Residential rents in Arkansas went up 16.5% in the past year -- seven times the national average increase of 2.4%, an industry study claims.
Arkansas ranked fifth among the 50 states in the rate of increase, according to Rent.com, a website for apartment and house-rental seekers. Overall, rents weren't rising as fast nationwide as the previous year. Arkansas ranks among the exceptions, according to the study.
"That's probably being driven by what's happening here," said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas' Walton College of Business. Northwest Arkansas is the fastest-growing region of the state, he said. When people move to Arkansas, they usually move here, he said.
Local figures also show steadily rising rents, Jebaraj said Thursday. There was a 2.3% overall vacancy rate for multifamily housing units, local figures show, which is functionally zero, Jebaraj said.
More recent figures going into the next Arvest Skyline Report on local real estate will show no easing of the rental market, he said. Figures he has seen show rents rising at a faster rate than house prices for the first time in the region in recent years, he said.
"This started with the rise in mortgage rates," Jebaraj said of rental rates rising faster than home prices. "When mortgage rates went up, more people were forced into the rental market."
In what the Rent.com report described as a "drastic pivot" from last year, "many prospective homebuyers are sticking to renting as reports have found it's more affordable to rent a three-bedroom home than to own a comparable one."
The average monthly rent for a two-bedroom apartment is $860 in Fayetteville, which has a large student population attending the University of Arkansas, $1,507 in Springdale, $1,724 in Rogers and $1,935 in Bentonville, according to Rent.com.
"I wish I could say I was surprised," said Duke McLarty, executive director of the Northwest Arkansas workforce housing center. His group was formed by the Northwest Arkansas Council to address rising costs of housing.
"This goes back to a fairly simple supply and demand equation," McLarty said. "As more people every day call Northwest Arkansas home, and we don't have housing to meet that demand, the market is going to respond with higher rents. More housing is the answer. We just need more of it, and we needed it yesterday."
The biggest yearly increases were mostly in Southern and Midwestern states where rents are rising quickly, but still less expensive than costly markets elsewhere, the rent report found. Florida showed the highest increase in rents at 19.7%, followed by Mississippi with 18.6%. Arkansas ranked fifth with 16.5%, behind Florida, Mississippi, New Hampshire (18.4%) and South Dakota (17.4%).
"This data also tells me the Sun Belt southern migration trend is not going to stop, and we need to prepare now for that future growth," McLarty said. "When you compare the states with the highest year over year increases with the states with the lowest, it's striking that only one southern state is represented on the decrease list, while five are represented on the fastest-growth list."
The Rent.com report's release arrived the same week as a mover's industry yearly study. The "migration patterns" study by Allied Van Lines tracks moving van trips by their company between states. This year's migration study showed 59% of all trips by movers to or from Arkansas were trips from people moving into the state. Arkansas ranked third in this percentage behind North Carolina and Maine.
The number of moves to and from Arkansas was almost evenly split at 49% moving in and 51% moving out as recently as 2019, past migration studies show.
The study's authors didn't release totals of how many moves were made, but were willing to disclose where people coming to Arkansas were coming from, said Zoe Buhl, spokeswoman for the study. The top three states for residents moving to Arkansas were Texas, California and Illinois, she said in an email.
"Texas lost more people to Arkansas than California and Illinois combined," Buhl said.