The number of home building permits issued in Benton and Franklin counties grew six percent in 2017—despite a slow start to the year.
“We couldn’t pour concrete; the ground was freezing,” said Jeff Losey, executive director of the Tri-Cities Home Builders Association, or HBA. “For two straight months, we had to play catch up.”
The market did catch up and eventually exceeded 2016 growth, racking up a total of 1,370 single-family residence permits issued through Nov. 30. For the same period in 2016, 1,289 permits were issued.
Pasco continued to see growth, increasing 25 percent over last year, which is equivalent to 87 new homes. The city’s schools also have been feeling the growth.
“That goes to show how big of a deal this school bond was. They’re still growing—still busting at the seams,” Losey said.
Pasco School District voters approved a $99.5 million bond in November that pays for several projects to address overcrowding, including two new elementary schools, rebuilding and replacing Stevens Middle School and building a fourth middle school.
While the cost of land is starting to catch up in Pasco, Losey said it’s the quality of land that’s the growth driver.
“It’s really easy to develop in Pasco because most all of it is sand,” he explained. “It’s not really rocky, so it’s easy to develop.”
But while Pasco saw double-digit housing growth, Kennewick took a dip, dropping to 202 permits issued through Nov. 30, compared to 301 permits from the same period last year.
Losey said lack of available land is partly to blame, but the Bob Olson Parkway that connects the Southridge area to Steptoe Street is going to help growth. The five-lane road links Highway 395 to Highway 240.
“And of course there’s Hansen Park, so there will be more homes going in,” Losey said. “The reality is, there are some new lots becoming available, so there’s opportunities for us to have more homes being built in 2018. There’s going to be enough new lots to help the builders moderately keep up with demand—barring interest rates. At least through 2018 we don’t think interest rates will have that much effect on the market, so we’ll be a little bit bullish.”
Richland showed a 10 percent uptick in the number of single-family housing permits issued this year — 274 through Nov. 30 compared to 248 from the same period last year.
Along with the growth in permits in 2017, Jeff Smart, the incoming president of the Tri-City Association of Realtors, said the value of homes has gone up as well.
In 2016, there were 4,423 homes sold with an average price of $244,035.
For the nine-month period, between January to September 2017, 3,236 homes were sold with an average sale price of about $265,000.
Smart grew up in real estate, driving around with his father on weekends looking at houses. He works as the designated broker and owner of Smart Realtors in Richland.
Smart said the Tri-Cities’ appreciation growth is right on par with Washington state, reporting an average sold price increase of about nine percent from last year.
While that’s good news for sellers, Smart said it’s getting tougher and tougher for people looking for their first home.
“We’ve created an open space in the marketplace. New homes are on lots and land is getting more expensive. So because of the increase in lot prices, we’ve seen home prices go up with the starting point above the $350,000 to $400,000 mark—and it’s created a bit of a gap in the $250,000 to $350,000 price range. So you have a lot of people who own a home, and they want to move up, but because we’ve made this divide, there are not a plentiful supply of homes that those people can jump to. They have to jump to a $350,000 to $400,000 home. When you have a big opening, you can’t jump across that divide,” said Smart, who hopes 2018 will bring more homes online in the $250,000 range.
He’s watched the Tri-Cities grow to what he said could really be considered the “Five Cities.”
“The sheer spread of the city has been interesting to see. Kennewick south has been amazing to watch. West Richland itself has grown immensely over a number of years. And Benton City is right behind it,” Smart said. “You have to take into account West Richland—they’re a force amongst themselves—and Benton City. We’re seeing builders out there and available lots and developments.”
West Richland boasted a 38 percent increase in the number of single-family home permits issued through Nov. 30, or 99 compared to 72 during the same period last year.
The Tri-City Association of Realtors has noted membership growing to more than 800. Smart said the group will be offering a lot of training in the year ahead to help educate realtors to assist clients, as well as reaching out to the public about how a buyer or seller can leverage a realtor to keep more money in their pockets. That’s especially important for buyers hoping to build since lots are getting harder to come by.
“We’re seeing lot prices of about $75,000 to $100,000,” he said. “It’s tough to build a home that’s going to be $250,000 on a $100,000 lot.”
There’s also a shortage of skilled laborers, said Losey, who explained that since the housing crisis started in 2008, the construction work force lost a million people as workers sought new employment. When the market picked back up, a third of those laborers didn’t come back.
“There’s still a labor shortage, and everybody’s now a year older,” Losey said. “So even if there were 2,000 more lots (to build on), there are not enough construction workers available to step in.”
To help ensure the market stays healthy as the housing industry moves into 2018, the home builders association will continue to work with Tri-Tech Skills Center and the Walla Walla Community College carpentry program to help foster the next generation of construction workers.
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