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LITTLE ROCK, Ark. — It’s one of Google’s most frequently searched questions — when will housing prices go down?
We took that question to real estate experts in Arkansas.
“We are definitely seeing an adjustment,” Realtor Stacy Hamilton said.
Hamilton said she’s seen a slight decrease in the market firsthand, leading to cheaper houses.
Although the housing market has decreased slightly, Hamilton said it’s generally been a seller’s market for the last couple of years.
Something that could soon change.
“The interest rates have caused it to where there are fewer buyers out there,” Hamilton said. “We are seeing a shift.”
Interest rates are another significant talking point right now. According to Hamilton, they’re close to 7%, a 2% increase from a year ago.
She said the heightened interest rate has an impact on buyers.
“Today’s buyers have more serious motivation behind them,” Hamilton said. “They’re buying because they need to.”
That was a different story back in 2020 when Hamilton said interest rates fell to around 3%, causing buyers to swarm the market.
The influx in buyers contributed to a housing shortage.
UA Little Rock Economist Michael Pakko said the number of houses for sale has much to do with their prices.
“Prices are all about the balance between supply and demand,” Pakko said.
He also explained how prices tend to be higher when fewer homes are on the market, an area that’s starting to see some relief.
“The homebuilders are finding a better environment,” Pakko said. “They’re building more houses, and that’s adding to the supply where the existing homes are in shortage. We’re seeing kind of a reshuffling of the sources of supply.”
Even though Pakko and Hamilton said the housing market seems to be trending towards stabilization, prices are still too steep for some people, especially first-time homebuyers.
“The housing prices under $300,000 have just come up so much… you could find a really nice house in the city for $150,000,” Hamilton said. “Today, that’s pretty hard to come by.”
However, Hamilton said people are taking advantage of the different financing opportunities to buy a house.
“We have a first-time homebuyer loan called an FHA loan,” Hamilton said. “In the last couple of years, they weren’t used very much because interest rates were so low, but an FHA loan always offers a lower interest rate than your conventional loan. We’re starting to see buyers use that type of financing again.”
Mortgage lender Mark Phillips said he’s feeling the impact of the high-interest rates in his daily job.
“It just requires a lot more skill to know what we need to move around,” Phillips said. “Possibly pay something off here, pull some equity from the sale of a house and maybe pay off this small card balance. Maybe [even] eliminate certain other debts so that the house payment will work with the higher rate.”
Meanwhile, Phillips said people should consider their time spent in a house when deciding whether or not to buy in a market like this.
“If you’re planning on buying that house to live in for a year, [it] might not be a good idea,” Phillips said. “You don’t know what will happen in a short period as the market fluctuates and changes. If you’ll live in the house for maybe three to five years or more, buy the house.”
Hamilton said it’s still an excellent time to buy, though.
“Even though we’re at a 7% interest rate, we were at 7% interest rates in 2005, 2006 and 2007,” Hamilton said. “This is a normal number. We got spoiled with the 3% [in 2020], but 7% is perfectly normal.”
Even though most houses cost more than they did a couple of years ago, experts said Arkansas is still much more affordable than other states.
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