Tri-Cities comes in second for housing market recovery

By Kristi Pihl, Herald staff writer

Tri-City home prices are expected to grow by 3.4 percent this year, ranking the area second in the nation for best recovery in the housing market.

The recent rating by the Housing Predictor, an independent real estate market forecaster, is more evidence of how well the Tri-City economy is doing, said Rene Dahlgren, Home Builders Association of Tri-Cities director of government affairs.

Housing Predictor said the only housing market expected to see more growth in home prices is El Paso, Texas, which is expected to see a 3.7 price increase.

It's hardly the first time the Tri-Cities has made lists of best housing markets, Dahlgren said.

In February, the Tri-Cities was named the fifth best housing market, according to Builder Magazine. In 2010, the Tri-Cities was fifth on the list of best performing large cities based on job and salary growth as rated by the Milken Institute, and ranked first out of 372 areas for employment growth in the last five years by Garner Economics.

And despite looming layoffs at Hanford, Dahlgren said they hope the market will remain strong and that the economic slump will be less than in the past.

"We've definitely come a long ways in diversifying our economy," she said.

Having a strong housing market is a good indicator of whether the economy is going well because that means people are willing and able to invest in real estate, Dahlgren said.

In 2011, 890 single-family homes received building permits as of July, according to the Home Builders Association of Tri-Cities. Pasco had the most new home permits, at 321, while Kennewick had 192 and Richland 175. West Richland issued permits for 80 new homes.

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Tri-City housing market rated at No. 17 by magazine

By Kristi Pihl, Tri-City Herald

The Tri-Cities is expected to have one of the top 20 healthiest housing markets in the nation next year.

The Tri-Cities, at No. 17, was the only metropolitan area in the Northwest to make the list created by Builder Magazine and Hanley Wood Market Intelligence.

The healthiest of the 100 largest markets nationwide were determined using home prices, employment, population projections, unemployment rates and median household incomes, said Jonathan Smoke, executive director of research for the real estate research firm.

The Tri-Cities does well in all categories, and each is expected to improve in 2012, he said. For example, the area's home prices are expected to grow by about 3.8 percent next year.

The Tri-Cities might be one of the smaller markets to make the top 20 list, but the area's economy has been relatively strong during the national housing downturn and recession, Smoke said.

Already, construction permits in the Tri-Cities have been rebounding for more than a year.

The area also has an above-average number of high paying jobs, combined with relatively affordable housing, Smoke said.

And the Tri-City home ownership rate is higher than the national average, he said. It increased to 69.5 percent in July, while nationally the rate is 66 percent and has been declining each year.

The Tri-Cities is the most affordable metropolitan area in the state, said Paul Roy, president of the Tri-City Association of Realtors.

Housing affordability means it has made more sense for families moving to the Tri-Cities in the past decade to buy homes rather than to rent, he said.

An increasing home ownership rate combined with a growing number of households creates a demand for homes, Storm said.

Roy said August and September were disappointing in terms of home sales in the Tri-Cities. Consumer confidence is low, but he expects that confidence to improve.

Through September this year, 2,145 homes were sold in the Tri-Cities, according to a report by Coldwell Banker Tomlinson Associated Brokers of Kennewick.

An average of almost eight homes were sold each day so far in 2011, compared with about nine homes sold a day on average in 2009 and 2010, according to the report.

Roy said October sales should end up better than the same month last year.

There is about eight months of inventory for sale because of fewer sales and more listings, he said. But he expects that anomaly will correct itself after winter.

Inventory is based on the sales pace in the past, he said. And if things pick up to 2008, 2009 or 2010 levels, the housing inventory will be just right.

The Tri-Cities is estimated to have 1,244 new homes issued building permits this year and 1,099 in 2012, according to Builder Magazine's report.

Rene Dahlgren, director of government affairs for the Home Builders Association of Tri-Cities, said builders expect to see a similar number of permits for new single-family homes next year as this year.

As of September, 1,089 permits for new single-family homes were issued in the Tri-Cities, and about 1,300 total are expected by the end of the year, according to the association.

Dahlgren said that is sustainable and keeps builders relatively busy. But they would like to see some growth.

Unlike the rest of the state, the Tri-City home market has maintained its stability, she said.

-- Kristi Pihl: 582-1512; kpihl@tricityherald.com

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Housing market does well, despite Hanford layoffs

By Kristi Pihl, Tri-City Herald

Thomas Masterson, owner of T.R. Masterson Construction of Washington, stands in front of his latest project, the Canyon Crest Apartments in Richland. He doesn’t expect the recent layoffs at Hanford to affect the demand for Tri-City apartments. See story below.

RICHLAND — Richland's Canyon Crest Apartments are starting to fill with residents, even though the 30-unit complex isn't expected to open until the end of November.

Thomas Masterson of T.R. Masterson Construction doesn't expect the recent Hanford layoffs to slow demand for his new apartments.

"We couldn't be happier," said Masterson.

The $1.96 billion in stimulus money from the American Recovery and Reinvestment Act, which pumped up jobs at the Hanford nuclear reservation in the past two and a half years, is mostly spent now.

But despite almost 2,000 layoffs so far at Hanford and up to another 1,060 possible by fall, many apartment owners and homebuilders remain optimistic about the Tri-City housing market.

"People have to live someplace," said Masterson, a builder for 35 years.

Hanford helped keep the Tri-City housing market healthy while the recession beat up housing markets in many other parts of the nation.

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said he doesn't see the same thing happening here.

With the stimulus money spent, Crellin said he expects some softening, with fewer home sales and some declines in prices. But there isn't likely to be the plummeting prices other regions have seen.

The Tri-Cities is on a different cycle than the rest of the state, he said.

Rick White, Pasco's economic and community development director, agreed, saying he expects to see a minor dip in the housing market that will even out over time.

Interest rates are at record lows, possibly helping to counteract the impact of the Hanford cuts, he said.

Pasco isn't seeing much of a slowdown in home construction. The city ended September with 402 new permits for single-family homes -- just 41 fewer than at the same time last year.

Katie Wilson, assistant manager at The Crossings at Chapel Hill in Pasco, said they expect the Hanford layoffs will mean more of their 228 apartments will soon be available. But the demand for apartments remains high.

The Tri-Cities' apartment market has been operating at an almost unprecedented vacancy rate of 1 percent to 2 percent for a couple of years, said Crellin.

Last month in Kennewick and Pasco, 97 percent of apartments were occupied, while in Richland, there was 95 percent occupancy, according to the survey completed by Kennewick's Crown Property Management.

The layoffs could help the market return to a more sustainable 5 percent vacancy rate as workers who came specifically for stimulus-funded jobs move, Crellin said.

Most property managers consider a 5 percent vacancy rate ideal because it gives managers a chance to keep up on maintenance, he said.

Typically, new apartment construction eases rental shortages, but tight lending because of the national economy means that hasn't happened in the Tri-Cities, he said.

Even in the early '80s, when about 10,400 people lost their jobs, Masterson said his Kennewick company kept going for several years building custom homes. Although the volume was down, homes still were needed.

Similarly, just this month ground was broken on a new 5,000-home planned community called Badger Mountain South.

Paul Roy, president of the Tri-City Association of Realtors, said he is more worried about "perceptions" than the actual economy.

If consumer confidence is low, people are more hesitant to make financial commitments, he said. And because consumers are responsible for about 70 percent of the economy, he said it's a self-fulfilling prophecy if they stop spending.

Still, Roy said believes the Tri-Cities will end the year with a similar number of home sales to last year.

During the last major round of Hanford layoffs in 1995, when about 5,400 jobs were cut, people still were buying homes, he said. Sales took a temporary dip before picking up again.

And the Tri-City population is continuing to grow, Roy said.

Contributing to that growth are retirees moving here from other areas because of the affordable cost of living, mild weather and good services, he said.

"What we can't lose track of is that we are selling houses every day in the Tri-Cities," Roy said.

-- Kristi Pihl: 509-582-1512; kpihl@tricityherald.com

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