From the fast-growing suburbs around Little Rock to rural areas seeing new interest, first-time buyers faced shifting ground.
Statewide, affordable prices and low interest rates made homebuying accessible for many first-timers.
Buyers rushed to take advantage of cheap loans and the need for more space.
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Arkansas, usually known for low housing costs, suddenly saw bidding wars and double-digit price jumps.
Statewide home sales spiked by double digits in 2020.
In Northwest Arkansas, sales jumped 12.8% in 2020 amid the frenzy.
By mid-2022, Arkansas home prices hit record highs.
The median sale price statewide around mid-2022 was about $252,000, up 12.4% from the year before.
This created new affordability challenges for first-time buyers.
Cooling Off in 20222023
The red-hot market cooled when mortgage rates shot up in late 2022.
Home sales slowed sharply.
In Northwest Arkansas, home sales dropped about 1011% in 2022 and again in 2023.
Prices leveled off by late 2023, with some areas even seeing slight dips.
After mid-2022, higher interest rates cooled demand and stabilized prices.
Most Arkansans become homeowners by their mid-30s (around age 36 on average).
A generation ago, in 1980, most bought their first home by age 27.
Income Challenges
One reason for delayed homebuying is that home prices have grown much faster than incomes.
Arkansass median household income is only about $50,000 (among the lowest in the nation).
This is why many first-time buyers have needed dual incomes or have postponed buying until they saved more.
Household Composition
Household size for first-time buyers tends to be small.
This means most first-time buyers are drawn from the younger population (under 40).
Arkansas is a mostly rural and suburban state without many high-rise condos or co-ops.
About 87% of owner-occupied homes in Arkansas are detached single-family houses.
First-time buyers overwhelmingly go for these houses typically 2-3 bedroom homes with a yard, often called starter homes.
Townhomes and condos make up a tiny slice of the market in Arkansas.
These are quite common in the state.
Roughly 11% of Arkansass owner-occupied housing units are mobile or manufactured homes.
Manufactured homes often cost less per square foot than site-built houses.
Despite these compromises, buyers clearly preferred single-family houses whenever they could afford them.
What do these prices mean for first-time buyers?
This relative affordability attracted some out-of-state buyers and remote workers during the pandemic, who could outbid local first-timers.
By late 2023, with the market cooling, price appreciation flattened.
In some Arkansas cities, prices even dipped slightly, giving buyers more negotiating power.
Inventory also increased, giving buyers more choice.
Affordability Challenges
Despite being cheaper than most places, Arkansas wasnt immune to the affordability crunch.
Down payments became a bigger hurdle as prices rose.
This region experienced explosive growth in 20182023.
For first-time buyers in NWA, this was a tough environment.
Prices in Benton and Washington counties rose by over 50% from 2016 to 2021 alone.
By 2023, an entry-level home in the Fayetteville area could easily cost $300k or more.
Thats steady appreciation, but not extreme.
But by late 2022, higher rates cooled things off.
Many Delta counties are losing population, and housing demand was weak, with home prices staying extremely low.
For first-time buyers in the Delta, the challenge is less about price and more about economic opportunity.
The downside is limited jobs, amenities, and population decline.
This gap widened during 20182023, underscoring that Arkansas has multiple housing markets with vastly different conditions.
In Little Rock, the city government also has a down payment assistance program for low-income first-time buyers.
A notable trend is the rise of family financial help.
A recent study found 38% of young buyers used money from their family for the down payment.
This likely holds true in Arkansas as well, where tight-knit families often support each other.
As a result, first-time buyers formed a bigger share of the market, since repeat buyers retreated.
Conclusion
The past five years (20182023) have been a whirlwind for first-time homebuyers in Arkansas.
Cities like Little Rock saw moderate, steady trends.
Despite challenges, many Arkansans did achieve the American dream of buying their first home in this period.
As of 2024, the market seems to be calming.
Prices in Arkansas arent soaring like before, and interest rates may eventually settle.
This could give upcoming first-time buyers a better shot, especially if more homes are built to meet demand.
