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real estate review
By Ethan C. Nobles, director of media relations for Arkansas Realtors Association

Last year was a rough one for housing markets throughout the nation and in Arkansas, but Jonesboro was a bright spot.

Double digit declines in sales were common in housing markets last year, but there were 978 single-family residences sold in Craighead County last year – 80 fewer homes than were sold in 2007. That’s a drop of 7.56 percent in sales compared to 2007.

No one wants to see sales decline, of course, but a slight drop in an environment where substantially larger declines are the norm isn’t too bad at all. In Arkansas, markets in Benton, Pulaski, Saline, Washington counties and other areas have contended with declines in the neighborhood of 20 percent – Jonesboro, considered in that context, has fared considerably better.

Nationally, of course, sales prices have dropped sharply. That’s not true in Arkansas where prices have remained relatively flat in 2008, meaning homeowners are, generally, at least holding onto the value of their houses.
In Jonesboro, the average sales price increased slightly to $139,273 last year, up 2.68 percent from $135,640 in 2007. That’s not a huge gain, of course, but it’s a far cry from markets around the nation where sales prices have declined sharply for the past couple of years.

The question, of course, is why has the Jonesboro housing market held up so well? For one thing, prices in Craighead County remained fairly constant throughout the booming markets of 1999 through 2006 and are still very reasonable. The state average sales price in 2008 was around $150,000 – considerably higher than the $139,273 average in the Jonesboro area.

Second, the economy in the Jonesboro area has remained very strong at a time when job losses throughout the nation are common. Jonesboro, after all, is the financial hub in a nine-county area and has medical facilities that attract a lot of patients. Arkansas State University continues to provide jobs and boost the economy in the area.

The food processing business in the area – anchored by businesses such as Frito-Lay North America, Kraft Foods and Nestle USA – has remained strong, as well.

Furthermore, economic expansion was the rule in 2008 as three companies announced major expansions in the area that will provide around 1,500 jobs in the area.

StarTek, Nordex USA and Nice-Pak all announced expansions to the area. Denver-based StarTek – a company that answers customer service and support calls for companies in the wireless, wireline and cable-broadband-satellite business – opened a center in Jonesboro in 2008 that employs 500 people.

Nordex USA, a subsidiary of a Germany company that manufactures wind turbines, announced in October it will invest about $100 million to build its U.S. manufacturing facility in the Jonesboro Technology Industrial Park. Wages at the facility will be $17 per hour and the plant should be up and running by the end of 2009 and bring 700 jobs to the area.

Also in October, Nice-Pak announced it was spending $40 million on a facility that will bring 300 new jobs to Jonesboro. The company, headquartered in Orangeburg, N.Y., manufactures pre-moistened wipes and related products.
In other words, the Jonesboro economy was already diverse thanks to medical, food processing, banking and academic industries and seems to become more so as new companies expand into the area. Economists have maintained that areas featuring diverse economies tend to weather recessions well, and that appears to be the case in the Jonesboro area.

One question we get a lot here at the Arkansas Realtors Association involves when markets might start booming again. We’re not in the crystal ball business here, so we can’t honestly say.

However, it is clear that markets will thrive around the state and nation once again. Realtors in Jonesboro have mentioned that at least one group out there is purchasing quite a few homes right now – investors.

Most markets have reported an increase in foreclosures over the past couple of years and that’s certainly true in Jonesboro. However, it seems investors are taking advantage of foreclosed properties and many of them are renting those homes out with plans to sell them when the market starts booming again.
They’re banking on the area housing market coming back strong because they know that slumping or flat sales are only temporary.