% increase in home values.

Median Rent Prices In Arkansas


Not unlike every other market across the country, rental prices in the Arkansas real estate market share a direct correlation with home values. For the better part of a decade, in fact, rental prices have increased with their home value counterparts as the Arkansas real estate market continued to strengthen. That said, today’s historically high home values have resulted in similarly high rental prices.

The median rent price in Arkansas is now $1,100, which is 10.7% higher than it was at the start of this year and 32.3% higher than the first quarter of 2011 (when rents bottomed out during The Great Recession). Median rental prices across the country, on the other hand, have outpaced Arkansas on the year. The median rent price in the United States has increased 11.1% since the start of 2019. It is important to note, however, that while rental prices across the United States have increased more this year, Arkansas rental prices have actually increased at a faster pace over nearly nine years. Since January 2011, median rent increases in the U.S. have trailed behind Arkansas rents by 2.8%.

Arkansas Foreclosure Trends & Statistics


According to RealtyTrac, a nationally recognized real estate information company that specializes in distressed properties, Arkansas has a relatively low distribution of distressed properties. With approximately one out of every 6,735 homes in some stage of distress (default, auction or bank owned), Arkansas boasts a minuscule foreclosure rate of 1.4%, which places it considerably lower than the 3.9% exhibited by the national average.

“In August, the number of properties that received a foreclosure filing in AR was 29% lower than the previous month and 52% lower than the same time last year,” according to RealtyTrac. The low distribution of foreclosures and distressed properties is primarily attributed to the state’s latest economic improvements, historical appreciation rates and general affordability. In fact, it is actually more affordable to own property than rent in most parts of the Arkansas real estate market. The relatively low cost of living afforded to Arkansas homeowners mitigates the risk of foreclosure.

While Arkansas real estate trends have drastically reduced the number of distressed assets across the state, real estate investors will be happy to hear that there are still isolated pockets of foreclosures. While Arkansas’ economy has made gradual improvements for years, some counties inherently boast more distressed properties than others. The following counties have the highest distributions of foreclosures in the entire state:

  • Lonoke (1 in every 1,695)

  • Garland (1 in every 2,210)

  • Crittenden (1 in every 2, 411)

  • Marion (1 in every 3,138)

  • Saline (1 in every 3,183)


Tax Lien Investing


  • Tax Lien or Deed: Tax Deed State

  • Redemption Period: 3 Years

Real Estate Investing In Arkansas


Arkansas real estate investors, not unlike investors across the country, tend to favor distressed assets. Placing an emphasis distressed homes increases their odds of locating deals with potentially larger profit margins. That said, there’s one type of distressed property Arkansas real estate investors should pay special considerations to: auction homes.

As their names suggest, auction homes are assets which have been repossessed due to the previous owner’s inability to keep up with their mortgage obligations. In an attempt to recoup potential losses, however, a bank will auction the home off to the highest bidder, oftentimes at a discount. Remember, banks would rather sell a home for less than it’s actually worth than to hold onto it and incur holding costs. In addition to rewarding auction attendees with a potential deal, auction homes represent the largest distribution of distressed homes in the entire state of Arkansas. Of the distressed homes identified by RealtyTrac, 72.1% are either up for auction or will be at some point in the near future.

The remaining 27.9% of Arkansas’ distressed homes are bank owned; that means the distressed assets failed to sell at auction, and are now in the sole possession of loan originators. Nonetheless, bank-owned homes grant investors a similar opportunity to acquire discounted homes.

Of course, knowing where to find real estate deals in Arkansas is only part of the equation. Once investors secure deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Arkansas real estate investors? The answer is simple: all of them. However, short-term strategies appear to be more promising than their long-term counterparts at the moment. Rental properties remain a viable option, but rehabs are currently more conducive to success when placed in context with today’s economic indicators.

Median home values in Arkansas are historically high at this point in 2019, which would typically lead investors to pursue long-term rental strategies. Cash-flowing rental properties reward savvy investors the ability to offset higher acquisition costs overtime. More often than not, it’s easier for investors to justify high prices when they expect to collect rent for at least a couple of years.

However, Arkansas is unique in that it remains relatively affordable—despite nearly eight consecutive years of appreciation. Coincidently, it’s actually more affordable to own a home in a majority of the state than it is to rent long term. As a result, buyer demand tends to tip the scales in favor of rehabbers.

Arkansas Housing Market Predictions


It is nearly impossible to predict where the Arkansas real estate market will be in a year, and perhaps even six months from now. Regardless of how predictable Arkansas real estate trends appear to be, there are simply too many variables to rely on them without at least some degree of error. Nonetheless, it’s good practice to try and make well-informed, educated guesses pertaining to a respective housing market. Keeping a finger on the pulse of the market is the simplest way to keep pace with today’s fast-paced market cycles. Consequently, there are a few Arkansas real estate market projections that are more likely to play out than others:

  • Rehabbing will prevail as the most attractive real estate investing strategy: As one of the most affordable housing markets in the country, Arkansas real estate has become a commodity for the budget-conscious shopper. Real estate in Arkansas is so affordable that it’s actually cheaper to own than rent in a majority of the state. Demand in the local housing market tends to lean in favor of buying over renting. Real estate investors will most likely find themselves with more short-term opportunities, as opposed to long-term rentals. Of course, there are plenty of people looking to rent, but with more people leaning towards buying, rehabbing remains a very attractive exit strategy in Arkansas.

  • Home values will increase at a slightly slower pace: Much like the rest of the country, real estate in Arkansas has increased at a nearly exponential pace for the better part of a decade. Thanks, in large part, to improving economic conditions, persistent demand, and a lack of available inventory, homeowners have been able to increase asking prices for nearly eight consecutive years. That said, there’s nothing to suggest the trend won’t continue—albeit at a slower pace. As Arkansas continues to account for its inventory shortage, appreciation rates should temper.

  • Positive economic indicators will support a healthy real estate market: Not unlike the majority of markets across the country, Arkansas is a lot better off today than it has been in years past; that, combined with a stronger economy and historically low interest rates should promote homeownership on a higher scale. As a result, the entire market should see a lot more activity, which bodes well for everyone involved in transactions for the foreseeable future.

Arkansas Real Estate Market Summary


There are several Arkansas real estate trends working in favor of today’s investors. Thanks to encouraging economic developments, like job and wage growth, the local real estate industry has become the beneficiary of more active buyers. However, the same lack of inventory impacting the rest of the country is present in the Arkansas real estate market. While more people are interested in buying, they are faced with rapidly escalating prices. Nonetheless, recent demand has already stimulated the local market, and should look to improve things even further for the foreseeable future.

Sources:



https://www.census.gov/quickfacts/AR
https://www.bls.gov/regions/southwest/arkansas.htm#eag
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ar/
https://www.realtytrac.com/statsandtrends/ar/
https://www.zillow.com/ar/home-values/
https://arkansasrealtors.com/wp-content/uploads/2019/07/MAY-2019-Housing-Report-FINAL.pdf

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