Investing in Real Estate in a Slowing Economy with Unchanged Interest Rates

The U.S. economy is slowing, yet the Federal Reserve has kept interest rates steady, creating a mixed but opportunistic environment for real estate. With rising inventory levels and sellers becoming more negotiable, investors and buyers can find valuable opportunities in today’s market.

1. The Economic Landscape: Slower but Stable

The U.S. economy has shifted from rapid growth to a more moderate pace, impacting consumer confidence and real estate demand.

• Slower Gross Domestic Product growth signals cautious spending and investment.

• Labor market remains steady, but wage growth is easing.

• Inflation and tariffs add uncertainty, keeping the Fed on alert.

By holding rates steady at 4.25%–4.50%, the Federal Reserve is signaling patience, allowing investors and buyers to plan without worrying about immediate rate hikes.

2. Interest Rates and Housing Market Impact

Mortgage rates remain elevated, averaging around 6.7% for 30‑year fixed loans. While these rates are higher than pre‑2022 levels, their stability allows investors and buyers to plan more confidently.

• Homeowners with older, low-rate mortgages are still reluctant to sell.

• New listings are increasing, creating more options for buyers.

• Price growth is slowing, giving buyers an advantage.

3. A Shifting Market: Buyers Gain the Upper Hand

The combination of slower demand and rising inventory has led to conditions that feel closer to a buyer’s market, especially in certain price points and markets:

• Sellers are more negotiable: Price reductions, closing cost credits, and buyer incentives are becoming common.

• Inventory is increasing: More homes on the market provide buyers and investors with choices they haven’t had in years.

• Opportunities for value: Properties that linger on the market longer often allow buyers to negotiate better deals.

4. Real Estate Investment Opportunities in a Slower Economy

Economic slowdowns often create favorable entry points for investors willing to be strategic.

A. Residential Rentals and Multi‑Family Properties

• Increased affordability pressures drive more demand for rentals.

• Multi‑family properties provide steady cash flow and less vacancy risk.

B. Vacation and Second Homes

• Higher‑income buyers continue to drive activity in lifestyle markets like lakefronts and mountains.

• Investors can focus on short‑term rentals (where allowed) or seasonal leasing to maximize returns.

C. Commercial Real Estate with Stable Tenants

• Focus on essential-use properties like medical offices, grocery‑anchored retail, or logistics hubs.

• Distressed or vacant office space remains risky, but prime locations may offer discounted entry points.

5. Strategic Tips for Real Estate Investors Right Now

1. Leverage the Buyer’s Market: Negotiate price reductions, seller-paid closing costs, or even mortgage buydowns.

2. Prioritize Cash Flow: Focus on properties with strong rental potential rather than speculative appreciation.

3. Diversify: Mix residential, vacation, and commercial investments to balance risk.

4. Watch Inventory Trends: Rising listings often translate to better deals and higher negotiating power.

5. Stay Prepared: Have financing ready, as the best deals often go to ready-to-move buyers and investors.

6. The Bottom Line

In today’s slower economy with stable interest rates, the market is quietly shifting in favor of buyers and strategic investors. Rising inventory and motivated sellers mean more negotiating power and better opportunities than we’ve seen in recent years.

For investors, this is a time to acquire quality properties at fair values, secure long-term cash flow, and position portfolios for future growth when the market accelerates again.

Contact Melissa to help find the perfect investment property for you!

870-557-9165

Short‑Term vs. Long‑Term Rentals: How Each Affects Our Local Community

The rise of short‑term rentals (STRs) like Airbnb and Vrbo has transformed the way people travel and invest in real estate—especially in vacation destinations like Hot Springs, Lake Ouachita, and the Ouachita Mountains. While these rentals create new opportunities for property owners and tourists, they also have significant effects on the local community, especially when compared to traditional long‑term rentals (LTRs).

In this post, we’ll break down the differences between STRs and LTRs, and explore how each affects housing availability, affordability, and the local economy.

1. Short‑Term Rentals (STRs)

Short‑term rentals are typically properties rented out for less than 30 days at a time, often to vacationers or business travelers.

Benefits for the Local Economy:

• Boosts Tourism Revenue: STRs attract out‑of‑town visitors who spend money on dining, entertainment, and local attractions.

• Higher Income for Owners: Hosts can often earn more per night than with a traditional long‑term lease, especially in peak seasons.

• Encourages Property Improvements: Many owners renovate or upgrade their homes to appeal to travelers, which can improve property values.

Challenges for Locals:

• Reduced Housing Availability: When more homes are used for STRs, fewer are available for families and local workers to rent long term.

• Higher Housing Costs: Limited rental supply can drive up both rent and home prices for locals.

• Neighborhood Impact: Increased turnover can mean more traffic, noise, and a “less residential” feel for neighbors.

2. Long‑Term Rentals (LTRs)

Long‑term rentals are properties leased for six months to a year (or more) to tenants who make the community their home.

Benefits for the Local Community:

• Stabilizes Neighborhoods: Permanent residents help maintain a sense of community and support local schools, clubs, and events.

• Reliable Housing Supply: LTRs ensure local workers, retirees, and families can find homes near their jobs and schools.

• Steady Income for Owners: While usually lower than STR revenue, long‑term leases offer consistent cash flow without seasonal dips.

Challenges for Owners:

• Lower Revenue Potential: LTRs often earn less annually than STRs in vacation markets.

• Tenant Turnover Risks: Evictions, damages, or vacancies can still disrupt cash flow.

• Less Flexibility: Landlords can’t use the property themselves on short notice.

3. How This Plays Out in Our Area

In Hot Springs, the demand for STRs has surged over the last few years, bringing both benefits and growing pains:

• The city has capped residential STR licenses at 400 and is not issuing new permits in residential zones (as of July 2025) to help stabilize neighborhoods.

• Local families have voiced concern about finding affordable long‑term housing, as homes are increasingly used for weekend visitors.

• Around Lake Ouachita, STRs remain popular and profitable, but balance is essential to keep our community welcoming to both locals and tourists.

Takeaway: A healthy mix of STRs and LTRs is crucial. Overreliance on STRs can reduce housing options for locals, while LTRs alone may limit tourism‑driven revenue opportunities.

4. Tips for Property Owners

• Consider a Hybrid Approach: Some owners offer seasonal short‑term rentals in summer and long‑term leases in the off‑season.

• Know Local Rules: Stay updated on Hot Springs STR permits and county zoning rules before investing.

• Be a Good Neighbor: Whether STR or LTR, maintaining property standards and respecting the community ensures sustainable growth.

5. Conclusion

Short‑term and long‑term rentals each play a vital role in our local economy and housing market. STRs drive tourism and revenue, while LTRs keep our community livable and connected. By understanding the impact of each and working within local guidelines, property owners can maximize their investment while supporting a thriving, balanced community.

Preparing to Pass Down Property: 10 Smart Steps to Protect Your Legacy

Thinking Ahead: How to Prepare Your Property for the Next Generation

Preparing for the end of life isn't an easy conversation—but it's one of the most loving and thoughtful things you can do for your family. If you own real estate—whether it’s a family home, lakefront property, land, or a vacation cabin—taking time to plan now can help your loved ones avoid stress, confusion, and even financial loss down the road.

Here are 10 important things you can do now to prepare for passing down property in Arkansas and beyond.

1. Get a Current Property Appraisal

Knowing the value of your property is the first step. A certified appraisal can:

• Help your heirs understand what they’re inheriting

• Assist in determining future capital gains tax

• Serve as a baseline for insurance and estate planning

2. Meet with an Estate Attorney

Every situation is unique. An attorney can:

• Help you create or update a will or living trust

• Explain how to title your property to avoid probate

• Guide you on Arkansas-specific laws for real estate transfers

3. Set Up a Living Trust or Transfer-on-Death Deed

These legal tools allow your property to transfer without going through probate, saving your heirs time and money. A trust also offers privacy and can be updated easily if your wishes change.

4. Organize Your Paperwork

Gather all relevant documents in one safe place:

• Property deed

• Mortgage and tax statements

• Utility and insurance accounts

• HOA or lake access agreements (if applicable)
  Make sure your heirs know where to find them.

5. Clear Up Any Title Issues

If you co-own a property, have old liens, or share a family property with siblings, now is the time to clarify legal ownership. Unclear titles often cause delays, disagreements, or prevent sales.

6. Talk to Your Heirs

Open conversations reduce future confusion. Share your intentions:

• Do you want the property sold, kept, or rented?

• Will it be split among siblings or given to one?

• Are there sentimental considerations they should know about?

7. Create a Property Maintenance Plan

If your heirs don’t live nearby, maintaining a home or land can be overwhelming. Consider:

• Setting aside funds for upkeep

• Providing contact info for trusted service providers

• Writing instructions for seasonal care, especially for lake homes or cabins

8. Minimize Future Tax Burdens

A CPA or estate planner can help you:

• Understand stepped-up basis for capital gains

• Gift property in stages (if appropriate)

• Plan for potential federal estate taxes (even though Arkansas has no inheritance tax)

9. Update Your Beneficiaries and Legal Documents

If your will or trust is older than five years, it may be outdated. Life events like marriage, divorce, or purchasing new property should prompt a review.

10. Work With a Trusted Real Estate Professional

If your plan includes eventually selling the property, a REALTOR® can:

• Help assess market readiness

• Provide insight on resale value

• Connect your family with the right professionals when the time comes

Final Thought: A Gift That Lasts Beyond a Lifetime

Your property is more than land or walls—it holds memories, meaning, and value. Taking the time now to plan for its future is a generous and compassionate act.

If you have questions or need guidance on the local real estate side of estate planning, I’m here to walk with you and your family through the process—respectfully and professionally.

📞 Let's Talk About the Future
Melissa Carmack – Caddo River Realty
Serving Montgomery, Garland, Pike & Polk Counties
📍 Mount Ida, AR | 🌊 Lake Ouachita
📧 [email protected] | 🌐 www.livelakeouachita.com

Ouachita Living Starts Here—And Lasts Beyond a Lifetime.