In This Article
Key Takeaways
Northwest Arkansas has sturdy underlying fundamentals, supporting worth appreciation and hire progress throughout the area.Areas close to the big employers like Bentonville, Centerton, and Rogers, are seeing comparatively sturdy worth progress in comparison with the remainder of the area.Springdale may be the perfect metropolis for instant money move, and there are nonetheless offers to be present in outer Fayetteville.
Northwest Arkansas (NWA) is at the moment one of many greatest undervalued markets to be investing in, due to its mixture of job progress, appreciation, and relative affordability.
I’ve already written three articles that examined the perfect markets for various causes (home hacking, earnings progress, and general financial system), and NWA has a means of discovering itself on every of those lists.
I’ll be analyzing the perfect particular person cities inside NWA for buyers. Actual property is a location-based enterprise, in any case.
However first, to recap, listed here are the underlying fundamentals behind NWA’s funding potential as an entire.
Northwest Arkansas Inhabitants and Job Development
The NWA space has seen sturdy inhabitants and job progress over a five- and one-year interval, due to Walmart’s return-to-office coverage, a rising variety of firms transferring to the world, and an general inexpensive price of residing.
NWA’s inhabitants grew by 2.35% over a one-year interval (the nationwide common was 0.53%).
NWA skilled a 1.61% enhance in jobs over the identical one-year interval (the nationwide common was 1.66%).
Northwest Arkansas Earnings Development
In keeping with the Bureau of Labor Statistics (BLS), the nationwide median wage is $44,830. NWA’s median earnings is at the moment estimated to be $58,475 as of September 2024, up from September 2023’s estimate of $53,934.
Northwest Arkansas Family Development
Usually, this might be the place I’d put a graph monitoring the progress in costs. In spite of everything, for many metros, will increase in earnings are extremely correlated with will increase in property values. Nevertheless, in my analysis, I found that in NWA, property values had a better correlation with the variety of households (a 0.79 correlation, indicating a pretty sturdy optimistic relationship).
Let’s check out family progress for the market. I’ve additionally included complete models as properly, to gauge how demand is assembly provide.
The market has executed a wonderful job of absorbing the incoming models. To date, the proportion of vacant models isn’t the bottom within the nation, nevertheless it’s nonetheless underneath the nationwide common (9.79%).
Northwest Arkansas Median Worth
Now that we’ve seen that households are rising and know that family progress is strongly correlated with worth progress in NWA over time let’s lastly take a have a look at the expansion in median worth.
The median house worth grew an intimidating 17.3% from 2022 to 2023 (in comparison with the nationwide common of 6.2%), in line with the U.S. Census. I don’t assume NWA will proceed to see appreciation like this sooner or later, nevertheless it seems to be an indicator that the underlying market fundamentals I recapped do have a optimistic impact on house costs.
Which Locations in NWA Are the Greatest for Actual Property Traders?
Northwest Arkansas is made up of many alternative cities and communities, so which of them may be greatest for actual property buyers? I’ll be analyzing this from the lens of an out-of-state investor who desires a standard long-term buy-and-hold property (sorry for now, STR people).
Right here is an introductory map when you’re not acquainted with the world:
Inhabitants progress by metropolis in Northwest Arkansas
For starters, let’s have a look at the inhabitants of every metropolis in NWA:
Now let’s have a look at the five-year inhabitants progress for every metropolis:
Highfill has an unbelievable 114% progress fee, however its inhabitants is underneath 2,000 folks. Centerton and Bentonville are seeing sturdy progress numbers relative to their dimension, at 53% and 22%, respectively. Fayetteville, the most important metropolis within the metro space, additionally boasts 16% progress in inhabitants, which beats the progress of smaller cities like Springdale (12%) and Rogers (10%).
Demand vs. provide, by metropolis
Inhabitants progress doesn’t occur in a vacuum. Even when a metropolis experiences progress, if builders sustain with demand and construct greater than sufficient models, it’s possible you’ll expertise sturdy competitors in your rental properties from different buyers.
There are two metrics I like to make use of to trace provide and demand inside a market. The primary is the emptiness fee:
I like how the heart of the area (Rogers, Cave Springs, Lowell, and Springdale) has comparatively low emptiness charges in comparison with their anchor metropolis counterparts (Bentonville and Fayetteville).
Now, let’s analyze a metric referred to as “internet family progress.” This takes the five-year family progress after which subtracts the five-year provide progress. It’s meant to be a rule-of-thumb measurement to see if family progress is outpacing provide progress.
In most markets, this measurement might be destructive. However typically, the upper the quantity, the extra family progress is going on relative to provide.
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It appears to be like like Bentonville and Centerton are rising provide quicker than family progress is going on. This is often the case for many markets and will imply extra competitors amongst buyers and sellers.
If you happen to wished to put money into a market close to giant employers, Rogers, Lowell, and Springdale could also be a greater wager resulting from provide and demand dynamics alone. Nevertheless, you’ll nonetheless need to take different metrics into consideration, like earnings, worth, and hire progress.
Earnings progress by metropolis
Now, let’s have a look at the present median earnings for every metropolis:
The focus of upper incomes round Benton County isn’t a surprise. This is the place Walmart HQ is, together with many different white-collar jobs.
Let’s have a look at five-year progress now:
It’s good to see locations in Washington County, like Fayetteville and Springdale, whose median incomes are lower than their Benton County counterparts (see earnings progress). However it seems that the residents of locations like Bentonville, Rogers, Cave Springs, Centerton, and Bella Vista have a better earnings on common.
Median worth and hire progress by metropolis
Let’s check out five-year worth progress for every metropolis:
Each “primary metropolis” noticed sturdy worth progress over a five-year interval. I’d prefer to particularly level out Pea Ridge, whose median worth grew 82%, but nonetheless solely has an inexpensive median worth of $222,000 (as of 2022), and is just a 30-minute drive to Walmart HQ, and never too removed from different employers as properly.
Springdale and Rogers stay inexpensive cities with sturdy appreciation (whereas Centerton, Bentonville, and Fayetteville had even stronger appreciation charges).
Now let’s have a look at hire progress:
The factor about worth and hire knowledge from the U.S. Census is that their numbers are often lower than what they’re in actuality. So, anticipate the median worth and median hire to really be increased than what you see on these maps.
So, what precisely do you have to be searching for? Simply be sure that the cities have comparatively stable hire progress. For instance, Springdale, Rogers, and Centerton are experiencing increased hire progress than Fayetteville. It doesn’t make Fayetteville a much less enticing market general, nevertheless it issues, particularly since Rogers and Centerton have already got increased appreciation charges than Fayetteville.
Let’s check out rent-to-price ratios (as of the 2022 Census ACS five-year survey):
The common rent-to-price ratio within the MSA is 0.29%, so something above that’s what I’d take into account higher than common for the NWA space.
It’s no shock the cities instantly surrounding the anchor cities of Bentonville (0.28%) and Fayetteville (0.27%) have a better rent-to-price ratio: They’ve a decrease median worth.
You’ll additionally discover many outer cities seem to have even increased rent-to-price ratios, like Gravette (0.50%), Pea Ridge (0.48%), and Elkins (0.54%). In these instances, it’s at all times useful to see what share of models are occupied by renters. Let’s check out what the Census knowledge tells us:
Elkins, Pea Ridge, and Bella Vista, whereas having good rent-to-price ratios, don’t have as many tenants proportional to their dimension. Nevertheless, Centerton has mixture of each. So does Rogers and Springdale.
I’ll be placing all of this knowledge collectively to calculate an “funding rating” for every metropolis within the NWA space, with an emphasis on affordability, money move, and future progress in inhabitants and residential worth appreciation.
However first, I feel it’d be useful so that you can get opinions on every space from a boots-on-the-ground crew. I’ve invited an investor-friendly actual property agent who helps out-of-state (and native) buyers navigate every market, in addition to two property managers who actively handle properties within the space, to present their tackle the professionals and cons of every metropolis within the NWA space. I feel you’ll discover their insights extraordinarily useful and actionable.
An Investor-Pleasant Actual Property Agent on NWA
Right here’s what Zach Stanley, an investor-friendly agent featured on the BiggerPockets Agent Finder, has to say in regards to the totally different markets in NWA:
“I’ve 5 to seven calls per week with buyers all around the nation, and even domestically right here, that every one have totally different investing methods. So I’ve seen the positives and negatives of the cities right here domestically.
Under are my execs and cons for buyers in every city:
Fayetteville
Professionals: Fayetteville is a cool/funky school city, with numerous progress. Fayetteville is surrounded by nice cities which have tons of land and areas for improvement, so the potential is limitless at this level for the world. Fayetteville has seen nice appreciation in house costs and hire lately, and any houses across the college inside a 10-minute drive are in a position to ask for very excessive rents per room as a result of College of Arkansas having a housing disaster and never having sufficient rooms for the scholars. This case permits for offers to begin making sense actually fast.
Cons: Fayetteville has pushed out a good quantity of native enterprise in previous years resulting from some left-leaning insurance policies. Due to this, some companies have packed their luggage and moved to the Rogers and Bentonville space.
Springdale
Professionals: Springdale has some huge cash and improvement being poured into and across the downtown space. Due to this, we’ve seen house costs enhance drastically across the downtown space, and I predict it is going to proceed to rise lately. Springdale can also be probably the most inexpensive locations to purchase houses in all of Northwest Arkansas.
Cons: Springdale has at all times been town that appears to be lagging behind the primary cities right here domestically (Fayetteville, Rogers, and Bentonville being the others). Plenty of this is because of a bigger quantity of some low B- and C-class neighborhoods that drag the areas round them down as properly.
Rogers
Professionals: Rogers is a powerhouse that invitations companies to quiet down there and has a number of the greatest houses and areas of leisure in all of NWA. It’s fairly central on the map, so you possibly can shoot as much as Bentonville fairly simply and additionally get south to Fayetteville if wanted as properly. Rogers has the Pinnacle Hills space, which is rising quickly and is a very good place to buy, dwell, have dinner, go to live shows, and many others. Individuals even actually love the downtown Rogers space, because it presents a distinct vibe than the opposite 4 downtowns and has numerous enjoyable issues to do. I personally personal three houses near downtown Rogers, so I imagine within the progress there.
Cons: You may run into some C-class neighborhoods in Rogers as you make your means extra east from the interstate. Housing costs in comparability with rents oftentimes make it robust to money move on leases in these areas as properly.
Bentonville
Professionals: There are such a lot of execs about Bentonville, it is onerous to place in just a few sentences. Bentonville is the house base of Walmart headquarters, which is without doubt one of the primary powerhouses of this space. A couple of different powerhouses could be Tyson Meals, JB Hunt trucking, George’s Rooster, and Simmons Rooster.
Bentonville is house to some superb actual property, Crystal Bridges Artwork Museum, and a quickly rising inhabitants that ought to be doubling within the subsequent 10 to fifteen years. Bentonville might be the rationale why most individuals hear about NWA.
There are some nice subcommunities which are rising due to the expansion of Bentonville that I feel are nice areas to put money into. One of these being Centerton, the place so much of my private investing shoppers have been investing. Additionally, I actually just like the potential and the expansion I am seeing from Highfill. Highfill is the city closest to our regional airport, and it would not take a rocket scientist to know this space will be rising drastically within the coming years.
Cons: With such an important space and so many eyeballs on one spot, the costs have shot up drastically, making it an space the place plenty of actual property investing offers simply do not make sense anymore. Sure, you may park some money in Bentonville actual property and hope for it to understand properly for the subsequent 10 to fifteen years and even longer, however you’ll most probably be shedding cash month-to-month on money move within the meantime.
Bella Vista
Professionals: Bella Vista is one in all my favourite locations in all of NWA. It’s near downtown Bentonville and an attractive place to personal a single-family residential house. STR houses can typically do properly right here if in case you have an important Realtor pointing you in the correct path (AKA the individual penning this). This metropolis is the place I personally construct just a few houses a yr as properly, because it’s one of many final areas I really feel in NWA the place you should purchase inexpensive land to construct on when you do not need to be a bigger manufacturing builder.
Walmart’s LLC Blue Crane not too long ago purchased 2,700 acres in South Bella Vista as properly, and there are some nice plans I’ve heard that must do with biking that ought to be big for the world as properly. So far as appreciation goes, I feel Bella Vista is a spot the place house costs will enhance dramatically within the coming years.
Cons: Bella Vista primarily has owners and never renters, so there may be not a ton of knowledge for leases, and the hire costs are sometimes decrease than the remainder of the world. The commute from Bella Vista to different locations in NWA is longer, and that may be a draw back as properly.
If you happen to’d like Zach Stanley’s assist navigating the NWA market in your personal investments, you possibly can join with him right here.
A Property Supervisor on the Native NWA Market
I assumed an out-of-state investor’s information to NWA could be incomplete with out listening to from a property supervisor (PM) as properly. Right here’s what Nick Slagle, an NWA-focused property supervisor featured on our BiggerPockets Property Supervisor Finder, has to say in regards to the particular person markets inside NWA:
“There are 4 primary ‘cities’ that make-up Northwest Arkansas, though, to outsiders, it is going to principally seem as one steady metropolis. So as of inhabitants, largest to smallest, it goes Fayetteville, Springdale, Rogers, and Bentonville.
Walmart, Tyson Meals, and JB Hunt are headquartered right here in NWA, and every has an impression within the form of the financial system. Though JB Hunt and Tyson Meals are older firms than Walmart, the truth is that Walmart performs the greatest position within the financial system of NWA. The Walton household additionally invests huge sums into the native artwork, leisure, schooling, and tradition of the world. Crystal Bridges Museum of American Artwork, the huge community of bicycling trails (Razorback Greenway and OZ trails), and the Alice L. Walton Faculty of Drugs are some of the apparent examples of the household’s funding in our space.
Fayetteville’s (pop. 100,000) financial system and tradition is centered across the College of Arkansas, which is its largest employer, in addition to an enormous chunk of the inhabitants (33,000+ enrolled fall 2024). The median age in Fayetteville is underneath 30 years. It is no shock that extra households are renters than within the different cities of NWA, however this can be a double-edged sword. Youthful tenants are usually extra cell and infrequently solely keep for the preliminary lease time period or the period of their school years. Fayetteville hire demand cycles are closely associated to the varsity calendar, each due to college students and additionally younger professionals who’ve not too long ago graduated.
Springdale’s (pop. 90,000) financial system is closely dependent on the poultry and meals business. Tyson Meals, Cargill, and others have a presence in Springdale, with Tyson having its world headquarters right here. The workforce right here may simply be described as predominantly blue collar. There are a number of meals processing crops and factories in Springdale. Plenty of tradesmen that work within the booming NWA development name Springdale house. Residential leases in Springdale typically catch barely decrease hire than the remainder of NWA, however buyers are rewarded with tenants who have a tendency to remain in place for a few years.
Rogers (pop. 75,000) is usually ignored, however is my private favourite of the main 4 cities, each from an investing and a high quality of life perspective. In some ways, Rogers is an financial system that’s married to Bentonville’s. Walmart’s first retailer was opened within the bigger of the 2 Benton County cities again in 1962, and it has been a rising metropolis ever since.
Rogers is a extra established metropolis with loads of alternatives to purchase 20-to-40-year-old homes and add worth. Are you able to say BRRRR!? Rogers has mixture of each blue- and white-collar residents. The Pinnacle Hills space of Rogers is house to purchasing, eating, and leisure, in addition to quite a few main company places of work: PepsiCo, Nestle, Common Mills, Reckitt Benckiser, and Johnson & Johnson, to call just a few.
Rogers and Bentonville are principally one steady group, with many individuals residing in a single and dealing within the different.
Bentonville (pop. 60,000) has not too long ago turn out to be probably the most well-known and investor-desired metropolis in Northwest Arkansas. For that reason, I would counsel that out-of-state buyers look elsewhere in NWA for combine of money move and appreciation.
Money move goes to be troublesome to search out in Bentonville, however there isn’t any denying the appreciation that we’ve seen during the last 15 years. Each Bentonville and Rogers have seen quite a few high-end, giant residence complexes accomplished within the final three years. These appear to be absorbed properly, however I have noticed a softening within the single-family rental market in Bentonville not too long ago as in comparison with the height of a few years in the past, once we had leases beginning inside days of the earlier ending.
A few different notable cities value contemplating:
Centerton (pop. 24,000) has been a bed room group for fairly some time now, however not too long ago has seen a much-needed enhance in industrial improvement. There are just a few eating places and purchasing choices, however nonetheless, for probably the most half, individuals who dwell in Centerton work in Bentonville. Centerton is principally an echo of the Bentonville market, with a slightly decrease hire fee and residential values. However nobody can actually inform the distinction, besides for who sends the water invoice.
Pea Ridge (tough pop. guess 10,000) is an fascinating alternative for long-term maintain buyers. It is a bit out of the way in which proper now, and other people have to commute to Bentonville, Rogers, and past for work, nevertheless it seems when driving that there is not a cow pasture that hasn’t been divided right into a subdivision.
Actually, although, there is plenty of vacant land nonetheless obtainable for future improvement. Pea Ridge jogs my memory of the Centerton of 20 years in the past. Two-lane Arkansas Highways 72 and 94 connect with Bentonville and Rogers, with lane-adding development underway on Freeway 72. First-time homebuyers and buyers alike are starting to flock to Pea Ridge. What was as soon as a quiet little city has been discovered, and I predict huge appreciation sooner or later for house costs right here.”
If you happen to skimmed Nick’s response, I urge you to return and learn it once more. There are various insights right here from a boots-on-the-ground knowledgeable property supervisor that you need to take note of when you plan on investing on this market.
If you happen to’d prefer to ask Nick Slagle extra questions on any specific market and the rents you may have the ability to cost for a given property, you possibly can attain him at [email protected].
One other Property Supervisor on NWA’s Native Markets
For the aim of serving to out-of-state buyers navigate an unfamiliar market, I wished to get a second opinion from one other property supervisor within the NWA space. I reached out to Tyler Casey, who’s additionally featured on our BiggerPockets Property Supervisor Finder. I extremely advocate studying what he needed to say:
“I am Tyler Casey with Professional X Property Administration; we at the moment handle 1,900 rental models and repair the Fayetteville-Bentonville Metro Space, also known as Northwest Arkansas, or NWA. We primarily handle single and multifamily residential houses, with a small portion being mixed-use industrial properties.
Fayetteville
Whereas Fayetteville is very a lot a university market, it does nonetheless have a considerably various tenant pool. Occupancy charges are sturdy throughout NWA, and Fayetteville isn’t any totally different. The one downside to this market is that there’s some inherent seasonality with semester breaks. You may anticipate increased emptiness in the summertime months and certain extra turnover typically with a heavy pupil tenant pool.
Springdale
This market, being the least glamorous of the main cities within the metro, might seem probably the most enticing from a money move perspective to buyers. Springdale is rather more of a working-class tenant pool, with Tyson Meals being headquartered right here, in addition to JB Hunt headquarters being located in Lowell, an adjoining suburb simply to the north. For my part, this market presents a singular alternative for buy-and-hold buyers searching for future appreciation potential with out fairly as daunting a price ticket.
Rogers
Rogers’ proximity to each Bentonville and Springdale makes it a great spot to name house for workers of all three of the main employers within the space: Walmart, Tyson, and JB Hunt. Rogers is experiencing large progress resulting from this superb geographic location. There are additionally nonetheless loads of older houses/multifamily in want of some renovation to make the most of for the value-add-minded investor.
Bentonville
This metropolis is probably going thought of probably the most glamorous of the markets in NWA, with the fast progress being created by Walmart’s enlargement. Walmart is constructing a large new headquarters and selling a significant back-to-office initiative with its distant workers. Most individuals predict nice appreciation on this market.
All the main markets and most of the surrounding areas in NWA have actually sturdy future progress/appreciation potential, all have very sturdy occupancy charges (within the mid-high 90% vary), and I anticipate that to proceed primarily based on the developments I am seeing out there. I imagine new development, one thing we are able to additionally help with, to be a big alternative within the metro with the anticipated inhabitants growth.”
Tyler Casey is yet one more boots-on-the-ground knowledgeable that can allow you to navigate which rental markets may be greatest for you as an investor. You may attain out to him on his web site right here.
Placing It All Collectively: Funding Rating
Whereas I imagine you need to have sufficient info to choose which particular cities you’d prefer to put money into the NWA space, I created an algorithm to assist rank every metropolis by investability. I’ve put an emphasis on affordability and money move, whereas additionally preserving worth and hire progress charges in thoughts.
Listed here are the outcomes. Every metropolis is ranked by its funding potential.
For brokers, property managers, and fellow buyers who disagree with this map, I’d love so that you can clarify why within the feedback under. The algorithm is nowhere close to good and might completely be improved. I welcome all suggestions. It’ll assist me refine the algorithm, which is able to assist extra buyers navigate this market.
Remaining Ideas
The general NWA space is rising in inhabitants, and property values are appreciating at a wholesome fee. So long as you might be comparatively near employers (or the college in Fayetteville), there ought to be comparatively good demand for rental models.
If you happen to completely should have money move, these are stable markets:
If you happen to can afford it and need to make investments for fairness progress, these cities may be for you:
And when you’d like a mixture of each:
As a common disclaimer, good offers can be discovered in any market. If you happen to’re prepared to begin searching for an funding property within the space, I like to recommend utilizing the BiggerPockets Deal Finder (it’s how I discovered my funding property in Fayetteville).
I hope this breakdown of every metropolis within the NWA helped. If in case you have any questions or suggestions, please let me know within the feedback under.
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Word By BiggerPockets: These are opinions written by the creator and don’t essentially signify the opinions of BiggerPockets.