Fewer Kennewick, Richland, Pasco, and West Richland homes were built in the Tri-Cities area in the first half of the year than during the same period in 2005, but builders and other industry experts remain upbeat about the market.
During the first half of 2005, 1,077 new home permits were issued throughout Benton and Franklin counties. Through June 30 of this year, only 898 had been issued.
“It has slowed down, but we are keeping up at a more comfortable pace,” said Jeffrey Losey, executive director of the Home Builders Association.
And although the number of building permits has dropped, the estimated valuation of those permits has been more closely aligned with the 2005 numbers.
For instance, during the first half of 2005, 206 building permits were issued in Kennewick. This year, only 182 permit were given out — a 12 percent drop. But the total valuation of those permits only dropped 1 percent, from $38.5 million in 2005 to $38.1 million this year.
“The cost of things is just creeping up,” said Keith Sexton, co-owner of the Richland-based Mahalo homes.
Benton County and West Richland saw the largest decreases in the number of building permits.
In Benton County, building permits issued for the first half of the year dropped from 93 in 2005 to 73 this year. West Richland went from 77 permits last year to 57 this year during the same period.
The only city that saw an increase was Prosser, which doubled the amount of residential home permits it issued, from three during the first half of 2005 to six this year.
The cost of developing land — laying down asphalt, which is petroleum-based, and putting in sidewalks — has increased. And the cost of lumber is slowly, but steadily creeping up. And asphalt shingles. And copper wiring.
“It all goes right back to the cost of fuel,” he said. “And we have to bring everything to the job site, so this year it costs us twice as much to get the materials to the job.”
Building the same home in the same neighborhood would cost at least $10,000 more this year over last year because of those increases in construction costs, said Sexton, whose company has built about 300 homes in the Tri-Cities in the past four years.
Rick White, Kennewick’s city planning director, said the drop in new home permits likely reflects the nationwide trend.
Nationwide, new residential construction building permits were down 4.6 percent through June, according to statistics from the U.S. Census Bureau, and in the Western region, they were down 13.5 percent.
“I’m not concerned with the slowdown, because we still have a lot of product, in various price ranges available,” said White.
Appraiser Paul Henderson, M.I.A., president of Henderson & Associates, said although high-end homes are moving a little slowly, those priced below $350,000 appear to be selling well.
In fact, homes sales for the first half of the year are up about 2 percent, compared with last year, according to statistics from the Tri-City Association of Realtors.
During the first half of 2005, 1,727 homes were sold.
That number was up by 32 homes through the first half of this year.
Henderson said he also tracks the inventory of homes available to determine how healthy the market is.
“We compute the available market supply, and based on the number of homes, determine how long it would take to sell them out,” he said.
Henderson said in July, if no more homes were built or put on the market, it would have taken 4.6 months to sell every home available.
And although the number fluctuated throughout the past year, it never rose above 4.6, which is a reasonable inventory, he said.
“We had other periods of time where the market was having problems,” he said.
“In July 1995, that indicator was 7.6, so overall, the real estate market is stable.”
This story was originally published Saturday, August 19th, 2006, by Mary Hopkin, Tri City Herald staff writer.
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