Why Is Bentonville, Arkansas So Expensive?
Uncover the complex factors driving Bentonville, Arkansas's elevated cost of living and thriving economy.
Bentonville, Arkansas, has garnered attention for its evolving economic landscape, leading to a perception of a higher cost of living compared to historical norms. This shift is influenced by several interconnected factors that have reshaped the local economy and housing market. Understanding these elements provides insight into the changing financial dynamics experienced by residents and newcomers alike.
Economic Drivers
Bentonville’s economic transformation is largely due to major corporate headquarters, notably Walmart, Tyson Foods, and J.B. Hunt Transport. Walmart’s new 350-acre headquarters campus attracts a substantial workforce, including high-salaried executives and professionals. This investment fosters collaboration and attracts top talent, energizing the local economy.
These corporations created a ripple effect, attracting vendor and support businesses. Over 1,450 companies, including PepsiCo and Procter & Gamble, established offices in Benton County to serve Walmart’s needs. This influx of businesses and skilled employees cultivates a robust, high-wage economy, with median household income significantly surpassing the national average. This drives demand across various sectors, influencing community costs.
Real Estate Market Dynamics
The robust economic activity directly impacts Bentonville’s housing market. The city experiences a seller’s market, with low housing inventory and demand consistently outstripping supply. While a balanced market typically has four to six months of housing supply, Bentonville often operates with approximately three months, contributing to competitive conditions.
Median home sale prices in Bentonville have seen rapid appreciation, ranging between $488,000 and $522,000, representing an 8% to 16% increase year-over-year. This trend places Bentonville’s median sale price significantly above the national average. Rental rates have also climbed, with average monthly rents falling within a range of $1,231 to $1,805. Despite ongoing new construction, the pace of new development often struggles to meet sustained demand, exacerbating the supply-demand imbalance. Local planning decisions can also influence housing supply, as evidenced by instances where proposed housing projects, even those compliant with city codes, have been rejected, further limiting available units.
In-Migration and Population Growth
Economic opportunities in Bentonville have fueled substantial in-migration and population growth, influencing the cost of living. The city is one of the fastest-growing communities, with its population increasing by 3.33% from 2022 to 2023 and 14.13% since 2020. Projections indicate Bentonville’s population could reach approximately 62,570 by 2025.
This rapid influx of new residents, averaging about 36 net people daily, strains existing infrastructure and resources. Increased demand for housing, public services, and amenities contributes to a more competitive environment across various markets. Sustained population expansion requires ongoing investment in urban planning and development to accommodate the growing community.
Cost of Goods and Services
Beyond housing, the general cost of goods and services in Bentonville contributes to the overall expense. The high-income demographic within the city influences pricing for everyday items, local services, and amenities. While some analyses suggest that costs for groceries, transportation, and healthcare may be comparatively lower than the national average, prices for general goods and services can be comparable or slightly higher. Utilities, for instance, typically align with national average costs.
Regarding taxation, Arkansas’s state sales tax rate is 6.5%. Combined with local municipal taxes, the total sales tax rate can range significantly, averaging 9.45%. While property tax rates in Arkansas are generally lower than in many other states, with a statewide effective rate around 0.53% to 0.59% on owner-occupied housing, local rates can vary. Property taxes are assessed on 20% of the property’s market value, and Benton County residents typically face higher median annual payments compared to other areas within the state.