LITTLE ROCK — Arkansans shifted toward renting rather than owning homes late in the past decade as tightened lending standards, a deep recession and falling home values played havoc on the state’s housing market, new census numbers show.
The numbers also shedmore light on a decade that began with explosive growth and ended with numerous foreclosures in the state’s northwest counties.
Homeowners still outnumber renters in the state, but the proportion of residents living in homes they own fell from 69.4 percent in 2000 to 67 percent in 2010, the census data show.
At the same time, those living in rentals increased to 33 percent of the population, up from 30.6 percent.
“Certainly, the economics of homeownership has turned more in favor of renting than in owning a home,” said Michael Pakko, state economic forecaster and chief economist at the Institute for Economic Advancementat the University of Arkansas at Little Rock.
“The movement in those numbers took place primarily in the past couple of years ... If you had taken a 2005 reading you would have seen homeownership up,” he said.
Over the decade, owner-occupied housing grew 44,621 from 723,535 in 2000to 768,156 in 2010. Meanwhile, renter-occupied housing grew 59,767 from 319,161 in 2000 to 378,928 in 2010.
Overall, renter-occupied housing grew 18.7 percent, outpacing growth in owneroccupied dwellings, which rose 6.2 percent, census numbers show.
Economist Kathy Deck, the director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said the recession that began in late 2007 left many potential homebuyers looking to rent in 2010, heavily affecting the numbers tallied that year as part of the decennial census.
“You have to be aware of what 2010 was like, 2010 being the time when this idea of homeownership was perhaps at its least attractive,” she said.
Foreclosures also forced many former homeowners into the rental market, said Realtor Pat Harris of Coldwell Banker Harris McHaney & Faucette in Rogers.
“Probably why you see a bump up in the rentals is, one, they’ve lost their houses so they had to rent, and two, we’ve got sellers that say I can’t sell it, let’s rent it,” he said.
Between 2000 and 2010, 67 of Arkansas’ 75 counties saw the number of renter-occupied homes grow. The fastest growth occurred in Benton, Faulkner and Saline counties, which saw more than 50 percent increases.
Meanwhile, more counties saw their owner-occupied homes decrease than grow. Thirty-eight counties lost owner-occupied homes while 37 gained, the numbers show.
Pakko also attributed growth in rentals across the state to potential homebuyers deciding to pay rent instead of mortgage payments.
“One of the advantages of homeownership is that you build up equity over time and that’s not clear that that’s really a factor anymore. At least it’s not something you can count on” while housing prices are still in decline in many areas of the state, particularly in the state’s northwest, he said.
The latest numbers from the Arkansas Realtors Association show the average salesprice of new and existing homes in the state fell 2 percent in April from the same month the year before.
The numbers are worse in Benton County - down 4.5 percent - and even more so in Washington County - down 13.6 percent, according to the Realtors association.
The census numbers, along with other housing counts released last week by the U.S. Census Bureau, give a more detailed look at the impact of the recession and the burst housing bubble in the state’s northwest counties, economists said.
In Northwest Arkansas, large gains in the number of housing units coupled with, in some cases, explosive increases in vacancies likely are the result of overbuilding earlier in the decade, economists said.
Benton and Washington counties saw total housing units increase by more than a third while nonseasonal vacancies more than doubled, according to an Arkansas Democrat-Gazette analysis of census numbers. (The newspaper’s analysis excluded Census Bureau counts of seasonal homes such as lake houses and hunting cabins.)
Benton County experienced the largest increase in housing units - 44.8 percent - followed by Washington County, which had a gain of36.5 percent.
At the same time, Washington County saw a 181.7 percent increase in nonseasonal vacancies and Benton County a 104.4 percent increase, the largest increases in the state.
The rates tell a story of two very different Northwest Arkansas housing markets,Deck said.
In the early 2000s, the area had low home prices, high demand and over the next few years, a rapidly growing population attracted by the area’s “bedrock” employers - Wal-Mart, Tyson, J.B. Hunt and UA, Deck said.
At one point in 2006, Harris, the Rogers real estate agent, said, 1,500 families a month were moving into the northwest market.
“Hollywood couldn’t have drawn this up any better. ... We were one of those areas that was just sitting right,” he said.
But after the housing bubble burst and the recession set in, the bottom fell out, he said, which the numbers released last week reflect.
In Washington County in 2000, only a little more than 1 in 20 homes were vacant. A decade later, more than 1 in 10 were, the newspaper’s analysis found.
In Benton County, the numbers weren’t as drastic, but only slightly so. The nonseasonal-vacancy rate rose from 6.75 percent in 2000 to 9.5 percent in 2010, the analysis found.
“We went from that one extreme to the other, which is that there are [now] a lot of vacant homes in Northwest Arkansas,” Deck said.
While home sales have improved modestly since then, and real estate agents like Harris say their inventory isn’t sitting unsold as long, the market is far from rebounding, Deck said.
“Even though our prices have fallen substantially, folks don’t have that feeling that it’s a deal of a lifetime,” she said. “Nobody wants to find out that they bought a day too early.”
However, Pakko and Deck agree the area will continue to grow, just not at such as rapid pace.
“It’s still a vibrant economic area of the state,” Pakko said, noting he “wished he knew” when the market will stabilize and growth would resume.
The fundamental challenge is maintaining job growth, Deck said, because housing demand will follow.
“As long as there are employment opportunities, people will come and take advantage, even if it’s harder for them to get there because of the houses they’ve got to get out from under,” she said.
Front Section, Pages 1 on 05/29/2011