Between 2018 and 2023, Arkansass housing market didnt follow just one pathit split along geographic lines.
Home prices soared, and buyers scrambled to keep up.
Meanwhile, many rural areas moved at a slower pace, with fewer sales and smaller price jumps.
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The states real estate story isnt one-size-fits-allits a tale of two Arkansases.
This represents a roughly 9% average annual increase in prices during 20182023, far outpacing income growth.
Sales Activity Fluctuations
Home sales activity followed a rollercoaster pattern.
The number of homes sold surged in 2020 (up ~13% in Northwest Arkansas, for example).
2021 saw continued high sales (slightly above 2020s level) and price spikes statewide.
Buyers faced higher monthly payments, and sales volumes dropped.
Statewide, there were about 24% fewer homes sold in late 2022 compared to late 2021.
Even so, prices remained high because inventory was still relatively low.
Homeownership Rates
Homeownership rates in Arkansas reflected these trends.
It then eased back, staying around 66% in 20212023.
Urban Areas: Growth Hotspots
Urban and suburban parts of Arkansas led the states housing boom.
This fast-growing corner of the state saw unprecedented price increases and sales activity.
Over the five-year span, the average home price in Benton and Washington counties jumped by over 50%.
By 2023, the average sale price in NWA exceeded $400,000 far above the states average.
Several factors drove this urban boom in Northwest Arkansas.
Both out-of-state transplants and Arkansans from other regions moved into NWA for the economic opportunities, fueling housing demand.
This influx included young professionals and families, many with higher incomes, which pushed prices up further.
The frenzy cooled in late 2022 as interest rates rose sales slowed and price growth leveled off.
Other Urban Centers
Other Arkansas cities showed mixed trends.
Fort Smith (the states second-largest city, on the western border) had slow, modest growth.
Its home prices remained quite affordable, rising only gently in 20182023 in line with the local manufacturing-based economy.
In fact, the gap between high-growth urban counties and slow-growth rural counties widened during 20182023.
The Delta Region Challenges
Eastern Arkansas the Delta region along the Mississippi River is a prime example.
Unlike Northwest Arkansas, there was no big pandemic price spike in these communities.
Any price increases were modest and mostly due to general inflation in construction costs rather than true housing demand.
Housing inventory was plentiful in these areas (with many vacant houses), but sales were few.
Other Rural Areas
Other rural counties around the state saw varying trends.
Izard County (north-central Arkansas) similarly had a median value near $122,000.
These values are far below the statewide median.
However, these cases were relatively limited.
One exception in rural trends was the market for vacation and lake homes.
Arkansas has many lakes, rivers, and outdoor attractions.
During 20202021, there was a brief surge in second-home purchases in scenic spots.
However, this trend was short-lived.
In many small counties, over three-quarters of households own their home.
For example, Izard Countys homeownership rate is about 77%.
The reason is simple: homes are cheaper, so its easier for residents to buy instead of rent.
A modest income can buy a decent house in these areas.
Most Arkansans prefer a traditional house with a yard if they can afford it.
Condos and townhomes remain a tiny slice of the market, especially compared to some other states.
There are a few condo developments in downtown Little Rock or Fayetteville, but they represent a niche segment.
Manufactured Housing
One notable category in Arkansas is manufactured housing (mobile homes).
These homes cost much less than site-built houses.
But the prevalence of mobile homes helped keep homeownership achievable for some who might otherwise be priced out.
Upsizing and Downsizing Trends
Home sizes and features also shifted with buyer preferences.
For example, a family in Little Rock might sell a 1,500 sq.
ft. starter house and upgrade to a 2,500 sq.
ft. home with an extra bedroom and a home office, taking advantage of 3% interest rates.
This upsizing trend was common in the late 2010s and especially during the pandemic years.
In fact, move-up buyers (current homeowners buying a more expensive home) were very active in 202021.
By contrast, in 20222023, as affordability tightened, some buyers had to scale back their expectations.
Fixer-uppers and older homes became more acceptable to younger buyers who couldnt afford new construction.
Older Arkansans (55+) have high homeownership rates around 78% own their homes.
Some moved to be closer to family or healthcare as well.
A lot of older homeowners chose to age in place in homes they already owned.
Price Growth Differences
Home price growth drastically diverged.
From 2008 to 2017, Arkansas home prices were relatively flat or modestly rising overall.
Thats perhaps a 510% total increase over a decade (with some dips and recoveries in between).
In short, 20182023 saw much faster appreciation.
Market Dynamics Shift
Housing demand also shifted.
Fewer people were buying homes, and some who wanted to couldnt get loans.
Arkansas did have foreclosures and distress sales then (though not as many as harder-hit states).
From 2013 to 2017, the market slowly recovered as jobs returned and interest rates stayed low.
But nothing in that earlier decade compares to the feeding frenzy of 20202021.
Migration Patterns
Migration and location preferences changed between the two periods.
In the earlier 20082017 decade, Arkansass population growth was modest.
Some urban areas grew, but many rural areas steadily lost people (a long-running trend).
By contrast, 20182023 featured net inbound migration for Arkansas.
This was a big reversal from the sluggish population trends a decade earlier.
The beneficiaries were mainly the urban areas e.g.
National Comparison
National housing trends also provide contrast.
Arkansas didnt have a post-2020 bust; it had a moderation.
Investor Activity
Finally, the mix of purchases differed.
Investor activity post-2008 was often centered on picking up foreclosures and cheap homes to flip or rent.
In the 20202023 period, investors were competing with regular buyers for affordable homes.
The recent years brought higher highs (and some challenges with affordability) that the prior decade never saw.
