Leader Blues

Thursday, July 27, 2006

TOP STORY>>Rents are going up in area

IN SHORT: The demand for and the cost of rental properties throughout central Arkansas are on the rise with temperatures.

By SARA GREENE AND JOAN MCCOY
Leader staff writers

As the mercury rises in summer, so does the demand and cost of rental properties throughout central Arkansas.

According to the National Association of Realtors, monthly rent is expected to rise 4 to 5 percent this year and vacancies nationwide are estimated to be about 5 percent.

“Due to higher interest rates, we are seeing less people in the home-buying market and more in rentals,” said Jim Peacock, Jr., owner and broker at Jim Peacock Real Estate in Jacksonville.

In Sherwood, the company has two-bedroom duplexes starting at $435 per month and three-bedroom homes starting about $1,000 per month.

“Considering labor costs have went up 20 percent, fuel price have went up at least 40 percent, material and insurance costs have gone up 30 percent a 5 percent push in rent means the costs aren’t being passed along to renters,” Peacock said.

In both Sherwood and Jack-sonville, rentals are at about 90 percent capacity, with military personnel making up about 15 to 20 percent of the renters. Military housing allowance for enlisted personnel runs from $576 to $855 per month.

“In Jacksonville, apartments and duplexes run about $360 to $495 per month. Houses can vary from $450 to $1,200 per month,” said Thad Gray of Bart Gray Realty Company.

Rent is up in Cabot, where houses that cost $650 a month two years ago now cost $800, said Kelly McCloskey with Century 21.

The main reason is the influx of people from out of state who are accustomed to paying more, she said, and that means the locals who don’t already have homes are likely living in apartments which rent for $450 to $550 for the older units and $550 to $650 for newer ones.

“If you’re just the average Joe, it’s hard to find a house here,” McCloskey said.

“With rents that high we turn down a lot of people because we know that with the cost of utilities that also are high in Cabot they would never be able to afford it. And that’s a shame but we have to charge what the market tells us.”

The housing situation for lower wage earners is not likely to change soon because Cabot is a small city that offers exactly the small town atmosphere that newcomers find appealing. And property owners want to cash in on the boom, she said.

Department of Commerce statistics put the median price of a new home in Arkansas at $235,000, out of reach for workers in the service industries of Cabot where the average wage is $18,611.

Cabot residents commuting to Little Rock earn about twice that, $27,123 according to Metroplan, a long-range planning organization for central Arkansas.

Charlie Knox, owner of Knox Realty, said the rental market holding steady in Lonoke.

“We’re still not growing like a lot of places,” Knox said. In fact, he said the rental market is exactly opposite from what it is in Cabot where houses rent for more than apartments.

In Lonoke, a three-bedroom, one-bath house will cost $500 a month while the new apartments that are being built cost $600.

April Fisher with Fisher Rentals and Construction said the demand for rental houses, apartments and mobile homes is high in the Beebe area.

“I believe people are trying to get out of Little Rock and the traffic in Cabot is just crazy,” Fisher said.

The public schools and Arkansas State University-Beebe also draw people, Fisher said, and though the price of rental property has held steady for many years, it is going up now, she said.

Average-sized frame houses rent for $500 to $600 a month while brick houses will bring in $650 to $750, she said. And 1,200-square-foot mobile homes rent for $500.