Schools, lower interest rates, grow Conway (03.31.1995)

Peter Lorenzi, Dean, University of Central Arkansas

Conway’s growth is most often attributed to the growth of (1) service jobs at Conway’s three colleges, (2) manufacturing jobs in our facto­ries, and (3) the desirable location Conway provides for Little Rock commuters. Home sales grew in the past five years because of good local schools and pleasant hous­ing developments, fueled by de­clining interest rates.

Single family home sales in Conway continue to grow. In 1994, 969 homes sold in Conway, up 1.4 percent from 1993. The increase is more noticeable when compared to 1990 (544 homes sold), 1991 (588 homes sold) and 1992 (835 homes sold). That’s a 78 percent increase in four years. The 1994 run up in interest rates hurt home sales. Conway home sales in the last five months of 1994 were lower than they were in the last five months of 1993 and even lower than in the last five months of 1992. In December 1992,93 homes sold. In December 1994, only 61 homes sold. Sales this spring are beginning to show that interest in Conway homes is increasing, with the usual spring surge, more stable interest rates, and continuing growth in busi­ness, and education in Conway.

Home ownership today is often viewed as an investment, but this has not always been the case. For much of our history, a home has been an expense, not an invest­ment. Some homeowners over-learned the lesson of high infla­tion in the 1970s, inflation that caused home prices to increase all around the U. S., but especially in New York, Boston, Washington, Los Angeles and San Francisco. Some people saw great paper pro­fits from selling their homes and a few came to believe that home prices would continue to increase. Sad lessons came to those unfor­tunate people living in. areas in economic decline -- especially the Rust Belt -- and some found themselves losing thousands of dollars or unable to sell their homes at any price. A home is not guaranteed to appreciate and maintaining a busy home can be time-consuming and expensive. Lower marginal tax rates for high income have made mortgage payment tax deductions less attractive.

Yet owning a home is part of the American dream, probably ri­valed only by car ownership as the sign of having made it in life. And a starter home 20 years ago cost less than a luxury car costs today, and that home almost certainly did not depreciate as quickly as a car does. In looking to buy a how might a homeowner protect the value of the home? Start by looking at buying a home from the perspective of the >consumer rather than from the view of the sales professional. Perhaps the most important decision a home­ owner makes occurs before= the home is purchased. Employing a good real estate agent can teach a home buyer many important les­sons. A good referral for an agent is a real plus. There are several different types of roles the agent can play, so it is a good idea to first understand the services the agent can offer.

Resale value results directly from pre-purchase decisions. To protect an investment in a home, the home you purchase should be of interest not only to you but also to a subsequent buyer. Few people live in a home for the duration of the 30-year mortgage; resale should always be considered. Key physical features that have a big impact on a home=s value include nice landscaping, a modern kitchen, attractive bathrooms, and an impressive master bedroom. Buying a home with these features in poor shape for a lower price, and then fixing them up, can generate a good return on the investment. Whether you plan on reselling soon, or living in the house for a long time, you need to think about the quality and value of the home over the long term. Short-term thinking on a home purchase can lead to financial personal trouble. A home is part of the American dream.