Thursday, Oct. 22, 2009

Kennewick tops U.S. in growth of housing prices

By Drew Foster, Herald staff writer

The Kennewick metro area led the nation in housing price growth over the last three years, according to a national financial information and analysis firm.

Homes in the Tri-Cities grew in value by 8.9 percent over the past three years and could increase another 3.4 percent by June 2010, according Fiserv's report on CNNMoney.com.

That was the largest rise in value in the nation in that time frame.

Fairbanks, Alaska, was a distant second with a 2.5 percent increase in home value. On the other end of the spectrum was Miami, where home values have plummeted 48 percent during the last three years and are expected to drop another 29.9 percent by June 2010.

The reason for the increase in home values isn't complicated, said Glen Clark, president of the Tri-City Association of Realtors.

"Simple -- jobs."

He added, "We've got Obama's stimulus money in town."

The upward tick in home values in the Tri-Cities bucks the national trend.

According to Fiserv's report, home values in the next year are predicted to drop in 342 of the 381 markets analyzed nationwide.

Kennewick resident Cassandra Badeaux and her husband Dean are in the process of selling their West 37th Place home for $198,000 themselves. Badeaux said the $198,000 price tag is higher than it would have been if they had decided to sell a couple of years ago.

"I do feel construction a few years ago was really booming, so we would have had to sell for a little less to stay competitive," she said.

Clark said the Tri-Cities' housing market values are buoyed by its 6 percent unemployment rate, one of the state's lowest, and the infusion of billions of stimulus dollars.

The Tri-Cities also largely avoided the housing foreclosure catastrophe that crippled many real estate markets across the country.

"We've just maintained a steady growth. We didn't have a big boom, no bubble," he said.

The number of notice of trustee sales, which inform owners they have 90 days to get their payments current or to sell their homes before foreclosure, have grown in Benton and Franklin counties, but not exponentially over the past three years.

According to Benton-Franklin Title Co., there have been 668 such sales through September this year. There were 631 through September 2008, 598 through September 2007 and 538 through September 2006.

But while home values grew, the number of homes for sale in the Tri-Cities has been shrinking. About 1,000 homes currently are on the market and 400 were under contract to be sold last month.

"Our inventory is really going down the tubes," Clark said. "We have a two-and-a-half-month supply of inventory."

A healthy housing market has a six-month supply.

"Two years ago, I believe, in September or October we had about 1,500 properties for sale," Clark said. "That's probably more in line for what our market needs to be balanced."

For the supply to increase, new homes need to be built. Clark said that's not likely to happen if banks don't loosen lending practices.

Even in a market like the Tri-Cities where new homes may have the potential to sell, Clark said only the most well-established builders are able to secure money from banks.

"(Banks) are looking at (real estate market) from a national trend, not a local trend," he said.

Home sales are projected to grow in 2009. There were 3,023 closings in 2008 and the Tri-City Association of Realtors estimates there should be about 3,100 closings this year.

Jerry Smith, broker and owner of Tri-Star Real State, called a portion of the Tri-City real estate market "hot."

"Anything under $200,000, as long as they are priced right, shouldn't be on the market for more than a few weeks," he said.

Smith said he expects homes in the Tri-Cities to continue growing in value. "I think we're a sleeper here."

-- Drew Foster: 585-7207; dfoster@tricityherald.com