Are You Prepared for Arkansas's 2021 Real Estate Market?
Despite the onset of the COVID-19 pandemic and the economic uncertainty that came with it, the Arkansas real estate industry has remained strong. Markets across the Natural State are expected to continue that upward trend throughout 2021. With demand steadily increasing, low-interest rates motivating buyers, and rapidly rising home sale prices, real estate agents all across Arkansas should gear up for a sweltering year ahead.
2021 Arkansas Real Estate Outlook: Hot
In December of 2020, the average home in the state of Arkansas was valued at $140,986. That’s a 5.3% increase from the previous year, and Zillow predicts the market will rise by another 9.6% over the next year. Bustling real estate activity, despite 2020’s challenges, is a promising sign that 2021 could be profitable for Arkansas-based agents and sellers alike.
Additionally, inventory in northwestern Arkansas and Little Rock has been dwindling compared to 2019. A property spends an average of 111 days on the market, but in hot areas of Little Rock, some are selling within 24 hours. Thanks to record low-interest rates (the lowest they’ve been in five decades) and continued strong demand, Arkansas will likely be a seller’s market as 2021 unfolds.
Rent prices, on the other hand, have remained steady year-over-year statewide, but there’s still room for additional increases. Luckily, Arkansas rents are 36.4% lower than the rest of the country on average. Meanwhile, a total of ~1.0% of Arkansas mortgages were reported as delinquent, just slightly above the national average of 0.8%. So, while new transactions continue to boom and the temperate climate draws more and more people to Arkansas, current homeowners will thrive as well.
2020 Arkansas Real Estate Market Data
|Zillow Home Value Index||$140,986|
|1-Year Change on Home Values||+5.3%|
|1-Year Change on Rent Prices||0.0%|
|Homes With Negative Equity||~1.0%|
|Buyer’s or Seller’s Market||Seller’s|
Market Insights for Arkansas
In November of 2020, the Bureau of Labor Statistics reported that the unemployment rate in Arkansas was 6.2%, down from 7.1% in July. Currently, Arkansas sits just below the national unemployment rate of 6.9%, and that’s likely to continue improving as tourism, events, and hospitality return to normalcy. Economic activity often correlates with growth in the real estate industry, and narrowing unemployment rates along with low-interest rates are a positive sign for agents the year ahead.
The state of Arkansas also sports some other attractive features that could positively impact its market. For example, some towns in Northwest Arkansas are willing to pay certain residents who move there $10,000 and give them a bicycle to explore the nearby Ozarks. Meanwhile, others are leaving the high taxes and harsh winters of northeastern cities for the temperate climate, rich culture, affordable real estate, and business-friendly environment that Arkansas has to offer. For instance, real estate is hot near the new Amazon distribution center in Little Rock Port, and other commercial sites are likely to change hands soon.
As for 2021, inventory will remain low with a noticeable influx of first-time homebuyers moving to places like Benton and Little Rock. Expect bidding wars to ensue and home prices to reach new heights. Arkansas real estate, while still a great investment that affords homeowners a high quality of life, will play out to be a strong seller’s market in 2021.
Local real estate agents will need to be at the top of their game and prepare clients for the likelihood of bidding wars by encouraging their clients to make strong initial offers. However, out-of-state buyers are looking to make Arkansas their permanent residence and are thus likely willing to pay more, which could shatter previous real estate records. So, with a myriad of opportunities on the horizon, there has never been a better time to help your fellow or future Arkansans purchase the home of their dreams.
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