The tightest residential market in Tri-City memory has home buyers, real estate agents and even sellers scrambling to make deals.
There were just 583 active residential listings in May — roughly half of what would be considered a normal market.
“We are in territory that we have never been in,” said Lola Franklin, chief executive officer for the Tri-City Association of Realtors.
There were enough homes available in May to satisfy the current level of demand for less than 1 1/2 months, a figure that puts the market firmly in control of sellers.
Sign Up and Save
Get six months of free digital access to the Tri-City Herald
A normal market features a four- to six-month inventory or at least 1,500 active listings based on 395 sales in May, according to Realtors data.
We are in territory that we have never been in
Lola Franklin, Tri-City Association of Realtors
The residential market typically heats up in the summer and will cool somewhat when the school year begins. But seasonality only partly accounts for the Tri-City home drought.
Area brokers say a perfect storm of job growth, an influx of retirees attracted by the low cost of living and difficult lending standards for land developers are behind the challenging situation, as are the lingering effects of the slowdown in construction that accompanied the Great Recession.
“I think we’re going to be three years before we have inventories back to normal,” predicted David Retter, designated broker and owner of Windermere Tri-Cities, the area’s largest residential brokerage.
The Tri-City home inventory has hovered below the 1 1/2 -month level since March and hasn’t risen above the three-month level since February 2015, when there were 878 active listings and 247 sales.
There are indications the housing market is at the limit of what buyers will bear.
The number of closed sales and the number of new contracts both fell in May relative to a year ago, according to Trendgraphix Inc., a real estate data service. Closed sales fell nearly 4 percent and new contracts fell more than 8 percent, it said.
Over the same period, the average home price rose 10 percent to $246,500, according to Realtors association data.
I think we’re going to be three years before we have inventories back to normal.
David Retter, Windermere Tri-Cities
Not surprisingly, home construction is soaring. Though brokers say it’s still difficult to finance land development, local home builders have stepped up the pace of new home starts.
The Home Builders Association of the Tri-Cities said 601 permits for single family homes have been issued in 2016 to date. That’s up 28 percent over the same period in 2015 and 36 percent over 2014.
Kennewick with 151 starts and Pasco with 152 accounted for half the total. Richland had 107. The others were Benton County 97, West Richland 46, Franklin County 37, Benton City 10 and Prosser 1.
The tight market is frustrating for buyers, agents and even sellers, said Retter.
Well-priced homes regularly attract multiple offers on the day they’re listed, but closing deals is tough when prices are rising.
Lender-required property appraisals don’t always agree with the price in sales contracts because appraisers have to base value on past deals.
“Any time the market goes up, we struggle with the appraisals,” Retter said.
97 Benton County
46 West Richland
37 Franklin County
10 Benton City
601Total year to date
72 Manufactured homes*Home Builders Association of the Tri-Cities
Buyers are under pressure to act quickly when they find the home they want to buy.
Dennis Gisi, co-owner of John L. Scott Tri-Cities Pasco, said buyers can feel pressured to act quickly, especially if they’ve made unsuccessful offers on other homes.
“Clients get anxious to get into a house. That’s a danger,” he said.
He called the current climate “real-time real estate.”
Buyers agents have to know what is coming on the market and when and to get their clients to them as quickly as possible and write offers almost on the spot.
“Many times, we are competing with other agencies. We’ll submit an offer and we’ll be one of four,” he said.
Good agents aren’t only interested in the sale. They want to make the right sale. If an anxious buyer wants to buy something that doesn’t seem to fit, agents have to ask questions and point out that the property isn’t what they described in their criteria.
“(The agent) has to have your best interests in mind, including not only telling you if something is overpriced for the market, but really to protect you and keep you focused.”