Reports of the nation being a homebuyers’ market have persisted for months.

The trends are evident in the Mid-Columbia, where September inventory reached 1,138 homes for sale – a level not seen in a decade – and the median price for a home sold hit its lowest level since last year.

But at $425,000, that’s still out of the range for many young or first-time homebuyers.

That could prompt some buyers to expand their search beyond the Tri-Cities.

Homebuilder Hayden Homes recently broke ground on its latest development in Prosser. Once built out, it will have 165 single-family homes ranging between 1,000 and 2,200 square feet. The homes have floor plans ranging from two to five bedrooms and up to three bathrooms.

The starting price for its most affordable model is $285,000, more than 30% below the region’s median price and well within the range of affordability based on Benton County’s median income for a family of four at $105,600.

“We are grateful to the city of Prosser for supporting economic development and access to housing that local families and workers can afford,” said Rees Wasney, Hayden’s regional vice president, in a statement. “When cities like Prosser pass pro-housing policies, builders like us can achieve price points that allow more community members to achieve the dream and stability of homeownership.”

Managing growth

It’s part of the city’s deliberate efforts to manage growth while being a place where families can start out, said Rachel Shaw, Prosser’s deputy administrator and city clerk.

“How do you balance smart growth with keeping the cute little town that is so desirable?” she said. “There is a heavy effort to make sure we are balancing that.”

Entry-level homes – those with two or three bedrooms, one bathroom and floorplans usually no bigger than 1,500 square feet – became a critical part of the housing market following World War II as homebuilders sought to meet demand for housing from returning servicemembers and their young families.

Fewer of those types of homes have been built in recent decades, partly due to market demand for larger homes and lots but also shifting building codes and economic development policies.

Even those that have been built are much less affordable. In 2019, the nation’s median list price for such a home was about $220,000 – which a household earning roughly $50,000 a year could afford, according to Realtor.com. By 2021, that same home was selling for $325,000, a 48% increase.

That lack of affordability was making it hard for the city of Prosser to add housing to meet demand. While the Benton County seat is still a relatively small community – under 7,000 residents – it swells to 13,000 during the day as people come to the community to work and do business, Shaw said.

“There’s a lot of people who live just on the outskirts,” she said.

That’s where Prosser’s Housing Density Incentive Program came in. It was implemented in 2018 as part of the city’s comprehensive plan update, with elements such as simplified zoning, housing incentive policies and reduction in fees for building permits and utility connections. The result was going from 14 housing permits issued in 2018 to as many as 72 in 2021, and an average of just under 50 per year since 2019.

More recently, city officials updated the program to focus on affordability, by allowing the inclusion of manufactured homes, partial development project participation and single-family rentals. So long as the homes are maintained as affordable for at least 20 years, developers may build more homes on parcels, maximizing their value.

“By helping to reduce land cost burdens, the city intends to stimulate housing supply and in turn make homes more affordable to our local households of all income levels – creating a stronger community and economy for us all,” said Prosser Mayor Gary Vegar in a statement.

At Merlot Meadows, located just east of the new Prosser Memorial Health hospital that’s visible from Interstate 82, 39 lots are included in the city’s housing incentive program. Two of the development’s model homes start at under $300,000, with the 1,000-square-foot, two-story Alpine being the most affordable. And First Story, the nonprofit lender founded by Hayden, has opened up applications for a homebuyer making less than 80% of the region's median income to purchase an Alpine home in Merlot Meadows with a zero-down, zero-interest 30-year mortgage.

“Merlot Meadows reflects the best of Prosser living – friendly, accessible, and ready to support the life you want to build,” read Hayden’s promotional materials for the development.

The housing incentive program doesn’t come cheap for the city. Prosser has waived roughly $1.8 million in fee revenue from developments that have participated. The city also has taken on more liabilities with responsibility for infrastructure ranging from new streets, sidewalks, streetlights, sewer lines and more.

But the program provides city leaders a powerful tool to determine the direction of the community, which is a high priority for many residents, Shaw said.

“There are some community members who do not want more growth,” she said. “It’s a big challenge, but I feel like we’re handling it in a way that understands we are representing our entire community. We’re not just growing, growing, growing.”

Need for starter homes

There are signs that the broader housing market recognizes the need for more starter homes. Active listings of starter homes nationally rose 13% year over year in October, pushing inventory to its highest October level since 2016, according to Seattle-based real estate brokerage Redfin. That combined with slower sales has eased pressures for buyers.

“People aren’t racing to waive contingencies or outbid 10 other offers,” said Andrew Vallejo, a Redfin Premier real estate agent in Austin, in a statement. “If a starter home isn’t priced perfectly, it can sit for a bit, and buyers know that. They feel more comfortable negotiating because they’re not worried about losing the home in 24 hours.”

Other cities in the region also are looking to ease the ability for homebuilders to bring more homes to market. The city of Pasco recently launched a new online portal using a new civil permit to streamline residential and commercial development.

For now, though, Prosser is happy to welcome those who are just wanting to start their homeownership journey, whether at Merlot Meadows or elsewhere in town.

“I did receive phone calls from residents after the groundbreaking, asking how they can get into the program,” Shaw said.