Rent in LR area rises 11.4%

Data show 8.3% increase last year in NW Arkansas

Rental rates for three-bedroom, single-family homes in the Little Rock area increased 11.4 percent last year, the ninth-largest increase in the nation, according to Rent-Range, a Denver-based provider of rental data.

The firm said it electronically gathers rental data on about 250,000 single-family houses nationwide each month from a variety of sources, including multiple listing services, property managers, landlords and websites.

Rental rates rose 8.3 percent in Northwest Arkansas, which includes Benton and Washington counties, giving the region the 20th-largest increase last year, Rent-Range said.

The median rent paid for three-bedroom homes — meaning half of the rental rates were higher and half were lower — was about $1,075 a month in the fourth quarter last year in Northwest Arkansas and about $1,000 in the Little Rock area.

Rent-Range tracks rents on more than 1,730 singlefamily homes in the Little Rock market, ranging from approximately $680 a month to $1,500 a month.

The company follows rents on about 1,020 singlefamily homes in the Fayetteville metropolitan area, where rates range from rates of about $750 to about $1,690 a month.

Supply and demand is behind the higher rent prices in Arkansas, said Walter Charnoff, chief executive officer of Rent-Range in a telephone interview.

“Both [markets] have vacancy rates that are down moderately, and both really have strong job growth,” Charnoff said.

Steve Pinter of Little Rock, who owns and manages about 80 single-family homes in Pulaski County, was surprised that rent prices for Little Rock area homes increased as much as they did.

“I’ve seen rents go up, but I haven’t seen them go up that much,” said Pinter, who also owns Steve Pinter Realty. “But I’m slow to raise rents, especially if I’ve got a good renter. When they move, I’ll make an adjustment.”

One of the biggest reasons

for the flourishing singlefamily, home-rental market is that many potential homebuyers are finding it difficult to qualify for mortgage loans, Pinter said. That includes many families that suffered economically in the 2008 and 2009 recession, Pinter said.

“So they have to rent,” Pinter said. “The requirements to get a loan are more difficult than [they] used to be. People lost their homes in foreclosure. Or they have a bad credit score.”

Jennifer Turner, the owner of two single-family homes that she rents out in Northwest Arkansas, agreed.

“With the financial crash and the changes in the laws — financing with 20 percent down — some people can’t come up with that much money,” said Turner, whose father owns and rents out three single-family homes.

It is possible to buy homes with less than 20 percent down, said Chris Lee, a real estate agent for Lindsey & Associates who also is a property manager for 30-35 singlefamily homes.

Most people who qualify to buy homes also can qualify for 3.5 percent down payments through the Federal Housing Administration, Lee said.

Turner said she has raised the rent on a Bentonville house that she owns by 25 percent to 30 percent in the past two years because it is in a neighborhood “where everybody wants to live.” She has owned the house for 11 years.

Also, the unemployment rate in the Little Rock and Northwest Arkansas markets is lower than the national rate, Charnoff said.

Northwest Arkansas’ unemployment rate was 3.2 percent in December, and the Little Rock market was 4 percent, both below the national

average of 4.9 percent.

“Especially Fayetteville, there was really a big difference in the labor force growth versus the decrease in unemployment,” Charnoff said. “That shows there was some inward migration for employment as well.”

That includes workers who are hired from out of state by Fortune 500 companies, such as Wal-Mart, Tyson Foods and J.B. Hunt Transport, Lee said.

Lee and Turner noted that some people who move to the area rent houses for a year before settling on buying one. Some choose to rent because they suspect that they may later be transferred out of the area, Lee said.

The single-family rental market remains strong across the country, Charnoff said.

“The home ownership rate continues to decline and a higher percentage of the population migrates to rental housing,” Charnoff said in a written statement. “As the real

estate market continues to improve, we are seeing significant rental price increases in many markets, which bodes well for investors.”

RentRange tabulates the rental numbers for every metropolitan area in the country that has a significant singlefamily rental market, Charnoff said. The information is used by Wall Street, institutional investors, real estate investment trusts, mortgage lenders, property managers and the government to gauge rent growth and potential, Charnoff said.

The highest increase nationally in rents was in the Fort Myers, Fla., metropolitan area with a 25.4 percent jump in rates, RentRange said. The Shreveport area was second with an increase of 19.6 percent.

RentRange tracks all single-family homes — from one bedroom to five bedrooms — but focuses on three-bedroom homes for its quarterly news releases.