Multifamily developments continue, outpacing other homes

More and more Northwest Arkansans are living in multifamily housing even as the typical apartment is costing more per month, according to a midyear industry report and census data.

About 1,500 apartments were built in Bentonville, Rogers, Springdale or Fayetteville in 2015 and so far this year including four new student-housing developments, according to the latest apartment market survey from CBRE Northwest Arkansas, the local branch of an international real estate and analysis firm. Roughly 2,000 more are expected to open by next year, the report states.

Those new units add to the some 32,000 apartments within the four largest cities. The flood seems to be holding steady with the number of people looking to live in them, with occupancy rates dropping slightly from 98 percent one year ago to 97.5 percent now, according to the report. Despite the supply, monthly rent jumped more than $40 in that time to a regional average of $651.

Benton County's cities are about $160, or 28 percent, more expensive than Washington County's, the survey found.

"We have always maintained the strength of the multifamily market is closely tied to the strength of the job market and local economy," CBRE's analysts wrote in the report, adding they expect rent to keep rising as new complexes are finished and start leasing at higher rates than older developments.

Meanwhile, the most recent data from the U.S. Census Bureau shows two related trends: The number of renter-occupied dwellings in the Northwest Arkansas metropolitan statistical area grew more quickly than owner-occupied units from 2010 to 2014, and the share of people living in multifamily structures grew more quickly than the overall population in the same time.

Taken together, the reports depict a region where developers, property owners and residents are increasingly leaning toward the renter-based, apartment-living lifestyle, though single-family houses still dominate.

"When you have the kind of continual growth that we've experienced -- both at the student population level as well as the general population level -- there's only one thing to do, and that's build the cheapest things available on the smallest footprint," said Kevin Fitzpatrick, professor of sociology at the University of Arkansas and director of the Community and Family Institute. "If you go around to most places that are experiencing that kind of continued growth, you should see a similar pattern."

Some of the credit goes to the university, where enrollment has grown by several thousand students in the past few years, Fitzpatrick and others said. There were more than 26,700 students enrolled last fall.

More than 6,000 beds in student-targeted complexes have been built since 2010, said Samantha Higgins, assistant director of the university's Off-Campus Student Services. Four of those complexes are opening this semester near campus or in southern Fayetteville.

Jordan Shuster, a pre-law junior, said she chose a one-bedroom unit in the new Sterling District, which stands several stories tall near Dickson Street, because of a host of reasons, including its location, cost, security and furnishings.

"I didn't really want to have to keep up with the lawn," she joked. "It's been working out really well."

Shuster said the idea of her own home is appealing but unlikely, at least until after law school.

"I'm just a barista at Starbucks. There's no way I'd be able to afford a house and go to school," Shuster said.

Move-ins started at Gather Dickson and Champions Club, and a representative for Atmosphere Apartments, also near Dickson, said it should be ready by October.

"As an apartment market, we are addicted to the growth of the university year after year after year," Kathy Deck, director of the university's Center for Business and Economic Research, said at a talk with Fayetteville Chamber of Commerce members Monday. Developers can't count on that growth lasting for more than a few more years, she added, and lower or more stable rents could be on the way.

In fact, there may now be too much student housing, at least for the moment, Higgins said. She pointed to a 2015 year-end report from FourPount Student Housing Investments that found the expected number of new beds around the university in the next two years is three times the expected enrollment growth.

"We talk to individual properties that are half-full," she said. "I think it'll just take some adjusting for the market."

Other factors come into play outside of the college world. Apartments and rentals are increasingly popular for people in their 20s and lower 30s who typically make thousands of dollars less than their parents did, according to the Census Bureau, in part due to the recession, rising college debt and other factors. Various studies by the Pew Research Center and other groups have found young adults put off marriage and home buying longer than previous generations as well.

Jerry Workman, who has lived with his wife and two young children at Fayetteville's Shiloh Apartments for about two years, said apartments can offer a lot more options and convenient locations than houses in their price range. The homes in the best spots, meanwhile, cost "tons of money," he said.

"We're just saving up money for a good down payment on one," said Workman, 25.

Still, the area is lacking somewhat in multifamily complexes aimed at young professionals, said Mike Harvey, head of economic development for the nonprofit Northwest Arkansas Council, which aims to help guide the region toward healthy growth. Two complexes in north Fayetteville are examples of developments more aimed at that group, with around 600 units expected by 2017, according to the CBRE report.

"So I'm thinking we're just playing a bit of catch-up," Harvey said of the slew of apartments opening soon.

Interest in homes hasn't disappeared, however. Siloam Springs, Centerton and the four major cities have all seen increasing numbers of houses sold, according to the latest Skyline Report from the economic research center, which tracks building permits, home sales and home prices every six months. More than 1,000 residential building permits were issued in the second half of 2015, it said.

Philip Taldo, co-owner of Weichert Realtors, said people in their 30s and 40s are the "hottest" buyers right now.

"They're professionals, they've got their family, a lot of them -- their family is up in high school or maybe going to college," he said, adding demand for homes is slightly outpacing supply, particularly in Benton County, which has higher incomes on average than Washington County. The Skyline Report from the second half of 2015 found Benton County homes are costing about $205,000, or $15,000 more than in Washington County.

"For every 100 houses that are sold in WashCo there's probably 160 sold in Benton County," Taldo said.

As home prices continue upward, they move out of reach for people of all ages, Fitzpatrick said. His regular homeless census found thousands of people don't have their own beds, at least temporarily, in Washington and Benton counties each year, and poverty and food insecurity affect tens of thousands more even as the region's unemployment stays low and average wages rise.

Cleta Hodge, a retired widow living with her grown daughter in Fayetteville's Mountain Ranch Apartments, said apartment living is far more feasible for her than owning and maintaining a home.

"It's the upkeep, it's the taxes, the insurance -- they continually go up," she said. "Working paycheck to paycheck, you just can't accumulate."

NW News on 08/21/2016