Little Rock, AR Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Wed, May 19 2021

Jump To Another Year In The Little Rock Real Estate Market:

The Little Rock real estate market has had a hard time maintaining the same pace as its nationwide counterparts. Whereas median home values across the United States have increased for the better part of a decade, real estate in Little Rock has had to overcome a few more additional obstacles. Due largely, in part, to an economy that still has plenty of ground to make up from the last recession, Little Rock real estate trends are on the right path, but not exactly where many people would have liked to have seen them at this point in the year. Nonetheless, things appear to be heading in the right direction. While inventory shortages in the wake of the pandemic have led to exorbitant prices across the country, relative affordability in Little Rock now looks like an advantage.

Little Rock Real Estate Market 2021 Overview

  • Median Home Value: $161,946

  • 1-Year Appreciation Rate: 2.6%

  • Median Home Value (1-Year Forecast): N/A

  • Average Days On Market: 46

  • Median Rent Price: $995

  • Price-To-Rent Ratio: 13.56

  • Unemployment Rate: 4.9% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 197,312 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $51,485 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 11.77

  • Foreclosure Rate: 1 in every 5,448 (1.8%)

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Little Rock real estate investing

2021 Little Rock Real Estate Investing

The Little Rock real estate investing community has enjoyed quite a lucrative run over the last decade. Home prices have increased 18.2% since bottoming out during the Great Recession. Perhaps even more importantly, demand never tempered in the face of appreciation. A strengthening economy allowed prospective buyers to continue shopping, despite price increases. It is worth noting, however, that supply and demand issues, in conjunction with the current pandemic, continue to increase prices, so much so that homes are finally starting to appear “expensive.”

While the Little Rock real estate market is relatively cheap compared to the national average, price margins for investors are growing thinner and thinner. As a result, home values are near historic highs, and rehabbers are finding less room for profits. That’s not to say rehabbing can’t still be done in Little Rock, but rather that the new marketplace created in the wake of COVID-19 favors another exit strategy: building a rental property portfolio.

The pandemic ushered in a period of historically low interest rates, which are now somewhere in the neighborhood of 2.94%. Today’s borrowing costs have made it easier for investors to transition from rehabs to rental properties. In particular, low borrowing costs can simultaneously offset higher home prices and increase monthly cash flow from operations. If for nothing else, lower mortgage payments mean landlords can collect and retain more profits.

In addition to lower interest rates increasing cash flow potential, Little Rock’s 13.56 price-to-rent ratio (PTR) suggests landlords will have plenty of suitors for their units. While a 13.56 PTR would typically suggest more people want to buy, there isn’t enough supply to meet demand. While on the surface, it would appear that more people will favor buying over renting, there isn’t any inventory to buy. As a result, landlords will inherently benefit from anyone who can’t find a place to buy. If there are no places to buy, the renter pool will grow, effectively increasing rental demand.

Rehabbing remains a viable exit strategy in the Little Rock real estate market, but the new landscape created by the Coronavirus appears to prop of rental property owners.

2021 Foreclosure Statistics In Little Rock

According to RealtyTrac, Little Rock is home to a relatively high number of distressed homes. More specifically, approximately one in every 5,448 homes, or a rate of 1.8%. For context, the U.S. as a whole has a foreclosure rate of about 0.8% (one in every 11,464. With a foreclosure rate that’s more than double the national average, the Little Rock real estate market has some ground to make up.

Of the distressed homes in Little Rock, the majority are up for auction or will be at some point in the near future. With 57.1% of Little Rock’s distressed inventory of the auction variety, investors will want to pay special considerations to local auctions. Doing so will increase the odds of finding a deal below market value. To increase your odds, here’s a list of neighborhoods with the highest distributions of distressed homes:

  • 72209: One in every 2,776 homes is distressed

  • 72223: One in every 9,683 homes is distressed

  • 72204: One in every 14,573 homes is distressed

For all intents and purposes, the Little Rock real estate market is expected to see an influx in foreclosures. Unemployment in the wake of the Coronavirus is still higher than the city would like, and more homeowners are expected to fall on tough financial times. While it’s too soon to tell just how many foreclosures may be filed, it’s safe to assume there will be more by the end of 2021. As a result, investors who position themselves well now will be able to help distressed homeowners sooner rather than later.

2021 Median Home Prices In Little Rock

Is now a good time to buy real estate in Little Rock? The median home value in the Little Rock real estate market is $161,946, according to Zillow’s Home Value Index. Despite benefiting from nearly a decade’s worth of appreciation, however, median home values in Little Rock are considerably lower than the national average. At $281,370, the median home value in the United States is approximately $119,424 more than the median home value in Little Rock.

The disparity in price becomes more apparent over the course of the last decade. Real estate in Little Rock has appreciated at a modest rate of 18.2% since the market bottomed out in January 2012. Over the same period of time, the median home value in the United States appreciated at a rate of 73.2%. In the last year (alone), median home values across the United States increased nearly four times more than in Little Rock—11.6% and 2.6%, respectively. Not surprisingly, the trend looks like it’ll continue into next year.

Select neighborhoods across the city have contributed more to Little Rock’s appreciation rates than others, however. For two decades, these are the Little Rock neighborhoods that have appreciated the most (according to NeighborhoodScout):

  • City Center

  • E 9th St / College St

  • Pulaski / Pulaski Heights

  • U of Arkansas for Medical Sciences / W Markham St

  • Ampersand St / N Pierce St

  • E Roosevelt Rd / Bond Ave

  • Lee Ave / N Van Buren St

  • Hot Springs Junction

  • Philander Smith College / W 16th St

  • S Battery St / W Roosevelt Rd

Little Rock real estate trends haven’t been able to keep up with the rest of the country, but that’s not necessarily a bad thing for local investors. In fact, while many cities across the country have priced prospective buyers out of the market, the city remains incredibly affordable. The city’s low cost of living should actually stimulate more housing activity, which bodes well for local investors.

Little Rock Real Estate Market:2020 Summary

  • Median Home Value: $141,500

  • 1-Year Appreciation Rate: +1.4%

  • Median Home Value (1-Year Forecast): +0.8%

  • Average Days On Market: 76

  • Median Rent Price: $995

  • Price-To-Rent Ratio: 11.85

  • Unemployment Rate: 3.1% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 197,881 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $49,957 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 11.77

  • Foreclosure Rate: 1 in every 1,462 (6.8%)

Little Rock Real Estate Investing 2020

Little Rock real estate market trends took a significant turn in the first quarter of 2020. Not unlike everywhere else, the introduction of the Coronavirus interrupted what was looking to be a great year for local real estate. In a matter of weeks, fear and uncertainty onset by the pandemic completely derailed all of the momentum created in previous years. Little Rock immediately saw a decline in activity once the impact of COVID-19 was felt. Sellers took their listings off the market, buyers refused to even look at new homes, and mortgage underwriters were unavailable due to government-mandated “stay-at-home” orders.

The pandemic forced the Little Rock real estate market to take a step backward, but not for long. As soon as the market was brought to a standstill, the Fed dropped interest rates well below three percent. The move sparked more activity than anyone could have imagined, and buyers came out in droves to capitalize on attractive borrowing costs. The influx of buyers was too much for local inventory levels to handle, and demand quickly turned into competition. Lacking supply, sellers in the market held all the power, and they priced their assets accordingly. From March (when the Fed increased rates) through the end of the year, the median home value in Little Rock increased 2.5%. Not much in its own, 2020’s rate of appreciation was in addition to eight consecutive years of price growth, which helped local real estate values test new highs each month.

All things considered, real estate became more expensive than ever in Little Rock. As a result, real estate investors were forced to rethink their exit strategies. Wheres rehabbing had been the most popular exit strategy since the Great Recession, higher home prices all but eliminated attractive price margins. To combat higher home prices, investors started taking a long-term approach. In particular, most investors turned to rental properties. Historically low borrowing costs allowed investors to increase monthly cash flow from operations. At the same time, interest rates made it easier to justify higher acquisition costs.

When all was said and done, Little Rock had affordable inventory for rehabbers in 2020. Still, the new market indicators created by the pandemic made long-term investment strategies more attractive than ever.

Little Rock Real Estate Market:2016 Summary

  • Current Median Home Price: $140,700

  • 1-Year Appreciation Rate: 0.8%

  • 3-Year Appreciation Rate: -2.4%

  • Unemployment Rate: 3.7%

  • 1-Year Job Growth Rate: 2.3%

  • Population: 197,357

  • Median Household Income: $46,409

Little Rock Real Estate Investing 2016

The first half of 2016 witnessed minimal traction in terms of home prices and appreciation rates, as prices for the city underwhelmed compared to the national average. Nonetheless, home prices in the second quarter continued to grow relative to the previous year. The Little Rock housing market also saw improvements in home affordability during the first half. Arkansas’s capital was among the most affordable areas in the country, benefitting a trifecta of renters, homeowners, and investors alike.

Despite lagging home prices and meager appreciation gains, the Little Rock real estate market pushed forward. The median home price grew to $140,700 during the second quarter, compared to the national average of $239,167. Although minimal, one-year appreciation rates crossed into positive territory, rising to 0.8% in Q2. Thankfully, the Little Rock real estate market had other factors working in its favor.

One component responsible for enhancing local real estate was the economy. Employment held up, while unemployment was better than the national average. The second quarter saw an unemployment rate of 3.9%, compared to the rest of the rest at 4.9%. Furthermore, one-year job growth reached 2.3%, whereas the national average saw new jobs grow at a rate of 1.9%. In comparison to other markets, local employment growth was strong.

Little Rock Real Estate Market:2015 Summary

  • 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

Little Rock Real Estate Investing 2015

Little Rock real estate news was positive over the course of 2015. The real estate market became 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, the city’s recovery accelerated over previous years.

The median home price for the Little Rock real estate market was $131,800 in 2015. The national average, on the other hand, was around $203,867. With such a large difference in home values, it may surprise some to find out that appreciation rates across the country were very similar, 6.0% and 6.7%, respectively. In fact, both saw encouraging rises in home prices at the time.

While integral to the city’s growth, the influx of equity into the Little Rock housing market wasn’t the only positive indicator for the area. In fact, Little Rock real estate was very affordable in the face of rising prices. The city found a sweet spot between affordability and growing home values. Real estate investors grew to love the prospects of their careers.

On average, homeowners across the U.S. spent 14.4% of their income on monthly mortgage obligations in 2015. However, residents spent considerably less on housing, 6.3% to be exact. As a result, affordability in the Little Rock housing market was higher than most markets across the country.

Many believe that the city avoided the most volatile parts of the recession because of its business infrastructure. In addition, experts attributed the strength of the city’s nationally recognized economy to several diverse businesses. Low business costs brought in several large companies, which generated a high per-capita income—at least compared to the rest of Arkansas.

Little Rock real estate investing is benefiting from a healthy economy, just like individual homeowners. However, investors were attracted to an entirely different part of the Little Rock housing market: distressed properties. At the time, there were about 200 homes in some state of foreclosure: default, bank-owned, or foreclosure.

Of course, the availability of distressed properties was one thing, but the discount offered was another. Distressed properties in the area sold for about $87,000 less than non-distressed ones. That was a savings of 56.2% per home.

Not only did the city avoid the recession for the most part, but it also improved its economic standing in the wake of it. In association with high per capita incomes and affordability, a strong business infrastructure made the Little Rock housing market a very attractive area for both investors and homeowners.

Little Rock County Map:

Map of Little Rock housing market

Little Rock Real Estate Market Summary:

Little Rock real estate market trends have followed their national counterparts over the course of 2021. In particular, prices increased despite the pandemic, economic stimuli, and a lack of inventory. That said, most buyers have been priced out of many cities across the country. Little Rock, on the other hand, still looks relatively affordable. While prices are historically high, they still look attractive compared to other cities. As a result, more buyers may look to Little Rock in the future, which bodes well for everyone.

Have you thought about investing in the Little Rock real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Little Rock in the comments below.

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