At the conclusion of a conversation during a recent weekday, Realtor® Amber Wilson reached for her phone, checking to see what she’d missed in her business over the last 15 minutes.
“Four calls, two texts,” she said dryly.
Assuming that’s typical, that’s 24 communications per hour and approaching a thousand in a typical 40-hour work week. Except there’s nothing typical about what’s been happening in Wilson’s world over the past 16 months, a stretch where the phone hasn’t stopped buzzing, and the aforementioned 40-hour work week only gets you through Wednesday.
“It’s been nonstop since last March,” said Wilson of Donham Realty in Higdon, right outside Greers Ferry. “Right now, I have 16 properties under contract, all trying to close by next month. As of March this year, I’ve had four days off: Mother’s Day, Easter, my cousin’s wedding and another one I can’t even remember. I’ve really had no life.”
Wilson’s plight is shared by most in the residential real estate game these days, but her marathon hours and breakneck dealmaking have come almost exclusively in the vacation/retirement home sector, specifically lake properties. Once largely reserved for retirees, such properties are rapidly becoming the choice of younger buyers as well.
“As far as what’s driving this, I think a lot of people are doing lake houses because they can work from anywhere now, and a lot of companies found they’re just as productive working remotely,” she said. “Where a lot of buyers used to be, ‘We’re going to buy here and in five years retire,’ now it’s people buying homes and moving in with their young kids. We did have some younger families before, but it’s a bigger range now; some are even parents in their 30s.”
Mark McKenzie, principal broker with McKenzie Realty Group in Heber Springs, said he’s seen “a perfect storm” of market factors that have kept him hustling 12 hours a day for the past year and a half.
“Number one, COVID had people trying to figure out what to go do, because they were trapped at home, and the lake was a natural thing and closer to home for a lot of people,” he said. “Another factor is, once the COVID buying spree started, a lot of folks went, ‘Oh, I better go get mine now, or I’ll never have another entry point that’s affordable for me.’
“And then there’s another really interesting factor where we are seeing a lot of people who, just like I read in The Wall Street Journal a couple days ago, are coming to Mayberry because it’s so dadgum affordable, compared to where they are in Big City, USA.”
These factors have combined to produce a market phenomenon that even an industry longtimer like McKenzie can scarcely believe. Eden Isle, an island development connected to the shore by a causeway, is a good example.
“It’s 600 acres in size. It has about 450 residencies on it, 330 homes and 110, 120 condos, something like that,” he said. “I’ve lived there since 1998, and it’s the first time I’ve seen it sold-out.
“We’re used to having 40 or 50 residential properties on the market at any given time, because that’s the nature of vacation destinations. People buy them and use them for a year or two or five or 10. And then, they go do something else. Eden Isle’s the most popular vacation destination on Greers Ferry Lake because it has everything for the vacationer on the fun factor side. But I just never imagined it being sold-out.”
Another hallmark of the current buyer’s boom has been the speed with which many properties are snapped up, often generating multiple offers in days at well above asking price.
“It seems like you can almost double the price for a home on the lake versus one across the street. The land is very valuable,” said Rob Pfautz, principal broker with Hot Springs Realty in Hot Springs. “People are buying older homes on the lake, tearing them down and building their dream home. That’s not uncommon here.
“The first four months of this year versus last year, you’re looking at 18 percent price escalation. Lake home and condo sales are up 35 percent year over year. Four months is not a big view of it, but that gives you an idea of how it’s trending.”
Pfautz said the average lake home price in his market, sold in the first four months of 2020, fetched $509,000, whereas that same property commanded $600,000 over a comparable period in 2021. Condos followed suit, with last year’s average unit price of $227,000 growing to $306,000 this year.
As in other parts of the state, Hot Springs’ client demographics go beyond the stereotypical retiree to include many different types of buyers, Pfautz said.
“People who are relocating here are typically retiring; they have the means to afford a half-million to $1 million home,” he said. “We’re doing deals for people paying that for second homes. There are some people using them for their primary residence.
“One recent client came from California, where they probably sold their middle-of-the-road home for $1 million, and then they come here and pay $500,000 for a lot, and they’re going to have a $1 million home when it’s all done. Others maybe live within a couple hours’ drive of Hot Springs; they own a business and want a nice retreat for their families.”
Pfautz said one emerging trend among buyers is people looking for properties as income-generating opportunities.
“We’ve had some people paying up just to make them Airbnbs,” he said. “Being a resort town, there are homes on the lake grossing $200,000 per year. Property owners are getting $500 to $600 a night.
“That’s one of the things driving condo sales, the Airbnb business. Some condos allow rentals, some don’t, and we’ve seen more demand in the ones that do because investors come in and will pay a premium based on what that cash flow is.”
Of course, the trick to leveraging such a market is being able to navigate the feeding frenzy that ensues with just about every new listing, thanks to low interest rates and even lower inventory.
“If a home is under about $600,000, it’ll sell very fast here,” McKenzie said. “When I moved to Heber Springs in 1998, that price point of selling very quickly was closer to $300,000. And, we’re seeing a lot more million-dollar homes sold than we ever have around this lake. A lot more, especially on the Little Red River.”
“It depends on the property,” Wilson added. “Some go just $5,000 over, then another will be a revolving door because it’s lakefront, priced at $440,000 and a cash buyer got it for $510,000, which is $70,000 over, right there. There’s no set price mentality; it all depends.”
Some of the same trends are playing out in other types of vacation, second home and investment properties. Gar Lile, president of Lile Real Estate in Little Rock, said demand for hunting grounds, working farms and timber acreages has also been brisk, particularly among younger buyers.
“I think they’re very much interested,” Lile said. “We’re seeing a lot of that younger age group wanting to have a getaway, and if it can be turned into investment as well, it seems to support the decision. Most people would like to be an hour, hour and a half drive away, max, if it’s going to have personal use, not just straight investment. And we find that people do like to have the option of recreating on their investments.
“I do think those mid-30- to early 50-somethings are probably more attuned to this than prior generations, just because of knowledge of investments. So many more people are aware of those investment types than they were 30 years ago, if for no other reason than the internet and the spread of knowledge.”
Lile, who said the majority of his recreation land clients are from Arkansas while investment buyers are split 50/50 with outstate bidders, said he sees certain trends that are accelerating buying decisions at this particular moment in time.
“I do think you’re seeing a couple of movements,” he said. “You are seeing some investors finally acknowledge that we may be going into an inflationary period, which tends to push people toward real estate and other hard assets.
“You’re also seeing a cultural shift of a certain segment of the population not wanting to be in the cities. They want to have a place that they can go and be able to work remotely.”
As for the future of this part of the real estate market, none of the professionals interviewed saw a slowdown coming anytime soon, as much as they might like one to catch their breath.
“I can only speak to my area as I’ve learned you can have a market an hour away that is totally different, but I think it will go to the end of the year at least, unless something comes out of left field,” Pfautz said. “We can’t build inventory; we’re just turning it.”
McKenzie said supply is starting to loosen up in his market due to some property owners hearing what neighbors got for their homes. But even if that dries back up, he’s not sure the rabid buying spree will.
“I don’t think that anything but a severe collapse in our financial industry and the stock market is going to stop people from buying a vacation home or a retirement home in Heber,” he said. “I don’t think they will stop even if interest rates tick up or if we get a 15 percent pullback in the stock market. I just don’t see the demand for Small Town USA changing. I’m 51, and I don’t see it changing in my lifetime.”
Wilson agreed, albeit with a tired sigh, as her phone rattled to life in her hand.
“From talking to other real estate professionals and according to the National Association of Realtors®, they see this going on for another year,” she said as she stepped out to take the call. “But I’m not gonna lie; I would love a little break.”