Is it a Good Time to Buy a Home in Northwest Arkansas?
Published: December 2022
The New Year is right around the corner, so in the spirit of “New,” we wanted to start a series geared towards buyers.
Buyers, it’s been a rough 18 months. The NWA market has been incredibly competitive, and you’ve faced many unprecedented challenges in 2021 and early 2022. This series will discuss how the market is changing, why now is a great time to purchase a home, and what you should consider in your home-buying journey.
This blog will answer two fundamental questions you want to know before beginning your home search.
How does the 2023 market look different than the 2021/2022 markets?
This 2023 market is anticipated to trend much differently than we have seen in the past two years. There are two significant differences we are already experiencing — more inventory on the market and offers coming closer to the list price.
Comparing the last 18 months, there are more houses on the market now than what was actively available in 2021 and early 2022. In 2021, the NWA housing market dipped below 700 active listings for sale, which is incredibly low for our region. Currently, we are seeing approximately 2000+ active homes for sale. Simply put, more listings equals more options for buyers to choose from. Take these numbers with a grain of salt, as 2000 active listings is still considered low inventory for NWA.
Additionally, because there is less competition among buyers, you may not end up in a bidding war as many experienced in 2021 and early 2022, and buyers can now make reasonable, near-list price offers. We are no longer experiencing the 2021/Q1 2022 scenarios where buyers paid tens of thousands of dollars over list price during the “pandemic pricing.” This was not a fun time for Buyers, trying to make up gaps of cash that a mortgage vs. appraisal would not cover. The good news for Buyers of 2021 and 2022, your NWA home continues to increase in value, despite that increase in the purchase price.
Northwest Arkansas real estate continues to steadily increase, but rates have been inching up as well. So, it’s an excellent time to consider buying or even checking with a mortgage provider to see what your options may be.
Why is now an opportune time to purchase a home?
The national media is painting a far different picture than what we are seeing in the Northwest Arkansas housing market. The national media seems to have a narrow-minded focus on the rates without considering other variables.
One thing to point out, interest rates may never be as low as they were during the pandemic. The 7% rates we currently see align with the historical average for the past 50 years. It’s certainly possible we may never see rates as low as 3% – But we do know rates can go north of 7% to curb inflation, and it may be time to strike quickly as a buyer. If you have been waiting for another 3% rate, you may retire as a ‘renter.
Another consideration; although interest rates have risen, the appreciation value of homes in Northwest Arkansas has also increased. If you are considering buying a house, but the rates are deterring you, the longer you wait, the more you may be paying. Not only might you pay more if rates rise, but rising home prices will also cost you more. As they say in the industry, “Marry the Home but Date the Rate”; if interest rates improve, you can always refinance at a lower rate.
Our last tip, many homes are now offering additional incentives for buyers that were unheard of during the pandemic. These are often referred to as concessions (anything the seller pays for the buyer, like repair allowances, closing costs, home warranty, money to buy-down interest rates, etc.) Concessions can save a buyer thousands of dollars and need to be examined along with the interest rates. In layman’s terms, you may spend more on rates but save more elsewhere.
So what’s next?
We want you to understand this changing market and your potential opportunities. Throughout this home-buying series, we will discuss a variety of topics.
These topics will help buyers know where to start their homebuying process. We will talk about why you even want to buy a home, what services you will need before closing, how the pre-approval process works, and a few other things to help prepare you for this new chapter!