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
Read more: http://www.tri-cityherald.com/2011/10/18/1683490/housing-market-does-well-despite.html#ixzz1cz6Jnh2e
