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Homeward bound.

Low Interest Rates and Shrinking Inventory Propel the Central Arkansas Housing Market

RESIDENTIAL REAL EState agents in central Arkansas are aglow from the 22 percent increase in sales volume during 1992.

The scenario shaping up for 1993 includes a continued price increase for existing homes driven by a drop in housing inventory and the escalating cost for new construction.

"I don't think we'll be able to build the inventory back," says Randy Alexander, president of Little Rock's McKay & Co. "It's certainly a good time to put your house on the market because there's good activity.

"We haven't been in this situation long enough to see how long it will last. But if inventory doesn't pick up in the next weeks, which it normally does, it will definitely become a seller's market."

The swing toward a seller's market is going to help heal wounds for equity-conscious homeowners who have enjoyed little or no appreciation for homes bought in the mid-1980s.

Values have rebounded to the point where Dane and Anne Clement of Little Rock were able to sell their Hillcrest home of six years and recover their investment.

The Clements are moving up from a two-bedroom, one-bathroom house to a roomier three-bedroom, two-and-a-half bathroom home in Little Rock's Leawood subdivision.

"It's real exciting and nerve-wracking at the same time," says Anne Clement of the dual closing.

Some buoyant Realtors are projecting a 20 percent increase in 1993 home sales compared with 1992. If that exuberant forecast pans out, this year's performance will top 1986 as the hottest year for sales volume.

They won't be surprised if 1993 sales break the 6,000-unit barrier.

Gleeful agents expect the average time for a home to sell will drop to less than 100 days, with average sales prices rising to $86,000-$87,000.

The perception is that the apartment market has gone through a massive improvement since the multi-family building boom that ended in 1986.

"The truth is we've had a steady occupancy growth of about 1 to 1.5 percent over the last several years," says Richard Cheek, manager of Little Rock's Rivercliff Apartments.

According to figures compiled by Cheek, the average occupancy for two-bedroom apartments in Little Rock has grown from 86.84 percent in 1988 to 94.17 percent.

Apartment watchers report that, except for the downtown and southwest Little Rock markets, waiting lists are common even though rental rates continue to climb.

This climate is generating increased activity among single apartment dwellers looking for a home to buy. The key is coming up with enough cash for a down payment.

Karen Willett, assistant advertising manager for Arkansas Times, took the homeownership plunge unexpectedly when her grandfather came to visit.

"I made an offhand comment about needing to buy a house but maybe two or three years down the line because I needed to save up money for a down payment," Willett says.

"I'd have never asked to borrow money from my family, but my grandfather offered to give me the money as a gift."

With down payment in hand, Willett began her search in early October. She moved into her Hillcrest home Jan. 29.

She left behind a one-bedroom apartment in downtown Little Rock with a monthly rent of $325 per month.

Willett lowered her housing costs by hooking up with a roommate to split the monthly living expenses, a financial arrangement that is mutually beneficial.

"Buying a home is almost like a rite of passage," Willett says.

Others are finding creative ways to bankroll their residential move. Interest rates are just too good to pass up.
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Article Details
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Title Annotation:home sales in Arkansas
Author:Waldon, George
Publication:Arkansas Business
Article Type:Industry Overview
Date:Mar 8, 1993
Words:598
Previous Article:Welcome to Jay's world.
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