Home Builders Association: A bullish outlook for home building in 2018

The Tri-Cities as a whole continues to sparkle when it comes to new single-family homes being built. Families are offered some of the most energy-efficient homes in the country as Washington State has one of the most stringent energy codes in the U.S.

Even with another positive year of new starts, there have been some challenges that have slowed down what could have been an even bigger increase in starts.

In 2017, we saw an increase of 4 percent over 2016 with 1,446 new single-family home permits pulled for the Tri-Cities region. This was a bit of a surprise, as most of 2017 found the industry playing catch-up from one of our worst winters in recent decades. The winter’s devastating effect on scheduling lingered for most of the year.

Permits were pulled at the beginning of the year to start but some went well into the year before anything could begin as the ground stayed frozen, making concrete foundation pouring nearly impossible.

Another factor in slower growth has been the lack of available ready-to-build lots. There hasn’t been as much platted and ready to go. One of the most telling Cities was Kennewick. Tri-Cities showed an increase of 4 percent, but Kennewick plunged over 50 percent in 2017.

Most of Kennewick’s new growth will be in Southridge, which had been waiting for the completion of Bob Olson Parkway to open up the area for development. Now that the road is open and plats are ready, we feel that Kennewick will rebound in 2018.

Pasco is the only city over the past 4 years that has seen growth every single year. It has been 7 years since they instituted the $4,700 school impact fee that sent new home starts plummeting over 60 percent in the first two years it was in place. As Pasco still owns the distinction of the youngest of all our cities with a median age of 28.7, it’s easy to see why the need for housing continues to increase.

Shortage of labor continues to plague the construction industry. With a median age of 55, skilled labor in the trades might end up being the biggest Achilles heel over the next few years as the reason new home production might lag. From the local to national level, the construction industry is doing all it can to help our next generation get acquainted with the trades where possible.

The HBA is supporting Tri-Tech Skills Center Construction class and the Walla Walla Carpentry foundation in educating the next work force as they are paramount for replacing an aging construction industry work force.

In spite of all these challenges, the Home Builders in Tri-Cities over the last 4 years have built 5,009 new single-family homes with a valuation in new property taxes of nearly $1.5 billion dollars.

With a new tax plan in place for 2018 and a national economy that is red hot, we are expecting a couple of increases to the federal funds rate this year. We don’t feel that the increases will be very big, and the net effect on home buying will be negligible. Interest rates for new homes are still at an all-time low.

Weather so far in 2018 has been very favorable, and our state is projected to add 20,000 to 21,000 new jobs in 2018. We are very bullish on new home starts in 2018 and forecast that this year will see another increase in starts over 2017.

This story was originally published April 1, 2018 at 3:44 PM with the headline "Home Builders Association: A bullish outlook for home building in 2018."