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Understanding Buyer Behavior in the Northwest Arkansas Real Estate Market in 2024

As things currently stand in early 2024, current market dynamics in Northwest Arkansas somewhat favor sellers. However, even though we're in an attractive market for sellers, homeowners should still be keen to know more about buyer behavior in the NWA housing market.

No matter what the current market status is, you should always exercise prudence and long-term thinking during your home sale, which includes an understanding of buyer behaviors.

Understand the NWA Housing Market

As of February 2024, statewide home prices in Arkansas were up by 1.8% compared to 2023. With a high demand for homes from buyers that exceeds the roughly three months of supply in unsold housing inventory, sellers have a leg up during the negotiation process.

In addition, median home prices have increased at a rate of 1.8% since 2023. The median sale price at the start of this year was $240,900. Even as median prices increased, the average number of houses sold increased at a nearly comparable rate of 1.3%, which translates to about 31 more houses sold in February 2024 compared to February 2023.

The property market continues to be competitive, though less so than in previous years. Specifically, 14.7% of Arkansas homes sold above the list price, and 21.7% of homes dropped in price, with a respectable 97.1% sale-to-list price. The median days on market so far in 2024 equaled 52 days, only one day longer than in 2023.

As you might imagine, several of the Arkansas metros with the fastest-growing property prices fell within the NWA region, namely, Farmington (at #1 with a rate of 27.9% increase), Bentonville (at #3 with a rate of 10.4% increase), and Centerton (at #7 with a rate of 3.5% increase).

NWA Housing Supply

We've already mentioned that the increase in demand for houses for sale in Northwest Arkansas currently outstrips the supply of homes. However, the housing inventory is slowly increasing, with the hope of catching up to heightened buyer demand. According to Redfin, there were 8.8% more homes available for sale in Arkansas year over year in February 2024 (a total of 11,786 homes listed for sale).

The total number of newly listed homes at the start of 2024 also saw a slight increase of 14.5% year over year, with a total of 3,470 homes newly listed for sale in February. Despite the increase in absolute inventory, however, the average month of housing supply remains at 3 months even, which is the same relative to 2023.

NWA Housing Demand

In 2023, Northwest Arkansas reached the milestone of becoming the 100th-largest metro area in the country. That growth is expected to continue unabated, in large part thanks to the positive job market in NWA. Axios projects that the NWA region will more than double its size and achieve the current population of Austin, Texas by 2045.

This phenomenal growth has unsurprisingly placed a major consumer demand on the housing inventory in Northwest Arkansas, a demand dynamic that has not yet been matched by the growing supply. The result is that median home sale prices have continued to increase in favor of sellers, though not universally so and not completely out of the realm of affordability.

Nationwide Migration Patterns

Much of the above market activity can be explained in part by migration trends across the United States. During the quarter-year spanning December 2023 to February 2024, nearly a full quarter (24%) of American home buyers sought to relocate to a different metro area.

The most popular states that these buyers were interested in moving to were Florida, North Carolina, Arizona, South Carolina, and Tennessee. Meanwhile, the top five states that buyers wanted to move away from were California, New York, Illinois, Washington, and Massachusetts. Looking at individual metros, residents of Los Angeles, New York City, San Francisco, and Seattle were among those homebuyers most eager to relocate.

There are certainly multiple factors at work in these trends, but it seems reasonable to infer that many people are interested in moving from more northerly states toward the South, which might help explain the population boom that Arkansas in general, and NWA in particular, have been experiencing.

Another factor might be the ongoing aftershocks of the COVID-19 pandemic, which led many people to prioritize more living space (and thus, larger homes). This in turn has encouraged more migrations to rural and suburban areas, which dovetails with the general migration from more urbanized states to more rural or suburban-friendly locales.

In addition, people are always looking to make profitable investments, and there is hardly a more powerful investment vehicle than real estate investment through home ownership.

Fears About a Housing Market Crash?

2023 was a bit of a roller coaster for much of the housing market, which has led some people to speculate about the possibility of another crash. This concern has been heightened by the fact that real estate prices have not dropped, though their increase has slowed somewhat.

The answer to this question is complicated because there are plenty of factors at play. These include unpredictable interest rates on mortgages and uncertainty regarding inventory (though hopefully, home construction and infrastructure development will finally be able to catch up and alleviate the seemingly perpetual shortage of homes in many regions).

If the housing supply does manage to increase and mortgage rates do manage to stabilize, then the hot market could cool off enough to achieve some measure of balance.

Of course, a balanced market in one part of the country doesn't guarantee a cool market elsewhere. Each region enjoys a unique rhythm in its real estate. Everything from statewide population trends to the growth or diminishment of the local economy can greatly affect the market.

Assuming that the US economy avoids an outright recession, then housing price growth should even out or (in some markets) slightly dip as inventory catches up to strong demand and mortgage rates achieve greater stability. In this case, a "soft landing" will have been achieved.

If the US market tends toward a recession, or if some unexpected event (such as a natural or geopolitical disaster) occurs, then the real estate market would likely become chaotic.

Still, barring those unforeseen circumstances, a housing market crash is unlikely. Even if one were to occur, strong fundamentals in the market (such as low vacancy rates) and improved standards of lending compared to 2008 should leave the market on firmer ground than in the case of the previous crash.

Understanding Buyer Behaviors in the 2024 Market

Now that you have a better understanding of nationwide trends and NWA housing markets, let's take a look at the behavior and mindset of potential buyers in the 2024 season. It helps to know some key buyer statistics.

For instance, there are slightly fewer first-time homebuyers in early 2024 compared to 2023, with first-timers being responsible for 28% of home sales in January 2024 compared to 31% in January 2023.

However, cash sales have increased in 2024, making up 32% of home sales in January of this year. On a similar note, there were slightly more individual real estate investors and second-home buyers in early 2024 (responsible for 17% of home sales in January 2024). Lastly, the market is stable enough that only 2% of January 2024 home sales were considered distressed.

So what does this tell us?

How the Shifting Home Landscape Affects Buyers

In short, a competitive housing market influences buyers by making it necessary for them to stand out when making an offer on your home for sale. That includes making offers above the asking price or bidding with cash to show how well-qualified they are.

In a competitive market like this, non-cash buyers will be incentivized to receive pre-qualification for financing well ahead of time so that they can demonstrate their determination to the seller. It also helps out buyers who are shopping around for lower interest rates.

Buyers will always have some level of power in a home sale interaction (they are offering money for your property, after all), but there are some ways in which they might be more inclined to yield to a seller in certain areas.

For example, potential homebuyers seeking affordable housing options might be willing to waive contingencies (such as a home inspection), avoid extra asks (such as what furniture gets left behind in the sale), offer to pay all or part of the closing costs (which can save the seller up to a few thousand dollars), or otherwise try to work within the specific terms and conditions dictated by a seller.

Benefits for NWA Sellers in 2024

The above buyer behaviors can all have a net positive effect on home sellers in Northwest Arkansas. As long as you set a reasonable listing price for your home, you can likely expect to receive at or above your asking price and could even receive a cash offer.

In addition, you're likely to deal with buyers who have already done the legwork to get pre-qualified, meaning you'll waste less time getting distracted by unsuitable buyers.

Finally, the various concessions that homebuyers are often willing to make (such as paying for closing costs or waiving a home inspection) can all make life easier for you and even save you a bit of money during the home sale process.

Contact a Top-Rated Home Team Today!

Are you ready to partner with a team of real estate professionals to help you sell your NWA home? Contact the experts at The Summit Home Team to learn more about our selling strategies today!

If you enjoyed this article, check out these other articles about Northwest Arkansas Real Estate:
Setting the Right Price: How to Evaluate Your Northwest Arkansas Property

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