Tri-Cities Washington Real Estate News & Blog

The Mid-Columbia’s real estate market, which set records during 2005, slowed last year with fewer homes being built and constructed.

Home sales in 2006 were down 5.7 percent from 2005, according to statistics from the Tri-Cities Association of Realtors.

There were 3,543 homes sold in the Mid-Columbia last year, compared with 3,757 in 2005, when the area’s realtors set sales records. But the decrease was barely perceptible to real estate professionals, said Dani Gilchrist, president of the Tri-Cities Association of Realtors.

“It’s been a steady market,” she said.

The Mid-Columbia didn’t experience the drastic home price increases seen in some areas on the west side of the state, which also means the area won’t experience a huge drop off, she said. Much of the reason the home prices here didn’t jump up in price was because of the vast amount of land available.

“We have land and builders who are willing to come in and develop it,” Gilchrist said.

The steady market has helped the average price of the homes being sold increase by 3.5 percent over the year to $179,000 and the median price increase by 3.9 percent to $160,850.

Across the Mid-Columbia, construction of new homes fell by 26 percent in 2006 compared with the previous year.

According to statistics from the Home Builders Association of Tri-Cities, there were 1,596 building permits for new homes issued during 2006 compared with 2,147 in 2005.

“It’s definitely slowed,” said Jeff Losey, executive director of the HBA. “But it’s a more comfortable pace.”

Losey said that although the pace slowed, area builders and subcontractors didn’t have any problem finding enough work to keep them busy.

Dave Schneider, owner of Pinpoint Construction, a general contractor based in Kennewick, said 2006 was his busiest year.

“I worked more than I wanted to,” he said.

In Benton County, the number of new home permits dropped 23 percent, from 184 permits issued during 2005 to 142 last year and the values of the permits also fell. In 2005, the value of building permits for new homes in Benton County added up to $45.24 million, last year they totaled $34.85 million, also a 23 percent drop.

Franklin County had a 15 percent decline in new home permits during the same time, from 54 in 2005 to 46 in 2006, with the value of the permits falling 12 percent, from $14.5 million in 2005 to $12.7 million last year.

Area cities experienced a larger decline in newly built homes last year than the counties.

In Kennewick, single family home building permits dropped 22 percent, from 405 permits issued in 2005 to 314 last year, but the total value of the permits only fell 8 percent, from $73.8 million to $68 million.

Bob Hammond, Kennewick’s city manager, said an increase in commercial construction this year has more than made up for the residential slowdown.

“When we put together all our building permits, in 2006, we had $142.9 million in valuation, compared to $125.3 million in 2005,” Hammond said. “So looking at total revenue, it’s bumped up a bit.”

And with new residential lots platted in the Southridge area and additional commercial growth planned there as well, Hammond said he believes 2007 will continue with slow, steady growth.

“Nobody has a crystal ball, but we don’t believe there are going to be any substantial changes in the trends,” he said.

Richland officials also are optimistic, despite a 14 percent drop in building permits for new homes, from 335 permits issued in 2005 to 287 in 2006. The value of the permits dropped 5 percent during the same time, from $80.15 million to $75.86 million.

Of the area’s major cities, Richland experienced the lowest decline.

“One of the reasons we were relatively strong last year is because of development at Horn Rapids,” said Bill King, Richland’s deputy city manager.

King said the downturn wasn’t unexpected and that, like Kennewick, commercial development also filled the gap during 2006.

“We had a record year for new commercial development so that offset the drop in residential,” he said. “I think we will continue to see slow but steady growth in the housing sector, and a little more in commercial.”

Pasco saw the biggest plunge in new housing starts. In 2005, 995 new home permits were issued in Pasco, adding up to whopping $162 million in valuation; last year, that dropped 32 percent to 679 permits, worth an estimated $127.70 million.

But Gary Crutchfield, Pasco’s city manager, said he didn’t believe the drop-off in new houses being built was altogether negative.

“I would call it a welcome relief from the pace we have seen over the past few years, which stresses the community school system’s and traffic,” he said. “A little slower growth will be easier on the entire city.”

Crutchfield said city officials have known for several years the building boom was temporary.

“Frankly, it came a year or two later than we expected,” he said.

Crutchfield said he expects housing in Pasco to drop off even more in 2007, settling out at about 500 new homes being built a year.

“The city needs to focus on the commercial industrial growth to balance out the cost implications — we need a good balance of both,” he said. “We’ll accommodate residential growth, but we aren’t fostering it.”

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University’s College of Business and Economics, said the drop in sales and new home building permits likely makes the Tri-Cities market buyer-friendly.

“There’s a lower level of sales and increasing inventories, so buyers have more choices and likely, individual sellers are going to say they can’t get the price for their home that they could a year ago,” he said.

Joel Hill, a job superintendent for Aho Construction, agreed with that assessment.

“If I had my choice, we would be back where we were (two years ago),” he said. “We are hungry. Buyers have a lot more choices right now.”

This story was published Sunday, February 11th, 2007, by Mary Hopkin, Tri City Herald staff writer.

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