Building momentum

A growing population is fueling Northwest Arkansas' real estate market.

Benton and Washington counties added nearly 30,000 people between 2010 and 2013, according to the U.S. Census Bureau. Home sales grew from 5,374 to 7,269 during that same time period, reports MountData, a real estate data firm.

Paul Bynum, MountData owner and principal broker, said the housing market is tightening. MountData reports 803 new listings and 610 pending sales at the end of January, compared to 883 new listings and 540 pending sales a year earlier.

Home builders are working to fill that need, making Northwest Arkansas one of the top markets in the country, according to Robert Denk, senior economist with the National Association of Home Builders. The association tracks metropolitan statistical areas. The Northwest Arkansas area includes Washington, Benton and Madison counties in Arkansas and McDonald County, Mo.

"The numbers are showing a pretty bright future" in Northwest Arkansas, he said.

Denk said the most recent data available shows about 2,500 home building permits have been issued in the area in the past 12 months, about where the area averaged in the 1990s and early 2000s.

The housing market was a major factor in the recession that ran from December 2007 to June 2009. Builders across the country were building homes faster than they could be absorbed by local markets. Denk said Northwest Arkansas' market peaked in 2005, reaching almost 6,000 housing starts.

He said he expected the area's housing starts, or new residential building construction, to climb back to about 3,000 annually.

Planning offices in the area's four largest cities issued 1,421 single-family home building permits last year compared to 1,476 in 2013.

"It's still tough out there, but it is getting better," said John Rausch, CEO and president of Rausch Coleman Homes.

The company sold more than 1,000 home last year and brought in $175 million, he said. The builder works in Arkansas, Oklahoma, Missouri and Kansas.

Mark Dunaway, Rausch Coleman Northwest Arkansas division manager, said the company had 65 homes under construction locally in late February. He expects that number to increase to about 85 later this year.

"We do want to see about 25 percent growth year-over-year, "he said. "We feel that we can reach that by opening new communities."

The home builder started its Northwest Arkansas operations in 2002 and builds in 10 subdivisions, including one that recently opened in Centerton. Three more communities are set to open soon. He said Rausch Coleman has about 100 lots available across Northwest Arkansas.

"The new one in Centerton has had a lot of activity recently," Dunaway said. "I think this area is primed for a good market."

Centerton's population increased 392 percent between 2000 and 2013, going from 2,146 to 10,556, according to Census data.

Ron Stinchcomb, a Realtor with Coldwell Banker Harris McHaney & Faucette, said several areas throughout the region are primed for growth, including Prairie Grove and Farmington.

"These can be more economical places compared to the bigger towns," he said. "We need to realize we have a lot of land that is still available."

Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, said Benton County had 126 and Washington County had 115 subdivisions platted but never built before the recession.

The number of platted but undeveloped subdivisions dropped to 30 in Washington County and 43 in Benton County at the end of 2014, Deck said. The undeveloped subdivisions had 1,839 lots in Benton and 2,192 lots in Washington counties, she said.

Deck said the two counties had 383 active subdivisions with 37,847 lots. Active means there is some activity from initial building to inhabited homes.

Patsy Christie, Springdale planning director, said the home market has stabilized, but people remain a little skittish.

"I expect to continue to see fill-ins now in existing subdivisions," she said.

Derrel Smith, Rogers senior planner, said most of the lots that were platted before the recession have filled up and new projects are adding houses across the town.

He pointed to the start of phase eight of the Shadow Valley Neighborhood as an example of an expanding existing sub-division. The Rogers Planning Commission last month approved the preliminary plat for the 76-lot addition to the neighborhood.

Smith said he expects strong residential building permit numbers this year. Rogers issued 349 single-family residential building permits in 2014, down from 429 in 2013.

"There are a huge amount of remodels coming downtown," he said. "That's good because the infrastructure is already there."

Bentonville also saw a drop in single-family building permits last year to 449 in 2014 from 509 in 2013, but that can be misleading, said Troy Galloway, Bentonville's community and economic development director.

"I believe 400-500 single-family units annually is indicative of strong, sustainable single-family construction for a growing community of our size," he said. "January and February are off to an average start with 70 single-family permits issued since Jan. 1."

Galloway called downtown's residential market "white hot." He said it is not unusual to see a developer purchase a home near the city's downtown, tear the structure down and build two or three new homes.

Patrick Sbarra said homes in downtown Bentonville are in high demand. He owns Lamplighter Restoration with Todd Renfrow. They are building homes along Southwest D Street.

"It is the classic neighborhood lifestyle that is the compelling people to move back to downtown," Sbarra said. "People are craving that close sense of community and neighborhood walkability."

Renfrow said homes are selling for about $220 a foot, and the new homes will range from $600,000 to $720,000.

There were 442 new homes on the market in Washington and Benton counties at the end of January with a median price of $249,000, according to MountData. Bentonville had the largest number of new homes for sale with 107 at a median price of $279,900. The 82 new homes for sale in Fayetteville had the highest median price at $353,398.

Andrew Garner, Fayetteville planning director, said he is also seeing platted subdivisions fill up while builders introduce new projects.

The new subdivisions are scattered across town, including one north of Mission Boulevard between Winwood Drive and Lisa Lane that the Fayetteville Planning Commission approved last month. Whistler Woods LLC plans to build 19 single-family homes on about 7 acres.

Four of Buffington Homes of Arkansas' seven subdivisions are in Fayetteville. Juliana Salazar, Buffington Homes marketing director and principal broker, said the company built 91 homes last year and are on pace to exceed that this year.

"We specialize on location," she said.

Buffington Homes will begin building homes in May or June in Brighton Cottages in Bentonville. The subdivision will be in southwest Bentonville and include a community garden, several parks and a swimming pool, she said.

Salazar said building successful communities means building what people want.

"It's part of the lifestyle, not just a home," she said. "The design is made to compliment that lifestyle."