Leader Blues

Friday, February 01, 2008

TOP STORY > > Central Arkansas economy does well

By JOHN HOFHEIMER
Leader senior staff writer

“Arkansas’ housing market is holding up better than what we see (elsewhere) in the national press,” Metroplan Executive Director Jim McKenzie said Tuesday. “We’re not immune, but not impacted as severely in central Arkansas at least. In northwest Arkansas it’s a lot worse.”

“If there is going to be a recession, Arkansas typically lags going in and lags coming out,” he said from a Metroplan board retreat at Petit Jean Mountain.

He did warn about the impact the long-term decline in oil production and increase in price could have, including on the way cities grow, and said leaders and professionals needed to start working that into their economic and development plans.
U.S. oil production peaked in 1970, according to McKenzie, and while it continues to careen downward, demand here grows and demand in China and India are increasingly putting a strain on supplies and driving prices up.

A LOT TO LIKE

Metroplan just released its 2007 Economic Review, which despite some cautions, found a lot to like about growth in central Arkansas.

Researched by Jonathan Lupton, a city planner, and edited by McKenzie and assistant director Richard Magee, the report found job growth in several sectors and low housing costs among the factors driving relatively good economic times.

“Despite changes affecting regional corporate leaders and portents of a national downturn, central Arkansas is thriving,” according to the report.

Moody’s Investments says the Little Rock area is the second most diverse economy in the country and the area is one of the top 10 office-space markets, according to Sperry Van Ness.

NEW STARTS SAGGED

But construction in new single-family housing “sagged to barely above the national average” and high energy costs and the threat of a nationwide recession “will challenge local prosperity,” the report said as it appraised the 2008 economic outlook.
The low cost of housing is possible because the relatively low cost of gasoline allows area residents to live far from work and commute. If gas and oil prices continue to rise, as projected, eventually the cost of commuting could offset the affordability of housing.

In 2005, the average central Arkansan drove 31 miles a day, up about 19 percent from a decade earlier. Nationally, the average for urban dwellers was only about 24 miles a day, up about 10 percent from 1995.

People living in urban areas of central Arkansas, which is a low-density region, rely heavily on their single-occupancy cars, according to the report and use alternatives such as transit, walking and bicycling at lower rates than the national average.
The report says that North Little Rock, Cabot and Jacksonville account for the bulk of the region’s most affordable new homes.

LOW COST HOUSING

Locally in 2006, the median—meaning half are more expensive, half are less expensive— building permit in Sherwood was $170,576.

In Cabot, median permit value was $100,720 and in Jacksonville, $98,000. In the central Arkansas metropolitan statistical area, Maumelle had the highest median permit value at $248,800.
In that area, which is now known as the Little Rock, North Little Rock, Conway metropolitan statistical area, but which includes the other towns and cities as well, the median new-home permit grew from about $130,000 in 2000 to $170,000 in 2005 and 2006.

Construction grew faster than the national average between 2003 and 2005, but fell off about 7 percent in 2006, hovering just above the national average.

The housing downturn is reflected in the fall-off in average new home permit values between 2005 and 2006, the first decline since Metroplan began keeping tabs in 2000.
Comparing the first six months each year beginning in 1997 permits for single-family homes has trended generally upward in the statistical area through 2005.

JOB CREATION

Between the first quarter of 2006 and the first quarter of 2007, central Arkansas employment in manufacturing fell by about 2.5 percent and fell about half a percent in professional and business services. Growth in all other sectors was positive, led by a 4.5 percent increase in information, 3.5 percent in “other services,” 3.25 percent in education and health services, 2.25 percent in government and 2.2 percent in natural resources, mining and construction—presumably led by the emerging

Fayetteville Shale natural gas industry.

The entire area for 2006 employed an average of 322,925 people with an average unemployment rate of 4.7 percent. Within those numbers, Pulaski County accounted for 183,775 people working and an unemployment rate of 4.8 percent, while 29,800 Lonoke County residents were employed with the region’s lowest unemployment rate, 4.3 percent.

Central Arkansas banks have assets of $8.3 billion, of which $6.3 billion are in Pulaski County and $650 million are in Lonoke County.