While it isn’t unique to Eureka Springs, the appreciation in housing values seen in the past year means that many who work in this town can’t afford to buy a home here, and as home prices have gone up, so have rents.
The demographics of Eureka Springs are changing. One long-time local developer predicts it will increasingly not be a town where low-income people can afford to live.
Across the country, the middle class is shrinking, and the gap between the rich and the poor continues to grow. In just one month early in the pandemic, the combined wealth of the 614 U.S. billionaires increased by $584 billion, according to the Institute for Policy Studies.
“Wages haven’t kept up with the increased cost of living,” alderman Harry Meyer said. “Prices keep going up and people can’t afford housing. That is basically what has happened in New Orleans. Low-income people can’t afford to live there. It is also what is happening in Eureka Springs.”
In both New Orleans and Eureka Springs, there has been a trend for people to buy houses to rent on airbnb or VRBO. That reduces housing availability and leaves locals feeling like they don’t live in a real neighborhood where families live, people get together to socialize, and you have someone to keep an eye on your house when you are out of town. There are fewer residents to get involved in protecting the local neighborhood.
For two years, Eureka Springs has had a moratorium on the issuance of Conditional Use Permits (CUPs) to allow nightly lodging in owner-occupied homes in areas zoned residential. The moratorium was put in place because of concerns about housing availability for residents. But Meyer said the moratorium doesn’t appear to have changed things much at all, and he sees the bigger problem being wealthy people who purchase vacation homes here that they may visit only a week or two out of the year.
Meyer thinks another problem with locals being able to afford to purchase a home is that too many people here work for cash.
“You can’t get a loan unless you show two or three years of tax returns,” Meyer said. “What a lot of people don’t understand is you have to make pretty good dough to actually have to pay income tax. You really need to report your income to have that record and build up your Social Security account.”
Meyer, who has been involved in the building trade, said the costs of building have also appreciated so much that it makes building a home far less affordable.
“I used to pay 98 cents for a 2×4,” Meyer said. “They are $10 now. A five-eights-inch sheet of plywood is $50. It is not cheap.”
Diane Murphy, Realtor/owner Century 21 Woodland, said the small number of homes for sale has driven prices up.
“It is very much a challenge for housing affordability,” Murphy said. “It’s tough right now. There are a lot of homes people have owned for years and they are rarely here. But, so far, they haven’t seemed interested in selling. It is very difficult right now for someone who lives and works locally to find a house to purchase because prices have been driven up due to such a shortage. Building costs have gone up dramatically, as well. If there was a way to do it, there would definitely be a market for affordable housing for people.”
Murphy has been surprised by the broad geographic range of people looking and buying in Eureka Springs.
“We are definitely back on the national radar,” she said. “It is a much broader range in the past year than we’ve had in a long time. The interest is both in second homes and people relocating. Generally, most of our sales are to people from Texas, Missouri, Oklahoma, California, Idaho, New Mexico and Colorado. That is not necessarily new. Some people are planning for the future, buying something now and planning to relocate later.”
Murphy said people moving here are attracted by more affordable housing. Another factor is that because the market is strong, some people who previously owned homes they rented out have decided to sell.
Mark Mattmiller, executive broker at New Horizon Realty, agreed that there is more demand than supply, and that many buyers are coming from other places where they are used to paying higher prices. The demand here is creating high prices, even just compared to a year ago.
“It is not uncommon to sell something for $220 per square foot now if it is in good shape and doesn’t need a lot of work,” Mattmiller said. “It is expensive to build in Eureka Springs because of the cost to build foundations on these steep hillsides.”
He thinks it is essential to get more apartments in town and has suggested that people consider renovating houses into duplexes or, where zoning allows, triplexes.
“We have to house workers somewhere,” he said. “We need to figure out something to do whether renovating some of these hotels or doing something else to create housing. You have to have some type of housing available for people of every income level. That’s what makes a town a town. We need diversity in income and diversity in other things. When you only accommodate a certain segment of the population, it isn’t good.”
A lot of people working in Eureka Springs are living in Holiday Island. Mattmiller said that is a good place to buy with newer, more affordable and energy-efficient housing stock and houses more suitable for families with yards for kids to play in.
There are a few newer areas of Eureka Springs that are more affordable, but those don’t come on the market very often.
Mattmiller doesn’t think that bed and breakfast rentals are a major factor anymore. He said a lot of places that were B&Bs have been turned back into residences.
“Over twenty years you can see a lot who have lost their CUP license,” Mattmiller said. “It is interesting what is going on, for sure. I’m not selling second homes like I was fifteen years ago. I don’t know why that has changed. I’m seeing more young people buying homes because they can work from home. One limiting factor is that people who work from home usually need good high speed internet access. Even retirees want to be able to get on the internet. Outside of the city limits it can be hard to find good access.”