On the rise

Growth in housing costs spark affordability fears

Whether news is good or not often depends entirely on the vantage point from which one views it.

The capacity to keep wages low is often reason for celebration when a corporation’s stock price is evaluated, but when it comes to other aspects of a consumption-based economy, putting more money into people’s pockets so they will buy stuff is considered an economic boost.

Open up a hog farm on rural land and it’s viewed by property rights and farm interests as a vital part of Arkansas’ agricultural economy. Put it near the nation’s first national river and some view it as a likely con- taminator that could ruin a jewel of the Natural State.

One person’s renovation to increase the value of a property is viewed by another as gentrification.

An SEC football team on a six-game losing streak will lead to disappointment. But view it from another perspective and … no, forget that one. It’s just disappointing. But there’s progress and maybe that’s all Arkansas fans can hope for in 2018. Editorial fodder for another day.

Except for that last observation, all this brings us around to the recent word from the biannual Arvest Bank-sponsored Skyline report, conducted by the University of Arkansas’ Center for Business and Economic Research.

The report, released last Tuesday, said average home prices in Washington County have risen 12.3 percent to $235,618 this year so far, up from $209,899 reported for the front end of 2017. The average home price in Benton County edged up 4.9 percent to $238,098, up from $227,036 for the same period.

That’s great news for homeowners, many of whom are leaping at the chance to sell and upgrade to better or bigger housing a decade after the financial crisis of 2008 put the housing market into a funk for a few years.

For folks hoping to enter the housing market or those barely getting by with paying rent, these higher values can make it much more costly to keep a roof over one’s head.

The director of the Center for Business and Economic Research, Mervin Jebaraj, said last week’s report increased concerns that average real estate prices could outpace other economic factors, such as wage growth and inflation. In turn, that could lead to cost-of-living concerns for Northwest Arkansas, a factor that has traditionally been a strong selling point for pulling transplants into the region.

“Affordability is becoming an issue in the residential real estate market,” Jebaraj said in a statement about the report.

“With our population expected to continue to grow at a rapid pace, we need to continue building new homes to meet demand, but there are far fewer lots on which to build new homes,” he said. “This is especially true within the larger cities in the region where many people desire to live.”

Regional data spanning from 2013 to 2018 show the average price of homes rose 35.4 percent in Washington County and 28.4 percent in Benton County over the past five years, this newspaper reported last week.

A lack of affordability in home ownership is an undesirable development for the region, even if it may individually benefit some property owners. People who own property typically long for their property values to rise, except when the tax assessor comes calling. Because home ownership is one of the biggest long-term investments most people make in their lives, it can be satisfying to watch prices head skyward.

But it’s a problem when many jobs don’t pay enough to match the going rate of housing. Locally based companies need to be realistic about what their employees — not just the upper management, but more importantly, the rank-and-file — face in their efforts to obtain and maintain decent living conditions for themselves and their families.

It certainly can’t be said that housing costs are the root cause of every case of homelessness, but the larger the gap between wages and one’s ability to afford decent housing, the more likely it becomes that employed people will find themselves in a housing crunch. Naturally, one of the best ways to avoid an increase in homelessness is to promote economic conditions in the region that won’t force people on the low end of housing affordability into a desperate situation.

This isn’t just an issue for lower-income people, some of whom qualify for some forms of housing assistance. But there’s a segment within the lower middle class to middle class that can find themselves priced out when a region’s housing keeps skyrocketing while incomes don’t follow suit.

What can be done? Certainly, cities can examine their residential development standards and enforcement to make sure government isn’t unnecessarily adding to the costs of housing or clogging up the process so that developers are slowed. Local leaders should be — and may be — talking earnestly with developers to provide feedback on the kinds of housing needed and where, and thinking about ways to provide incentives to get what’s needed.

This much is sure: There are plenty of examples of cities around the nation and world where the cost of house careened out of control, seriously harming the quality of life for their residents. Northwest Arkansas can see the warning signs. The question really is what the region’s leaders plan to do about it.