Housing Market

Is the housing market really that bad?

By Ethan C. Nobles
Arkansas Realtors® Association ● Ethan@ArkansasRealtors.com

There’s been no shortage of news about how the housing market underperformed last year.
Reports of falling markets last year made both buyers and sellers fairly nervous about the housing market. However, 2007 stacked up very well against 2004 – the third best year on record for the real estate industry in Arkansas.
However, 2007 paled in comparison to 2006, which was the second best year on record for real estate here in the Natural State. Seeing how a sense of perspective is often important when discussing all things economic, let’s take a look at how the real estate market fared last year as compared with 2004.
Since July 2005, the Arkansas Realtors® Association (ARA) has released monthly housing market reports which cover the bulk of homes sales in the state. Prior to 2006, Baxter, Marion and Mississippi counties weren’t included in those reports. So, those three counties must be removed from current housing market reports to get an “apples to apples” comparison against 2004.
The most recent housing market report available from the ARA covers November 2007. When the aforementioned three counties are removed from that report and compared against 2004, the results are encouraging.
Through November, there were 27,085 homes sold in Arkansas – up 1.36 percent over 26,722 homes sold through the first 11 months of 2004. The statewide average price of a home through November was $155,458, up 14.42 percent over an average of $135,868 through the first 11 months of 2004.
While 2007’s numbers fall short of those set in 2006 and 2005, it’s an exaggeration to say the housing market is performing poorly as a whole in Arkansas. Housing markets in 2006 and 2005 were quite abnormal in Arkansas where both average prices and numbers of units sold have gained slowly every year.
In 2007, we saw average prices still gaining a bit over both 2006 and 2005, meaning homeowners are still building equity in their homes. However, the growth in prices has been relatively flat and the number of units sold returned to what can be considered a typical level in Arkansas.
What we’re left with, then, is a situation in which buyers are in very good shape. They’ve got more homes to choose from and interest rates are the lowest they’ve been in a long time. On January 28, the interest rate for a 30 year, fixed mortgage was 5.47 percent – down a percentage point from about a year ago.
It’s certainly true that Realtors® and homeowners would love to see record gains in the housing market every year, but that can’t happen forever. Regardless, 2007 wasn’t a bad year for the real estate market in Arkansas and the National Association of Realtors® has predicted that more improvements are in store this year.
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House to House is distributed weekly by the Arkansas Realtors® Association