Tri-City home prices aren’t surging like Seattle or Boise. Here’s why that’s a good thing

A $200,000 investment in a Tri-City home five years ago is worth $70,000 more today.

The same investment in Seattle? Up $150,000.

In Boise? Up about $138,000.

Local home prices have been on a tear in recent years, but the growth in Mid-Columbia home values lags the Northwest.

Local prices rose about 8 percent in the past year and about 36 percent in the past five.

That’s the takeaway from second quarter figures recently released by the Federal Housing Finance Agency.

FHFA calculates home price trends from sale price information on mortgages sold to or guaranteed by Fannie Mae and Freddie Mac, the government-sponsored mortgage agencies.

The Tri-Cities ranked 15th out of 22 Northwest markets for one-year home price appreciation and 18th for five-year appreciation.

Don’t be jealous of the neighbors, say Mid-Columbia business leaders.

“From my perspective, it’s good,” said Carl Adrian with the Tri-City Industrial Development Council. “We’re not getting as rich as like Seattle, but we’re not at risk of having a bubble.”

That’s a view shared by local real estate executives.

“Slow managed appreciation is a great thing. I’d rather have that than these huge spikes,” said Dennis Gisi, chairman and CEO of John L. Scott Tri-Cities.

Dave Retter, owner of Retter & Company Sotheby’s International Realty, goes even further.

Rapid price increases discourage buyers and encourage people to treat their homes like the stock market.

“I do not want to see Seattle and Vancouver appreciation, Portland appreciation, in the Tri-Cities. That is the worst thing that can happen,” he said. “Did we forget what happened in 2008?”

Bend, Ore., is a useful example of what happened that year. The sub-prime mortgage crisis popped the residential real estate bubble.

Bend, a center for second homes clustered around a designer golf course, popped more than most.

Today, it leads the region with home prices appreciating by 77 percent in the last five years. But during the recession, it led the nation for foreclosure rates.

In 2010, one in 17 homes in Bend was subject to foreclosure, according to RealtyTrac.

Stability isn’t just good for values. It’s good for the broader economy, said TRIDEC’s Adrian.

Site selectors place a premium on affordable housing, making a community more attractive to new businesses.

Tri-City home prices may be rising only moderately by Northwest standards, but they are above the national one-year average, 6.5 percent.

The Mid-Columbia ranked 77th of 245 metropolitan areas in the FHFA report.

Las Vegas eclipsed Seattle for the No. 1 spot with prices that rose nearly 17 percent. At the other end, No. 245 Peoria, Ill. homes dropped nearly 2 percent of their value.

Eight percent is a significant spike, said Travis Davis, designated broker for Coldwell Banker Tomlinson Associated Brokers in Kennewick.

Locally, home prices have appreciated at a rate of roughly 5 percent per year since 2010, rising to $267,000 from $196,000, according to Tri-City Association of Realtors figures.

Davis attributes the surge to the continuing shortage of homes for sale relative to demand.

There were 648 homes for sale in July, the lowest level since 1993. The market peaked in 2012, with 1,276 active listings.

The average price in July was $312,000, a sharp increase from July 2017.

Gisi, of John L. Scott, speculates the uptick is because of a greater share of sales were for new homes, which tend to be more expensive because of rising land costs.

Gisi credits a booming economy for driving demand above supply and keeping inventories low.

The Washington Employment Security Department said Mid-Columbia added about 5,700 jobs between 2016 and 2018. And unemployment is at a record low.

“There’s nothing better for the housing market than job creation,” Gisi said.

Retter predicts the booming economy will continue, thanks to stability in spending at Hanford, health care, the Pacific Northwest National Laboratory and agriculture.

That’s good for growth but won’t help the housing market return to a balanced state that would temper price appreciation.

“This is one of the toughest real estate markets I’ve ever seen,” he said.

Here is how the rest of the Northwest stacked up for one-year home price appreciation between 2017 and this year: Boise 15.6%, Tacoma/Lakewood 15%, Bremerton/Silverdale 14.4%, Seattle 13.7%, Bellingham 13%, Wenatchee 12.6%, Salem Ore. 12 %, Coeur d’Alene, Idaho 11.5%, Spokane 11%, Eugene, Ore. 11%.

The others are: Yakima 10.6%, Olympia/Tumwater 10.6%, Mt. Vernon/Anacortes 9%, Idaho Falls 9%, Tri-Cities 7.8%., Bend/Redmond, Ore. 7.8%, Medford, Ore. 7.3%, Portland/Vancouver 7.3%, Missoula Mont. 6.5%, Billings, Mont. 1.8%, and Anchorage 1%.