Don Pratt recently started three new homes in Hansen Park in Kennewick. The owner of Kennewick's Don Pratt Construction said he will see if they sell.
Demand for homes may be a little down, as people listen to the national news and hesitate to make a big purchase like a house, Pratt said. But smart buyers still see it as the right time to buy, with interest rates the lowest Pratt has seen.
"We've got something special going on in the Tri-Cities," Pratt said.
The Tri-City area is on track to have more new homes started this year than 2008 and 2009.
There were 1,194 new home permits issued through October, which is more than during the same period in 2008 and 2009, according to data from the Home Builders Association of Tri-Cities.
Pasco led with 430 homes, while Kennewick had 258 and Richland 237. West Richland has issued permits for 104 new homes.
The Tri-City area may end the year with about 1,300 new homes started, said Rene Dahlgren, director of government affairs for the Home Builders Association of Tri-Cities.
It's a sustainable level that means builders are able to stay busy while keeping up with the demand for new homes, she said.
Part of the reason the Tri-Cities didn't have a real estate bust along with the rest of the nation was that the economy here simply doesn't support overbuilding, Dahlgren said.
"It's great to see that our economy is still faring pretty well," she said.
Officials say it is too soon to tell what the recent layoffs of about 2,000 Hanford workers will mean for the area's housing market.
Pratt, who has built custom homes in the Tri-Cities for about 30 years, said there hasn't been same the type of swing like the area saw in the 1980s with Hanford layoffs.
A lot of people have pitched in to diversify the economy, so Hanford jobs aren't as vital to the Tri-Cities as they once were, he said.
And people are moving here, attracted by the sunshine, affordable housing, lack of traffic jams and open spaces, he said.
"It's really a pretty darn healthy market," Pratt said.
Rick Simon, Richland's development services manager, said he wasn't expecting a repeat of last year, when a federal tax credit for first-time home buyers elevated the number of new homes in 2010.
Richland may have fewer new homes started so far this year, but permits remain fairly steady, he said. South Richland is seeing most of the development.
Richland may end up with about 300 new homes this year, which is about average for the last decade, Simon said.
What has been up this year is commercial development, with a couple of large apartment complexes, Gold's Gym, Innovation Center's new buildings at the Tri-Cities Research District and several restaurants, Simon said.
Rick White, Pasco's community and economic development director, wouldn't be surprised to see 500 new homes permitted in Pasco by the end of this year. As of Nov. 15, White said Pasco had issued permits for 450 homes. Most houses are being built west of Road 36.
Steady permitting for new homes is good for the city in terms of building permit revenue, White said.
But, "It's murder on the school district," he said.
The Pasco School District is struggling to keep up with its ballooning enrollment and has asked the city and Franklin County to require developers to negotiate a payment when projects go through the state Environmental Policy Act and platting process. The district must ask for the fee for each project and must negotiate individually with each developer to set the amount.
The district is using this process because the Pasco City Council and Franklin County Commission haven't approved the district's request for an ordinance that would automatically require impact fees on new subdivisions.
The city already has about 1,150 lots approved in preliminary plats, White said. The school district can only request mitigation on new subdivisions, not on homes being built on existing lots.
The city planning commission will look at the impact fee ordinance proposal after the school district approves its updated capital plan, which is expected next month, White said.
Area real estate agents and builders have opposed the idea of an impact fee, arguing that development pays for itself by adding to tax revenue and drawing development and that the burden of providing new school facilities shouldn't rest on new construction alone.
Pasco officials have been trying to overcome the imbalance in new homes and new commercial and industrial projects. But commercial construction is about half of what it was last year, White said. And 2010 was half of the commercial development they saw in 2009.
Everyone says the same thing, that it's hard to get financing, White said. The national tightening of loans is one of the ways the Tri-Cities has been affected by the national recession.
Kennewick has stayed stable both in new homes and commercial development.
Jeff Kossow, Kennewick's director of planning and economic development, said Kennewick is on par to end up with about 300 single-family home permits at the end of the year, which was what was issued in 2010. The homes are being built in quite a few areas in the city.
Interestingly, while there are fewer permits for new homes this year, the value of those homes is higher, Kossow said.
The total value in Benton and Franklin counties for the 1,194 new homes permitted so far this year is $296.6 million, while last year, the 1,377 new homes permitted at this time were valued at $328.3 million total, according to data from the Home Builders Association of Tri-Cities.
But per home, the value so far this year is around $248,400, about $10,000 more than the average last year.
And commercial permitting has been at the same level for new construction, with more remodels this year, Kossow said.
"We are still doing well, all things considered," Kossow said.