America’s capital of cheap retail is confronting an affordability crunch. 

The cost of housing in Walmart’s base of north-west Arkansas has shot up by 60 per cent in the past five years with 33 people moving there every day. Houses within pedalling distance of the retailer’s new bike-friendly headquarters are on the market for more than $1mn — more than double the national average. 

The rising prices reflect north-west Arkansas’ transformation from a rural backwater into a metropolis enriched by Walmart’s commercial success and investment from the billionaire descendants of the company’s founder, Sam Walton. The region’s job growth, art museum, new medical school and cycling trails around the Ozark Mountains have lured highly paid workers to its streets. 

“It is a much more expensive place. It is also a much nicer place. What’s interesting is, we’re pulling people in to this area who have nothing to do with retailing,” said Scott Benedict, a retail consultant and former Walmart manager based in Arkansas.

The region, stretching about 30 miles from Walmart’s base in Bentonville to the university city of Fayetteville, has added jobs at a rate of 3.4 per cent a year between 2021 and 2026, about double the national average.

Over the past five years the population has grown by 130,000 to 622,000, placing north-west Arkansas in the top 20 fastest-growing metro areas in the country, according to the US Census Bureau. Forecasters expect it will hit 1mn by 2050.

Household incomes have also increased, growing at the fastest pace among seven national peers compared by the University of Arkansas between 2019 and 2024, even as the poverty rate remained among the highest at more than 11 per cent of the population.

Much of this has been driven by Walmart. The discount retailer is the nation’s second-largest company, with annual revenues of more than $700bn underpinned by its promise of everyday low prices.

The company’s 350-acre campus, which opened last year, has room for 15,000 people and sits at the centre of a broader retail ecosystem that includes suppliers, ecommerce consultants, accountants and lawyers.

Companies includingTyson Foods, the meatpacking giant, long-haul trucking company JB Hunt and the University of Arkansas are among the many that have added more jobs. 

Housing affordability has become a concern across the US after construction of new homes slumped in the wake of the 2008 financial crisis. It has also become a political issue ahead of this November’s midterm elections.

For north-west Arkansas, where affordability has long been a selling point, it threatens to undermine one of its biggest attractions.

“We could proclaim a decade ago, ‘If you choose to come take this job in north-west Arkansas, you’re going to have an incredibly high quality of life . . . and our houses are probably half the price of your metro,’” said Wes Craiglow, executive director at the Urban Land Institute of north-west Arkansas. “I don’t know that we can say that today with a straight face.”

Nearly 30,000 households in the region’s four biggest cities now pay more than 30 per cent of their income on housing, according to data from the philanthropic Walton Family Foundation. A National Association of Realtors index shows affordability for potential homebuyers has plunged by half since 2020, to the point that it is now less affordable than metro Chicago, Dallas or Austin, Texas. 

“First-time homebuyer sales are at an all-time low. They can’t afford to buy what they would want to buy,” said Cody Duley, a local estate agent. 

The luxury homebuilder Toll Brothers in April agreed to acquire Buffington Homes, a north-west Arkansas company that constructs houses selling for between $400,000 and more than $1mn, with chief executive Karl Mistry noting the region was “the home of Walmart and a host of terrific other companies” in a sign of growing appetite for higher-end homes, despite the shortage for those on moderate incomes.

The rising demand for housing has pushed development into the rolling pastures and forests to the east and west of Bentonville and other cities in the region, straining sewer capacity to the point that some communities have a moratorium on new development.

Alice Walton, daughter of Walmart’s founder and benefactor of Bentonville’s recently expanded Crystal Bridges Museum of American Art, also agreed to lend the city $239mn to upgrade its sewer system. 

To address the growing demand for housing, the region’s planning officials are trying to take an innovative approach to new development, reworking zoning laws and supporting building policies to try to make this corner of Arkansas a model of walkable, affordable design. 

Bentonville in April scrapped its longstanding land-use code, replacing it with one that promotes compact development and a mix of homes built along pedestrian-friendly streets. The plan was one of four projects in north-west Arkansas to win awards from the Congress for the New Urbanism, which hosted its annual conference in the region this year.

“They’re punching above their weight class, just extraordinarily,” said Mallory Baches, president of the organisation, a group that advocates for dense, transit-oriented cities. 

The nearby city of Rogers also updated its zoning ordinance last year, ending the strict separation of residential, commercial and industrial land uses and instead dictating the size and appearance of buildings but not their function.

The idea is to allow places such as coffee shops to spring up alongside houses and make it easier to convert tired buildings from one use to another. 

Rogers this month began a “pattern zone” programme that provides developers with ready-made building plans to reduce the time needed to get building approval.

“It cuts the cost down, because you don’t have to buy a set of plans, and you don’t have to pay for the five or six change orders on those plans as they go through the review process,” said Greg Hines, the mayor of Rogers. “Time is money.”

He added that the revised zoning laws meant new projects are more likely to be quickly approved rather than get bogged down by “not-in-my-backyard” opponents. 

At the same time, the town of 75,000 has stopped annexing adjacent land for development. “Our city doesn’t need to sprawl. Our city needs to look at vertical development,” Hines said. “One of the main drivers behind the form-based code was recognising that we’re going to stop expanding our borders and turn inward, to look at infill development.” 

As house prices soar in the north-south corridor along the Interstate 49 highway, residents and developers are moving deeper into the rural edges of the region. “The outward growth pressures are immense on them at this moment,” said Duke McLarty, executive director of Groundwork, a housing initiative of the Northwest Arkansas Council, a business-backed group. 

The council this spring released a planning blueprint that its leaders hope will get the region’s dozens of municipalities to co-operate in saving open space and concentrating housing closer to workplaces. “Growth is inevitable. The outcome is not,” the council said. 

The blueprint was funded by the Walton Family Foundation, which has also paid for fellowships for outside planning experts to assist thinly staffed local governments, and helped to finance affordable housing projects, including one that will set aside cottages for teachers and other school district employees after the Bentonville schools superintendent warned of a recruitment problem. 

Meredith Bergstrom, senior programme officer at the foundation, said it was crucial to intervene as soon as possible to ensure the region can stay affordable without becoming another emblem of American sprawl. 

The cost of housing “is a real, felt and true concern of residents and potential new residents”, she added. “There is a lot the region is doing to try to stabilise housing costs and ensure that people can afford stable housing at every level of the community.”