Residential market hungry for homes
By Michelle Dupler
The Tri-City area continues to be a hot market for real estate, offering continued affordability, low unemployment and an attractive local economy in comparison to many other metro areas in the United States.
Local experts said single-family home construction continues to boom, as do sales of existing homes, while both the average and median sold price of residential real estate has been increasing at a steady clip.
And most houses are staying on the market for less than two weeks — a sign that buyers are hungry for homes in the area.
“It is a very attractive market still,” said Lola Franklin, CEO of the Tri-City Association of Realtors.
The association tracks residential real estate sales in the Tri-Cities Metropolitan Statistical Area, which includes not only the core cities of Pasco, Richland, Kennewick and West Richland, but also outlying towns, including Benton City and Prosser.
Overall, the association reported a total of 4,423 home sales in 2016 compared to 4,153 in 2015, or an increase of 6.5 percent.
The average sold price rose from $224,699 in 2015 to $244,035 in 2016, or an increase of nearly 9 percent.
Franklin said 2017 looks very similar to 2016 so far in terms of the number of sales, and that number will likely grow as new developments are completed and more homes come on the market.
“There are simply more buyers than houses for them,” Franklin said.
Through August 2017, the association reported a total of 2,813 homes sold, at an average sold price of $272,400.
Dennis Gisi, owner, broker and realtor with John L. Scott Real Estate, said there’s an unmet demand for homes in the $200,000 to $250,000 price range. With few houses on the market in that range, buyers end up looking at homes priced at $300,000 or more — which in turn drives up the average local selling price.
“If you’re looking at demand, anything between $250,000 to $275,000 is the sweet spot,” Gisi said.
Gisi said he had a listing for a home in that price range that went on the market on a Wednesday, and by Friday, his company had two offers for the property. Because an open house had already been scheduled for that weekend, they kept the listing open until Monday before considering any offers. By the Monday deadline, they had six offers for the home.
“And one of them was cash. It’s a fast market,” Gisi said.
Dave Retter, owner of Retter & Company Sotheby’s International Realty, said that land values are increasing, which in turn raises the price of new home construction.
“If you have land sales go higher, it’s harder to do a $250,000 house on that,” Retter said. “Land is typically 20 percent of the (home) purchase price.”
However, rising land prices haven’t put a damper on new home construction in the Tri-Cities.
Jeff Losey, executive director of the Home Builders Association of Tri-Cities, said home construction remains robust in 2017 and shows growth over previous years.
Statistics compiled by the Home Builders Association show a total of 874 single-family residential permits through July 2017 in the Tri-City metro area, compared to 815 by the same point in 2016, and 681 by the same point in 2015. That’s an increase of nearly 20 percent from 2015-16 and about 7 percent from 2016-17.
Losey said areas that appear to be hotbeds of residential home construction include around Road 100 in Pasco, in the Clearwater Creek development near Steptoe Street and Leslie Road in south Richland, where a new connector will link the two corridors, and the Southridge area in Kennewick.
Retter said he foresees Richland and Kennewick needing more room to expand in the future as they build out their current city limits and designated urban growth areas.
“They both have reached the point where they have to expand,” Retter said. “Richland still has the Badger south area. Kennewick has the Southridge area. … Pasco still has a lot of farm ground that can be converted to homes. Richland and Kennewick have to expand. They’re kind of stuck with one area.”
One factor that could inhibit residential construction or drive up prices in coming months is the recent devastation wrought by hurricanes in Texas and Florida.
Gisi noted that billions of dollars’ worth of reconstruction in those states tends to put a strain on the supply of materials and labor for construction elsewhere in the country. That can lead to shortages that drive up prices, or put the brakes on construction.
“They’re going to need so much of everything because it’s so devastated,” Gisi said.