Housing affordability is a growing challenge for Northwest Arkansas, and it’s a challenge that bank manager Will Gladden said is essential for the region’s continued growth.
Although banks and financial institutions may be limited to deal with it, they are working in different ways to make an impact. Gladden is president of the Fayetteville market for Signature Bank of Arkansas and among several banking executives in the region facing the challenge.
“One unique thing we’ve done over the last few years is we’ve invested in tax credits,” Gladden said. “There was a fund of six Low Income Housing Tax Credit projects in Northwest Arkansas awarded in 2020. The fund was built with those six projects. Signature and four or five other banks finance the majority of these projects. »
He said the bank has become an investor in affordable housing projects in 2021. According to a presentation of the project, the Arkansas Development Finance Authority provided tax credit funding to projects totaling more than $50 million. The projects will be in Bentonville, Fayetteville and Springdale and will include 425 duplex/triplex and multi-family units for households with incomes between $29,000 and $68,000, the presentation says. The average monthly rent varies between $367 and $532 for one- to four-bedroom units.
“If we don’t have affordable housing, we can’t continue to attract bigger businesses, especially manufacturing and those types of businesses,” Gladden said. “It affects everyone”
Hunter Norton, president of the Fayetteville market for Encore Bank, and Landon Taylor, bank president and chief operating officer of First Western Bank at Rogers, highlighted their involvement in the tax credit projects. Taylor said they are in the regional bank market and those the bank often supports, comprising family developments from one to four.
“Encore Bank is honored to invest in the NWA Regional Fund and support these affordable housing developments in our region,” Norton said. “The lack of affordable housing has been clearly identified as one of NWA’s greatest challenges as we continue to be blessed with significant population growth.”
In another effort to address the housing challenge, the bank recently added a community outreach team.
“Our goal is to intentionally reach the underserved and address challenges in our community, such as affordable housing to uplift our communities through homeownership,” said Josh Vasquez, vice president and lead community outreach for Encore Bank. “Each team member has been individually selected to serve their respective markets and work closely with each department to help bridge the gap.”
Mark Cloud, vice president of commercial loans for First National Bank of NWA, said the bank was working with Fayetteville nonprofit Partners for Better Housing to help pay for the construction of homes in its 80-home Willow Bend development in south of Fayetteville. He said the bank is looking to help the nonprofit bring development to other cities in the region. Additionally, Cloud worked on financing two small home developments in Rogers – a 28-home project on Olive Street and a 50-home development on Monte Ne Road.
He said the high cost of land has been a challenge for those looking to build a house, leading people to look further out from cities. He added that they face higher transportation costs, especially amid higher gasoline prices.
According to the Center for Neighborhood Technology, the average household in northwest Arkansas spends 52% of its income on housing and transportation combined, or 27% on transportation and 25% on housing. According to Habitat for Humanity, households that spend at least 30% of their income on housing are burdened with housing costs.
Cloud also said he expects to see more multi-story condo developments and provide financing for them. He noted that occupants own condos, unlike apartments in which tenants rent them.
Dixie Cosper, community development lender and head of mortgages for Cadence Bank (formerly BancorpSouth Bank), said the area has a low inventory of habitable homes in the $200,000 range. When such homes become available, they are often quickly purchased by investors who pay cash and use them as rentals.
She said first-time buyers have faced bidding wars over the past year. This can include when a home with an appraised value of $200,000 receives an offer $25,000 over value. She recommended first-time buyers avoid bidding wars unless they have a large sum of money.
“It’s something we’re still working on, trying to figure out how we’re going to fix this with our rates going up at the same time,” she said. “I have a program that I specialize in, and I’m looking for houses for them that might be attached to a census tract for low-to-moderate income housing and I’m seeing if I can find a house that might be suitable for them there. where they don’t have to come up with a huge drained savings account and can walk into that house. That’s my goal right now.”
Cosper said the bank offers a loan program that includes a $500 down payment and low closing costs. This is particularly interesting for first-time buyers.
Charlie Van Ness, president of the Fayetteville market for Simmons Bank, said low home inventory was the biggest challenge. Later that year, he said the bank would offer a 30-year fixed mortgage that requires no private mortgage insurance and only a 10% down payment. It also offers down payment assistance programs.
“We are working with a number of community partners in the area to provide housing options,” Van Ness said, “including New Beginnings NWA, which provides housing for members of our community experiencing homelessness. I am a member of the advisory board for the NWA chapter of CCOA — Credit Counseling of Arkansas. He strives to help those in need of financial advice and skills, methods to repair credit.
‘WEALTH CREATION INITIATIVES’
Bryn Bagwell, lending director for Fayetteville-based Communities Unlimited, said the community development finance institution caters to low-income housing in rural southern areas and highlighted the Mi Casita franchise model, allowing homeowners to purchase a modular home for $50,000. She noted a pilot project underway in Texas along the Mexican border, and it could come to Arkansas in 2023.
“The modular home is designed to be affordable and basic to start with, but has modular components that will be built off-site and added to expand the home as the family and income grows, a bedroom/bathroom or a combination to time,” Bagwell said. “This is one of our wealth building initiatives to help people start small with what they can afford and grow without taking on more debt.”
Alex Martin, vice president and loan officer at Century Bank of the Ozarks in Fayetteville, said the community development finance institution is committing at least 60% of loan proceeds to low-income areas.
“We focus on building relationships with investors and developers in low-income areas,” Martin said. “It’s a huge problem in the region. It grows and gets worse every year. We’re doing everything we can to use our tools at hand to fix the problem.
He also noted the bank’s continued involvement in the low-income housing tax credit program and support for Partners for Better Housing.
“Northwest Arkansas is experiencing rapid growth and development, and affordable housing is a major concern in our region that no single organization, community partner or entity can solve alone,” said Jamey Vaught, President of the Northwest Arkansas Market at First Horizon Bank. “First Horizon recognizes these facts and sees the opportunity to collaborate and join forces to help provide resources through our products and services and our philanthropic efforts to find solutions and reduce barriers to access. We We are delighted to see that other regional lenders are also stepping in to support this vital work and address this regional challenge.