The inventory crunch that curbed home sales in 2017 could ease somewhat in the coming year as builders introduce more subdivisions and more home sites to the Tri-Cities.
“We know that there are many new developments coming on,” said Lola Franklin, CEO of the Tri-Cities Association of Realtors.
She predicts the easing tightness will moderate the pressure that drove home prices up more than 9 percent in the past year.
The new additions should help to ease the tight market that gave buyers little to choose from last year.
“Our economy is growing and booming and our residential housing market is struggling to keep up,” Franklin said.
But 2018 could be different.
There were fewer than 600 homes on the market in the Tri-Cities at the end of 2017, half of normal. The tight market helped keep the market firing on virtually all cylinders:
- Single-family home permits issued rose 4 percent.
- Homes sold in an average of 31 days, 18 percent faster.
- Builders sold 7 percent more new homes.
- The number of homes sold held steady at 12 per day.
“It’s just a really consistent, vibrant market,” said Dave Retter, owner and broker of Sotheby’s International Realty, Retter & Co. Sotheby’s alone is bringing on four new subdivisions in coming months: at Hansen Park, Apple Valley, Cherry Creek, Southridge and Canyon Ranch.
Retter said the new additions will have a trickle down effect as move-up buyers put their current homes up for sale.
While the market is expanding, inventory is the story.
Sellers aren’t listing enough homes to keep up with demand, and builders also struggle to secure enough lots to keep up.
The supply challenge of 2017 was most on display in Kennewick, the only city where residential development slowed in 2017. The city issued 211 permits, compared to 319 a year ago, according to statistics compiled by the Home Builders Association of the Tri-Cities.
4,356 homes sold
$268,164 average price
$250,000 median price
31 average days on market
959 newly built home sales
1,446 homes permitted
$421.5M value new home construction
Greg McCormick, Kennewick’s planning director, said the drop is the result of a lot shortage that hit in the spring, curbing activity at the busiest time of the year. New subdivisions in the Southridge area have righted the situation, but the annual numbers suffered.
“As soon as supply came on, the numbers picked up,” he said.
Pasco held its lead for new construction, issuing 469 permits issued in 2017. That’s a 21 percent jump. Since 2012, the city has issued 1,830 single family home permits.
Rick White, Pasco’s community and economic development director, concurred that lot availability is a driver for the market.
Interestingly, Pasco experienced a slowdown in new home construction in 2013, the year after the city imposed a $4,700 school impact fee on new construction to offset the impact on schools. White recalls people speculating that the slowdown was because of the new fee. It was actually a shortage of lots.
It picked up in 2014 and hasn’t let up for four years, thanks chiefly to new subdivisions in western Pasco.
White credits the increase in both lots and builders, and predicts more of the same in 2018.
“There’s just more opportunity for choice,” he said.
Last year, the state Department of Natural Resources sold 230 acres of former farmland near Chiawana High School to residential builders.
If you drive out, you’ll see earth moving.
Rick White, Pasco’s community and economic development director
The city is processing three plat requests for the initial developments. That could make 300 new lots available there this year. Over time, the former farm circles are expected to yield as many as 1,000 new homes.
“If you drive out, you’ll see earth moving,” White said.
Richland too reported a strong year for new construction, issuing 295 permits in 2017, an 8 percent gain over 2016. Since 2012, it has permitted 1,520 new homes.
Kerwin Jensen, the city’s community development manager, called 2017 one of the biggest building years in recent memory. Richland regularly averages about 250 homes per year.
Growth is split between north and south Richland, with the older central city experiencing little new residential growth. North Richland, chiefly Horn Rapids, saw 80 new homes.
There were 208 new homes in the area south of the Yakima River. Jensen anticipates development will remain consistent in 2018. The Badger Mountain South area is gaining traction with builders and buyers after the city relaxed its development standards. Jensen said there are several new subdivisions proposed in the city’s far-south district.
Jensen said the biggest challenge confronting builders is finding suitable land. It’s always easy to build on a flat 40. For Richland developers working on the periphery, the challenge is to build on hills and sloping territory.
Elsewhere, Benton County issued 213 single family permits (comparable to 2016), Franklin County issued 128 (up 32 percent), West Richland issued 103 (up 29 percent), Prosser issued eight (up from two), and Benton City issued 19 (up from 16). Mid-Columbia jurisdictions issued a total of 67 permits for manufactured homes.