Fewer moved to state in 2010

LITTLE ROCK — Fewer people moved into Arkansas in 2010 than in each of the past five years, and those newly settled in the state earned less than the households moving out, new Internal Revenue Service figures show.

The state still attracted more residents than it lost last year, but the gap narrowed. Income figures reversed the trend of the previous five years, when the state gained households that earned more on average than those that left.

That combination — lower-earning new households and fewer of them — is strongly tied to fewer jobs, a slowdown in attracting people further along in their careers and the inability of many people to move because they owe more on their mortgages than their homes are worth, economists said.

Between 2009 and 2010, the state netted 2,374 households and about 6,100 people from in-migration over out-migration.

Between 2005 and 2006, the state netted 16,894 people or 6,940 households — the highest year of growth in the latter half of the past decade, the IRS data show. Since then, the numbers have declined across the board.

“When you look at these numbers, you might say, ‘Oh, my gosh, what’s happening to Arkansas,’ but I think that would be a bit of an overreaction,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

Overall, 29, 576 new households making up 60,987 people were added to the state in 2010 while 27,202 households or 54,871 people were lost, the tax data show. The IRS counts households by using income tax returns and people by the number of exemptions on those returns.

“It’s something that’s happening nationally ... geographic mobility has really been limited in no small part because of the fact that so many people are underwater on their mortgages,” she said.

At the end of 2010, more than 11 million U.S. residential properties had “underwater mortgages” — where owners owe more than the homes are worth, according to CoreLogic, a data company that tracks the housing market. That figure still remains high, accounting for about 10.7 million mortgages in the third quarter of 2011 or about 22 percent of the total home loans.

While state-level figures show that Arkansas has a relatively low number of negative-equity mortgages, larger numbers of such properties elsewhere have stranded many potential movers to the state, economists said.

“That’s a real problem for our economy generally,” Deck said.

“One of the things that has always been a strength of the U.S. economy is that when there’s an opportunity in some other part of the country, there are no limits on us just getting up and going, to take that job. ... It’s yet another impact of the housing crisis,” she said.

Even though fewer mortgages are underwater in Arkansas, many homeowners have seen their equity eroded, said David Mix, one of the broker-owners of Bassett Mix and Associates in Fayetteville.

“The equity portion has pretty much disappeared,” he said, noting that many sellers have taken their homes off the market and are waiting until spring.

And those they’re waiting to attract are coming to the area for one reason — jobs, he said.

JOBS AND MOVERS

State economic forecaster Michael Pakko said it’s still too early to tell whether the latest migration data show a trend, but as expected, the numbers suggest that the movement is most closely tied to employment opportunities — those who had jobs stayed put and those looking tended to move.

That’s consistent with another finding in the data: the average growth in adjusted income for Arkansans who didn’t move at all was higher than for those who moved either in or out, Pakko said.

“The higher earners tended to stay put,” said Pakko, who is also the chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

In 2010, the average gross income for a household that moved into Arkansas was $38,267. That was about $1,000 less than the $39,276 that a household moving out of the state reported earning on average, the IRS data show.

In 2009, a new Arkansas household earned more than $2,000 more on average than one moving out — and every year available back to 2004 shows the state attracting higher earners than it was losing.

The figures are evidence of a slowdown in the number of families moving and the number of people who are more established in their careers moving.

Still, jobs are attracting people from within and outside Arkansas to the state’s northwest counties, the scene of explosive growth in the years before the recession took hold in 2008, Mix said.

Employers such as Procter & Gamble, one of Mix’s largest accounts, continue to draw people to Northwest Arkansas from New Jersey, Cincinnati and Chicago, he said.

Laura Sentivany, 25, was one of those job seekers. Equipped with a master’s in business administration from the University of Missouri, she moved from Washington, Mo., to Fayetteville in October to take a higher-paying job as an account analyst for Procter & Gamble.

“I think Arkansas was kind of an ideal situation for me to move to. I’m still young. I’m not married. I don’t have kids. I don’t have roots yet. For me, I was willing to go wherever,” she said.

Sentivany, who decided to purchase a 1,850-square-foot home in Fayetteville’s Lakewood subdivision, said closer proximity to her family was also a big part of why she moved to Arkansas.

“I’m far enough that my parents won’t stop in randomly but close enough that they could if they planned a trip,” she said.

Like Sentivany, most new Arkansans come from border states — Texas, Missouri, Oklahoma and Tennessee. Nationally, figures indicate a slowdown in people making longer, more expensive moves.

In Arkansas, the greater number of newcomers are from Texas. The same is true for those who leave the state — they go to Texas.

WHERE ARE THEY GOING?

Between 2009 and 2010, about 800 more people left Arkansas for the Lone Star state than the other way around, the IRS numbers show.

Denise Hyde, the principal broker at Old South Realty in Benton, said the majority of those leaving from central Arkansas are following jobs.

“The ones that are moving out of state that I have dealt with, probably all of them have been moving because of job transfers — being relocated due to their work,” she said.

David Robertson, owner of A-1 Razorback Moving in North Little Rock, said that while his company has moved several retirees to warmer weather in Florida, most of his out-of-state business is people still in their working years headed to Texas, he said.

“Usually the Dallas area is a pretty hot area,” he said. “Pretty much just the eastern side of Texas from San Antonio over is common ground.”

Wendy Koller, who coowns Koller Moving and Storage in Fort Smith, said it makes sense for residents to move to Texas, particularly those in Sebastian County, which has been hit hard by job losses with little hope of a turnaround in sight.

(Whirlpool Corp. announced in October that it will close its Fort Smith plant in mid-2012, affecting 884 hourly workers, 90 salaried employees and an additional 800 workers who had been laid off from the factory and were on a recall list.)

“Until [Arkansas] gets aggressive like Texas has gotten aggressive, we’re going to continue to lose. I have several friends that have moved to Texas because they’re booming down there. They’re offering jobs that are higher paying with better benefits,” she said.

The decline in people moving is evident in the type of business Koller’s company handles.

Even just a few years ago, local families in western Arkansas would pay for movers to pack up their belongings and take them to a new home.

Now, most call only to have crews move large items such as refrigerators or clothes washers, she said. And, the bedrock business is nearly exclusively military families, which benefit from the Department of Defense picking up relocation expenses, she said.

“People have just lost jobs left and right, and they can’t afford to pay someone to move. ... I would venture to say that if we didn’t have the military business that we do, we wouldn’t be in business,” she said.

IN-STATE

Most of the state’s metropolitan counties drew people from surrounding counties or from one another. The state’s Northwest counties and those home to Little Rock’s bedroom communities showed net gains in households and residents in 2010.

Sebastian County saw declines in both.

Mix, the Fayetteville real estate broker, said employers have drawn from Fort Smith and other areas in western Arkansas where unemployment rates are higher.

“There are jobs up here in Fayetteville, so they’ve moved up here” he said.

“Interest rates are so low that if they were renting in Fort Smith, Van Buren or Huntsville, to buy a house is a lot more economical than renting,” he said.

In central Arkansas, Pulaski County saw a net loss of new residents but a slight net gain in households.

Robertson said he’s noticed the slowdown in families moving within the region.

“Our numbers the past couple years have been down. Typically we’re supposed to do four to five [moves] a day ... here lately it’s been closer to three a day instead,” the A-1 Razorback Moving owner said.

“The majority of our local moves are Little Rock to Little Rock but we do Little Rock to Cabot, Little Rock to Benton ... or to Maumelle,” he said. “Maumelle’s been a hot spot.”

In-county moves, though, aren’t as common as those of people departing Pulaski County, the IRS numbers show. Pulaski County lost more than 1,000 people to Saline County — home to Benton and Bryant — and lost smaller numbers to other neighboring counties, Lonoke and Faulkner.

“That’s a continuing thing. We still see people coming out of Pulaski County into Saline County on a regular basis,” said Hyde, the Benton Realtor.

“You have all the amenities of a city, but you have a small-town feel,” she said, noting that the majority of people move short distances to remain close to family.

Deck, the economist, said that’s always an element of Arkansas’ story.

“That’s part of being a small state, which we are, is that we have strong ties across county lines,” she said. “People look for a chance to move closer to their family or farther away from their family but not too far.”