Why is Arkansas Real Estate so cheap?

Arkansas Real Estate Q&A Discussion Forum

Why is Arkansas Real Estate so cheap?

Minneapolis, MN · Member since 2020 · 61 posts · 56 votes

Hi all, I've been looking into warmer states to start investing in, and one of the spots I've taken into interest is Arkansas. I started doing a little market research and found that It's overall a pretty cheap place to live, does anyone have any idea why that would be? I'm aware that it's no CA, or WA, but its a beautiful place to live, with a decent climate. Any thoughts?

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Wayne Ogburn

Real Estate Agent · Hot Springs National Park, AR · Member since 2014 · 7 posts · 7 votes

Arkansas is not a wealthy state. This is a factor. Some areas are attracting a number of part time residents who own vacation homes, many of which are priced out of reach of the majority of residents. Arkansas is very seasonal -horse racing Jan. to May, lakes June to Sept. Not much is year-round. Therefore, the natives can’t afford high end houses. Wages are among the lowest in the country. Inflation is minimal and prices are pretty flat, no more than 1% per year.

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Hadar OrkibiPro Member
Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
6y
@Cameron McNulty its an open end question with no one straight answer.
long story short, is supply and demand, population and job growth. these are "steady as she goes" in AR, Its not Texas, CA, FL OR Colorado for example.
3 Reply
Wayne Ogburn
Real Estate Agent · Hot Springs National Park, AR · Member since 2014 · 7 posts · 7 votes
6y
Arkansas is not a wealthy state. This is a factor. Some areas are attracting a number of part time residents who own vacation homes, many of which are priced out of reach of the majority of residents. Arkansas is very seasonal -horse racing Jan. to May, lakes June to Sept. Not much is year-round. Therefore, the natives can’t afford high end houses. Wages are among the lowest in the country. Inflation is minimal and prices are pretty flat, no more than 1% per year.
7 Reply
Mike ReynoldsPro Member
construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
6y
@Cameron McNulty I have wondered this too. My brother makes a good living flipping houses there. That is all he does. I have been thinking about investing there but have been a little spooked by the hype. He lives near Fayetteville but I don't know where he does most of his flips at. I may have to ask him as it is not that far from me.
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Kris Mead
Rental Property Investor · Hopewell Junction, NY · Member since 2019 · 81 posts · 38 votes
6y
@Cameron McNulty in my opinion Arkansas’ history of low to no growth is what drew me in. If you look at he historical data for population and price trends, there was really no impact during the recession. I fully understand that I am not going to get much appreciation, but we are probably near a market top and at least I won’t have to worry too much if there is a crash that drags values down. You are correct in saying it’s a beautiful state and many people don’t understand that. I am constantly explaining to people that it’s not all “flat farmland” or “brown”. In fact, we have discussed relocating from NY on many occasions. The weather is kind of a bummer though. It seems like it’s always some sort of extreme 😂.
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Kenneth Mooney
Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
6y
@Cameron McNulty demand. Low demand to live in Arkansas (for whatever the reason, low job growth, now a desirable place to live, etc) causes low movement of inventory, which would cause low pricing (in order to move inventory quicker.
There are other markets in Southeast where you still have low entry point and higher job growth and more desirability.
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Susan H.Pro Member
Investor/Landlord · NWA, AR · Member since 2016 · 227 posts · 132 votes
6y
Originally posted by @Wayne Ogburn:
Arkansas is not a wealthy state. This is a factor. Some areas are attracting a number of part time residents who own vacation homes, many of which are priced out of reach of the majority of residents. Arkansas is very seasonal -horse racing Jan. to May, lakes June to Sept. Not much is year-round. Therefore, the natives can’t afford high end houses. Wages are among the lowest in the country. Inflation is minimal and prices are pretty flat, no more than 1% per year.

That's true for much (most?) of the state. Then there's the northwest region of the state. Think Sam Walton (and all the people who bought Wal-Mart stock in the early years) and homes with multi-million-dollar price tags. And yes, many of them are natives of the state.
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Matthew Reid
Rental Property Investor · Jonesboro, AR · Member since 2019 · 105 posts · 59 votes
6y
@Kris Mead I agree with you entirely in regards to Arkansas being "insulated" from a recession. I remember growing up in Arkansas during the recession and not seeing much of a change in my hometown or way of life. Everything was business as usual. However, when I'd watch the news with my parents it seemed like the rest of the world was on fire due to people losing jobs, homes, and business' going under. I'm sure some of this is explained by the 1-2% increase in wages, and real estate compared to some of the other states where it may be well over 3%. Because of this when there was a correction in the market 10 years ago the faster growing states had a much larger correction than Arkansas.
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Kathie Riedel
Investor · Hot Springs Village, AR · Member since 2018 · 112 posts · 56 votes
6y
I traveled between California and Arkansas for 10 years. Summer and winter in CA. Spring and fall in AR. I now live full time in AR. I love the beauty and rural atmosphere of AR, the cheap real estate, the friendly people and cheap gas. I hate the weather. I made enough money in CA through real estate appreciation to live comfortably as a private lender in AR. The area I live (Hot Springs Village) is beautiful BUT if you are a golfer, tennis player or any other outdoor activity be prepared to sit inside for most days...too hot, too wet, too cold.
There is plenty of opportunity in real estate here. For people with high capital gains individuals there are numerous federally designated Opportunity Zones. IMHO this seems to be the latest investment by outside money. But for slow and steady flipping and buy and hold also work. Just don't count on appreciation when you run the numbers. It is happening but slowly and unreliably.
6 Reply
William Gay
Member since 2020 · 1 post · 1 vote
6y
I am a Realtor in Jonesboro, AR. We are a fast growing city with a population of around 70,000. Our housing market is pretty affordable due to having plenty of ground to build new homes on. I would say that the median house price for a nicer 3 bedroom 2 bath home would be around $160,000. If you ever make the decision to come to Arkansas, let me know. I would enjoy helping you find a place here to call home.
1 Reply
Joshua Schmidt
Investor · Central Arkansas · Member since 2018 · 109 posts · 58 votes
6y
If you are buying in Arkansas with the hopes of appreciation, you are buying for the wrong reason. Will your REI appreciate, more than likely, but it will not be a process that happens fast. If you can buy a REI and force appreciation, that is your best bet for appreciation here in Arkansas. Yes, NW Arkansas will appreciate faster than most of the rest of the state, but the prices are not as good as the rest of the state. I have lived in Arkansas my whole life, worked in the Real Estate industry for over 10 years now. We have hot spots that pop up here and there, ie Conway, NW Arkansas as well as a few others, but for the most part, appreciation is a long game here. In my opinion, the reason we have such great prices is because of the low rate at which the state's population is growing. Basically, supply and demand....Yes population growth has been steadily rising, but the needle moves pretty slow. I have noticed over the years we are starting to get more transplants from other states, such as from CA and some of the more NE states. People can sell their house for 1mil in CA, move here and buy a newer/bigger house for a 1/4 of the price and live well off the rest of their cash, plus their pensions usually go a lot further here as prices on everything haven't been inflated like some of the other states. Throw in the great hunting, fishings, boating and golfing thoroughout the state and you have a great little hidden gem in the middle of America.
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Joshua Schmidt
Investor · Central Arkansas · Member since 2018 · 109 posts · 58 votes
6y
Oh, and I forgot one of the biggest factors in my opinion, slow job growth and wages here in Arkansas. That, in my opinion, has slowed the appreciation rates the most...
1 Reply
Kris Mead
Rental Property Investor · Hopewell Junction, NY · Member since 2019 · 81 posts · 38 votes
6y
Originally posted by @Joshua Schmidt:
If you are buying in Arkansas with the hopes of appreciation, you are buying for the wrong reason. Will your REI appreciate, more than likely, but it will not be a process that happens fast. If you can buy a REI and force appreciation, that is your best bet for appreciation here in Arkansas. Yes, NW Arkansas will appreciate faster than most of the rest of the state, but the prices are not as good as the rest of the state. I have lived in Arkansas my whole life, worked in the Real Estate industry for over 10 years now. We have hot spots that pop up here and there, ie Conway, NW Arkansas as well as a few others, but for the most part, appreciation is a long game here. In my opinion, the reason we have such great prices is because of the low rate at which the state's population is growing. Basically, supply and demand....Yes population growth has been steadily rising, but the needle moves pretty slow. I have noticed over the years we are starting to get more transplants from other states, such as from CA and some of the more NE states. People can sell their house for 1mil in CA, move here and buy a newer/bigger house for a 1/4 of the price and live well off the rest of their cash, plus their pensions usually go a lot further here as prices on everything haven't been inflated like some of the other states. Throw in the great hunting, fishings, boating and golfing thoroughout the state and you have a great little hidden gem in the middle of America.

Personally, that’s what drew me to this market. IMO this is the type of market you want to be in for times like these. If the real estate market pulls back a bit elsewhere, I may look to diversify into another market. For now, this is working well.
2 Reply
Elin Ghazikhanian
Los Angeles, CA · Member since 2018 · 2 posts · 3 votes
6y
@Kenneth Mooney you reffered to other markets in the southeast with a better outlook than Arkansas, do you mind sharing which ones? Im new and learning!
0 Reply
Joshua Schmidt
Investor · Central Arkansas · Member since 2018 · 109 posts · 58 votes
6y
Originally posted @Kris :

Personally, that’s what drew me to this market. IMO this is the type of market you want to be in for times like these. If the real estate market pulls back a bit elsewhere, I may look to diversify into another market. For now, this is working well.

Completely agree @Kris Mead, as I love this market we are in. You can buy in a down market, you can buy in an up market, the market here is almost always STEADY! You can't ask for a better market for planning in my opintion!

2 Reply
Mason Grande
Member since 2020 · 5 posts · 4 votes
6y
Based on the most up to date job numbers Fayetville is seeing over 2% Job growth in the last year. This puts it with some of the fastest growing cities in the country from a jobs perspective. I am liking NWA as a target market but i'm still a FNG so take my opinion with a grain of salt.

https://www.deptofnumbers.com/employment/metros/

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Account Closed
Member since 2021 · 154 posts · 108 votes
5y
Arkansas is growing but I don't want to live here anymore. Taxes are absurd. 6.5% income, tpp tax for business, .068% property, 10.5% sales tax, and more....
that said we are making a killing selling spec homes in russellville
1 Reply
Billy Daniel
Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
5y
Arkansas is seeing the same rise in real estate prices as the rest of the country now (proportionally). As @Account Closed said, Russellville is absolutely crazy. If something is on the market for more than two weeks, something is off about it.
A friend of mine bought a house in Fayetteville in 2018 and it has almost doubled in value since then! I don't think there is much for the average investor in NWA. If someone thinks there is, I would love to hear about it!!
1 Reply
Account Closed
Member since 2021 · 154 posts · 108 votes
5y
Originally posted by @Billy Daniel:
Arkansas is seeing the same rise in real estate prices as the rest of the country now (proportionally). As @Account Closed said, Russellville is absolutely crazy. If something is on the market for more than two weeks, something is off about it.
A friend of mine bought a house in Fayetteville in 2018 and it has almost doubled in value since then! I don't think there is much for the average investor in NWA. If someone thinks there is, I would love to hear about it!!

We are getting ready to build a sub division, 180 or so lots. We don't intend to sell many lots and plan to build spec homes on them. Expecting to get $145-152 per sqft.
1 Reply
Billy Daniel
Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
5y
@Account Closed thats awesome! Promenade is going for around $140/sq ft. It wasn't that long ago I was amazed at people getting $110/sq!
0 Reply
Account Closed
Member since 2021 · 154 posts · 108 votes
5y
Go check out the homes in the circle...
they are very poorly built and wouldn't pass an inspection.
attached are some photos. I do recon work on all my competition 😂
0 Reply
Austin R Jones
Rental Property Investor · Russellville, AR · Member since 2019 · 6 posts · 3 votes
5y
@Bill William you say that you’re in Russellville correct?
0 Reply
Account Closed
Member since 2021 · 154 posts · 108 votes
5y
Originally posted by @Austin R Jones:
@Bill William you say that you’re in Russellville correct?

I am.
0 Reply
Mike ReynoldsPro Member
construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
5y
Originally posted by @William Gay:
I am a Realtor in Jonesboro, AR. We are a fast growing city with a population of around 70,000. Our housing market is pretty affordable due to having plenty of ground to build new homes on. I would say that the median house price for a nicer 3 bedroom 2 bath home would be around $160,000. If you ever make the decision to come to Arkansas, let me know. I would enjoy helping you find a place here to call home.

What is Osceola area like? Asking for a friend lol.
0 Reply
Mike ReynoldsPro Member
construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
5y
Originally posted by @Account Closed:
Go check out the homes in the circle...
they are very poorly built and wouldn't pass an inspection.
attached are some photos. I do recon work on all my competition 😂

Back when I was still a framer (long ago) I tried to get with a large builder. I gave them a bid per sq foot and they told me they didnt pay that much. I asked why not. They said "We just dont put as much wood in ours as others do. There is not as much to nail up."
HMMMM,,,,
Time to learn how to remodel I guess lol.
I hate hacks.
1 Reply
Account Closed
Member since 2021 · 154 posts · 108 votes
5y
These are 2200 sqft homes fetching $132-145 per sqft new. Its absolutely absurd! The footers of the house are CMU block and filled in with concrete, no footer below the cmu block, just SP2.
Notice that brick goes all the way up, no footer or brick ledge only sitting on sp2, has 1 tie in 16" up from the sp2 and up the wall..nothing to hold the brick courses in place, not to mention missing water proofing/vapor barrier.
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