Bright Spots Seen In Home Market

The Jonesboro Sun, August 27, 2009
By Curt Hodges

National housing prices in June were down 7.8 percent from June 2008, but Jonesboro housing prices were down just 0.43 percent, according to newly released data from First American CoreLogic and its Loan Performance Home Price Index (HPI).

The difference is even more striking in May. First American CoreLogic officials said national housing prices were down 8.5 percent from their prices in May 2008, compared with an increase of 0.21 percent over May 2008 in Jonesboro.

The 0.7 percent nationwide improvement from May to June, and the superior performance of the Jonesboro market, have caught the attention of real estate agents and developers Bob W. Harrison and Kent Arnold of Jonesboro. Both men see bright spots in the falling market.

"The local housing market is not as robust as it has been in the past," Harrison said, "but it is holding its own.  I'm so thankful we're in Jonesboro, Arkansas, and not somewhere else where the real estate market has really dropped," he said.

Harrison, who has a team that works through Fred Dacus and Associates, said the slowdown has had a negative effect on the local housing market, but not nearly as drastic as in some other places.

"We've had to sell some houses for less than we would have liked," he said. "But, selling at a profit in a down market, when real estate values in other parts of the nation have fallen as much as 30 percent and possibly even more, is good."

Arnold of Arnold Group Real Estate took exception to the decline in figures and said that the segment of the real estate market in Jonesboro that is selling now and always has, the $80,000 to $150,000 range, is still a robust market that is even showing increases in value.

He said the $350,000 to $500,000 and higher price range is somewhat stagnant and that he has observed that homes priced in the upper range of that market are losing value as those in the medium and lower price ranges continue to increase in value and gain market share. So, Arnold believes that if there is a decline locally, it is only in the upper segment of the market.

"I like to call Jonesboro a 'Mayberry,'" Arnold said. "We're protected, insulated here from much of what goes on around the nation.

We see and benefit from the national trends, but we don't have the crashes," Arnold, who has been in real estate for more than 30 years, said.

Harrison agreed.

A major reason for that, the men insisted, is the diversity of the local economy that includes retail, manufacturing, medical, education, agriculture and a number of other factors that have helped prevent the same kind of recession here that has been experienced in other parts of the country.

Arnold also said that from 1980 until only recently in Jonesboro, around 400 new single-family houses were built each year. "That was more than 25 years of consistency," he said, "all in the $80,000 to $125,000 price range, the bread and butter of the local market."

Arnold also made another observation, based on his years of experience: Every time cash comes hunting, people can know that the bottom of the market has been reached. And, Arnold said, he has seen a resurgence of people coming to him with cash to invest in real estate.

"They are tired of getting 2-percent interest on their savings and want to put their money into something that will give them a better income," Arnold said. "They are investing in real estate, and every time that has happened, the market is ready to rebound."

Interest rates are low, jobs are becoming available, and on top of all that Arnold said he is also seeing an increased interest in commercial property, another good economic sign.

Also, Arnold said he has had a number of inquiries from people desiring to establish day care facilities. An increasing need for day care means people are going back to work, he said.

CoreLogic officials say the month-over-month declines have been moderating in the first half of 2009. Between January and June home prices improved by 3.3 percent. This is the first time in four years the spring and summer seasonal price trend exhibited its normal pattern.

The seasonal improvement in home prices in the first half of the year is seen as a positive sign. But it is important to note, they said, that a decline in distressed sales, rather than an increase in traditional home sales prices, was responsible for the uptick.

If the decline in distressed sales is sustainable and not simply a result of recent foreclosure moratoriums, this could be the first step toward recovery, which will then be followed by outright price increases that will result in continued upward price trends, according to a statement by CoreLogic.

"Year-over-year and seasonal home price trends continued to move in positive directions in June," said Mark Fleming, chief economist for First American CoreLogic. "However, the economy continues to contract, and there is a large overhang of distressed properties that have yet to clear. Until supply and demand imbalances adjust to more normal levels, future home price movements will remain sluggish."