The Looming Affordability Crisis in Northwest Arkansas

Mar 6, 2024

As NWA grows, the dream of homeownership is becoming increasingly unattainable for many. The surge in home values has outpaced income growth, creating an affordability crisis that threatens the stability and vibrancy of the local economy.

The disparity between income and housing costs is stark. Despite a modest increase in median income, the appreciation of home values has far outpaced wage growth. According to a recent report from Zillow, the income needed to afford a typical home in the United States comfortably has increased by a staggering 80% since 2020, while median income has risen by only 23% during the same period.

This growing imbalance is compounded by rising mortgage rates, further heightening the affordability challenge. The sudden spike in interest rates, coupled with soaring home prices, has pushed the dream of homeownership out of reach for many aspiring buyers. The average 30-year fixed mortgage rate surged from 3% to 7% in the wake of the Pandemic Housing Boom, marking a historic deterioration in housing affordability.

While the median sales price in NWA remains below the national average, the region has not been resistant to the trend of escalating home values. Benton County has witnessed a staggering 63% increase in median home prices, while Washington County has seen a 66% surge since pre-pandemic levels in 2019.

Check out this example
The median income to afford a home in NWA is $106,428 in Benton County and $99,768 in Washington County based on the median sales prices, a 7% interest rate, and a 10% down payment.
For Benton County:Median Sales Price: $354,475
  • Down Payment (10%): $35,447.50
  • Loan Amount: $319,027.50
  • Interest Rate: 7% Income: $106,428

For Washington County:

  • Median Sales Price: $332,320
  • Down Payment (10%): $33,232
  • Loan Amount: $299,088
  • Interest Rate: 7% Income $99,768

Calculator based on the 7% interest rates and the purchase price to tell you the estimated income needed: https://www.nerdwallet.com/article/mortgages/income-required-mortgage-calculator