Fayetteville considers zoning changes, permit-ready building design program.
By Britin Bostick
The city’s recent housing assessment highlights the need for 1,000 new housing units annually to keep pace with demand. - Photo from CITY OF FAYETTEVILLE
Since the start of 2020 a combination of factors left Fayetteville residents challenged to find housing that is within an affordable price range. These include but are not limited to: higher-than-projected population growth, record-breaking enrollment at the University of Arkansas, changes in financial markets leading to high interest rates, and delays in housing production caused by supply chain issues and construction labor shortages. Knowing these factors had been at play for the past three years but needing more definition to the scale of the issue, the city’s Long Range Planning team led a Housing Assessment that was published in October 2023.
Summary of the Housing Assessment Findings
Fayetteville needs about 1,000 new units of housing annually to keep pace with projected population growth. Beginning in 2019, however, Fayetteville’s population growth began to increase at a rate beyond housing production. From 2019-2022 Fayetteville fell about 1,480 housing units short of demand, and from 2021-2022 the population growth was 78% above projected.
An estimated 15,853 households, or 38% of Fayetteville’s total households, were cost-burdened by housing costs as of 2022 (paying more than 30% of household income on housing costs).
More than half of Fayetteville households need housing at a cost below current average rent.
Fayetteville would need an additional 8,426 housing units at costs calibrated to specific income levels to have affordable housing options for the projected population growth to 2045.
Fayetteville’s current zoning is similar to what it was in 1970, emphasizing low-density development despite more than tripling the total population since then.
If all new housing units needed for the projected population growth by 2045 were built as single-family housing in the city’s predominant low-density pattern, it would require nearly 7,000 acres of land, or 11 square miles, and more than 156 miles of streets, water and sewer. However, if current population growth trends continue and the housing units needed for the current growth rate were built as low-density, single-family homes, it would require more than 12,000 acres of land — approximately one-third of Fayetteville’s current land area.
Population Growth
According to the projections captured in the Northwest Arkansas Regional Planning Commission’s 2020 Transportation Plan, Fayetteville’s population was expected to reach 97,917 by 2025. According to the U.S. Census and American Community Survey estimates, the count of the city’s residents blew past that projection in just two years, growing from 90,993 people in 2020 to 99,288 people in 2022. Fayetteville was the second-fastest growing city in Northwest Arkansas from 2020 to 2022 by proportion of population increase, taking on 17.8% of population growth in the Metropolitan Statistical Area (MSA) and 34.1% of population growth among the four largest cities in the region — Fayetteville, Springdale, Rogers and Bentonville. In addition, enrollment at the University of Arkansas grew by nearly 4,600 students from fall 2020 to fall 2023 with no additional beds added on campus to absorb the additional housing demand.
More students than ever needed to find housing in Fayetteville after having a COVID-era option to attend classes virtually and remain at home in other cities, or even other states. Unlike most growth caused by in-migration that happens over weeks or months, university enrollment growth is observed over the course of a week in late summer when new and returning students arrive and housing, parking and restaurant tables quickly become more scarce. For the city’s building inspectors, summer can be one of the busiest times of the year as student-oriented apartment complexes rush to complete units and move new tenants in, and new housing developments with leases signed for fall residents feel pressure from parents ready to get their students settled before classes start. It’s an annual cycle that has repeated for decades, but never with this many new people added to the equation for both the student and non-student variables in such a short period of time. The last time Fayetteville grew this quickly was from 1940-1950, when the city’s population of 8,212 more than doubled to 17,071 in the decade that saw the end of WWII and the beginning of American servicemen enrolling at the UA as a benefit of their wartime service. There was not enough housing at that time, either, which led to concerns about overcrowding and congestion that still echo through Fayetteville’s zoning code today.
Figure 1. - Cumulative Housing Units Permitted vs. Population Growth (2014-2023).
Housing Construction
While the Housing Assessment found that Fayetteville fell hundreds of housing units short of demand in the last few years, the city issued permits for more than 10,000 housing units over the last decade. Single-family homes and apartment units made up nearly 86% of the 11,106 residential permits issued from 2014-2024. 2017 had the fewest residential permits issued in that decade with just 650 (only 192 multifamily units were issued permits that year), and 2019 had the highest number of permits issued at a record 1,693 (over 1,000 multifamily units were issued permits that year). Ironically, that record year for residential permits was the beginning of Fayetteville’s population growth peeling away from housing production as demand began to outpace supply. The obvious question was how many of those issued permits resulted in available housing? (see Figure 1).
Permit records show that from 2019 to 2023, 5,884 housing units had been issued a certificate of occupancy. 2020 and 2022 had the two lowest years of housing production in that half-decade with 909 units and 847 units, respectively. In 2019, 1,269 units were completed, and a record 1,706 units were completed in 2023 for a five-year average of 1,176 units. That nearly matches the annual average of 1,179 residential units issued permits for the same period. And it’s still not enough.
Housing Costs
Even as more people are seeking housing in Fayetteville, the number of people per household is lower here than for the state as a whole. Fayetteville averaged 2.19 people per household in 2022 compared to an average of 2.44 in Arkansas — 15,967 or 71% of nonfamily households had one person in 2022, and 13,684 or approximately one-third of all households in Fayetteville had two people. Household formation — or the lack of it — is a component of housing demand that can either exacerbate or reduce demand pressures. When housing costs are high or supply is low, it might seem reasonable to expect an increase in the number of people per household as residents find solutions to fit their needs. The Fayetteville data has not shown that to be occurring, however, even as housing costs have rapidly increased for both renters and owners (see Figure 2).
Figure 2. - Housing Cost Change and Median Household Income Change (2000-2022).
From 2000 to 2022, the median house value in Fayetteville as captured by the U.S. Census and American Community Survey more than tripled, and median gross rent increased by 54%. At the same time, median household income increased by only 69%. As a result, an increasing number of Fayetteville households are unable to afford housing costs here, and as of 2022, 38% of Fayetteville residents were cost burdened by housing — paying more than 30% of their income on housing costs, such as rent or mortgage, utilities and insurance. Data from the Center for Business and Economic Research at the University of Arkansas’s Sam M. Walton College of Business suggests there is a nuance to Fayetteville’s housing market not captured in the federal data. Although Fayetteville’s average new apartment in 2023 rented for $922 — just $5 per month below the 2022 estimate by the U.S. Census — that $922 was heavily weighted toward a housing product nearly (or possibly completely) unique to Fayetteville in the state of Arkansas. Lease by the bedroom (“By-the-Bed” in Figure 3) student housing is a popular housing type accounting for many of the multifamily units in the city. Apartments with a single kitchen unit may have three to five bedrooms, each with their own bathroom, leased individually to college students who then don’t have to worry about covering rent if a roommate moves out (or doesn’t move in at all). These leasing units account for 74% of the units surveyed for the data in Figure 3, and they have substantial downward pull on the monthly rent average, although they are typically not available to nonstudent residents. New, traditional two-bedroom apartment units rent for substantially more at $1,440 per month. At that rate, a household would need an income exceeding $64,000 annually (around $31/hour or more) for that rent to be affordable.
Figure 3. Fayetteville Average New Construction Apartment Costs.
The Narrative Thread
Eighty years ago, Fayetteville was faced with its first population boom. A small town of just over 8,000 people, its agricultural heritage was just beginning to transition to a different mode of economic prosperity, and the new homes constructed to house twice as many residents felt overwhelming in a way our community would recognize today. At the time, land was inexpensive and readily available to the north and west of downtown, and the city’s leadership chose to follow national practices and the state highways already crisscrossing the city and grow outward, adding low-density neighborhoods and single-story commercial buildings toward Springdale to the north. This pattern continued for decades as Fayetteville’s expansion consumed small farming communities once noted as being “3 miles from Fayetteville” and created housing densities that averaged barely two units per acre. It’s a pattern that Fayetteville began reconsidering more than two decades ago and began in earnest to address about a decade ago with changes to how we plan and invest.
Cities bear the costs of housing in many ways, but perhaps most recognizably in the costs of constructing and maintaining public infrastructure. Housing is connected by streets and serviced by water and sewer in cities, with the city government taking on either a lifetime of operation and maintenance costs for these infrastructure elements if they are dedicated by a developer, or building and maintaining them from the start. Infrastructure represents future liability, with road surfaces needing replacement every 15-20 years on average and full replacement of water and sewer systems typically occurring less frequently, but at costs above and beyond annual city budgets. For the city to be able to afford new housing, it must be built more centrally and more compactly, a change in direction from the course set eight decades ago.
In Closing
Fayetteville’s comprehensive plan, City Plan 2040, prioritizes appropriate infill development; a walkable, connected city; and housing opportunities. It was adopted in early 2020, just before housing demand began to noticeably outpace supply. City Plan 2040 captured elements from previous city plans that recognized the city needed to change its course and provided a foundation to support the work underway today. The work includes an ongoing assessment of housing and the demographic and market changes that affect housing supply and affordability; a Permit-Ready Building Design Program to create neighborhood-sensitive housing in areas of the city’s historic core undergoing rapid redevelopment; infrastructure investment that provides complete transportation connections and safe streets; and large-scale zoning changes to provide hundreds of acres of housing opportunity in central areas of the city that have not permitted housing over the last several decades. These transformative projects adjust the city’s course for 2045 toward a different set of outcomes than were imagined in 1950, but the need for which is clear today.
Britin Bostick is the Long Range Planning & Special Projects Manager for the City of Fayetteville.