We keep hearing it again and again, houses are selling for a lot more money right now across the nation, including here in Arkansas.
While the market is booming, it's not all that equal, and experts said this is leading to a growing issue for people looking to buy.
Let's focus on three main issues we're seeing in the Little Rock area when it comes to people looking to buy a home right now—why there's a shortage, how it's impacting the market, and the growing divide it's causing between tax brackets.
: Why is there a housing shortage?
We've seen prices skyrocket on almost everything over the past year, from gas to groceries to gifts.
More specifically though, COVID-19 created a large price tag on the places people live, according to Brian Mitchell, an associate professor of history at the University of Arkansas at Little Rock.
"We're starting to see almost ridiculous prices being paid and extraordinary measures which people are taking to buy houses," he said.
Mitchell said it all comes down to basic supply and demand. Prices are going up because there aren't enough houses to go around.
Part of that issue is rising prices on supplies to build new homes, brought on during the pandemic.
Arkansas Realtors Association President Bob Dodson said this problem has been boiling up long before that.
"At one point it was estimated nationwide, we needed 6 million homes to get the demand caught up just to that point. So, it's a big issue, this supply shortage," he said.
Dodson added that realtors have seen 70 to 80% fewer homes on the market than the year before.
: What is the impact?
Looking at the numbers we got from the Arkansas Realtors Association, it shows an increase in the average price a home sold for.
In 2019, the average price of a house sold in Pulaski County was $205,554. In 2020, that number grew to $218,610 and in 2021, it jumped up to $235,565.
"I've heard lots of stories about people buying houses online, by paying hundreds of thousands of dollars over the original asking, and buying houses sight unseen," Mitchell said.
Mitchell said the housing shortage is impacting the people right in the middle and it's been happening for a while.
We're talking about your "standard family homes," which usually have three bedrooms and two bathrooms, depending on where you live.
"After the recession, there wasn't a lot of housing stock, particularly middle income, and lower-income housing that was built. So, there's a general shortage of that housing stock now," he said.
Those average-priced homes just aren't on the streets for realtors to sell, according to Dodson.
These are the houses ranging from $150,000, in more rural areas, to close to $300,000 in the metro area.
"If we get that price of a home on the market, it's as good as gone and we just can't keep them," he said.
Most of those houses are only lasting one day to one week before they are sold, according to Dodson.
: Growing divide of the middle class
As prices keep rising, Mitchell said, we are seeing more "for sale" signs popping up in front of houses that middle-class families can't afford.
These are homes ranging from $400,000 to $2 million.
"There's plenty of housing for the extremely wealthy. In fact, that's where developers can make their biggest bang for their buck," Mitchell said.
It's a drastic difference from lower-income houses that usually sell for less than $100,000.
Mitchell believes at the heart of this all is an even bigger issue— not enough affordable housing.
"We are in dire need," he said. "There hasn't been enough housing built for the population of people who live below the median income here, so that's at crisis levels."
It's a problem that realtors have their eyes on, but unfortunately, there's no simple or immediate solution.
"That's only going to continue and that's only going to get worse until we start devoting some dedicated funds to making sure that there is affordable housing in the region," Mitchell said.
If you're looking to buy or sell your house, here are a couple of things to keep in mind.
Mitchell said don't be in any rush because material prices could go down in the future and you could end up buying a house for much cheaper.
On the flip side though, Dodson said this is the best time to get a mortgage on a home because interest rates are so low.