The Tri-City housing market got off to a slow start this year, but low interest rates, a first-time homebuyer tax credit and the return of confidence have jumpstarted home buying and selling, industry officials say.
Agents were showing a lot of homes to potential buyers who weren’t quite ready to bite and offering market analysis to hesitant sellers, but that’s changing.
During the first three months of the year, 541 homes sold, compared with 643 during the same time in 2008, according to information last week from the Tri-Cities Multiple Listing Service. That’s a drop of about 16 percent.
The average sale price also declined, from about $186 200 in the first quarter of last year to $181,500 during the same time this year, about 2.5 percent decrease.
The median sales price, meaning half of the homes sold for more and half for less, declined about 3 percent during the first quarter, from $165,000 to $159,900.
“Anytime the statistics show the numbers are down, it’s of some concern,” said Glen Clark, president of the Tri-City Association of Realtors. He attributed the slow first quarter to bad weather and continued “doom and gloom” national news.
Notices of trustee sales, meaning homeowners have 90 days to get their home loan payments current or sell their homes before foreclosure, took a jump in the first quarter.
The Benton-Franklin Title Co., reported 259 notices through March, compared with 213 during the same time last year. That’s nearly a 22 percent increase.
But the number of homes on the market has remained steady and even declined a bit. There were 1,249 homes for sale on April 1, according to the association down from 1,344 a year ago.
“We’ve got a lot of folks coming into town,” Clark said.
Add that to contractor financing for new spec homes, new jobs opening up at Hanford as a result of federal stimulus money and low apartment vacancy rates, and officials see a market gaining speed.
“I’d say that the market’s definitely heating up,” Clark said.
The fact that spec homes are starting to sell means builders can get loans for more construction, said Jeff Losey, executive director of the Home Builders Association of Tri-Cities.
“Last October, when the financial industry started to collapse….the spec market ceased to exist,” he said.
During the first three months of the year, 180 new home permits were issued, according to the HBA. That’s down nearly 46 percent from the 331 permits issued in the first quarter of 2008.
“Banks will lend money if you’re not already sitting on some (spec homes),” Losey said. “The first quarter was dismal, but the second quarter is shaping up to be much better. Activity is really starting to pick up.”
Custom homes and remodels made up much of builders’ recent work, he added.
Don and ShaRon Winder are getting ready to add to local builders’ workload. The Richland couple just sold their home and are building a new one in West Richland.
“We were worried about the economy…..but it fit our timing,” said ShaRon. The Winder home was on the market for nine months, with one deal that fell through in September, but it was set to close last week, she said, at a sale price of $234,000.
Now they’re waiting for a city permit to start construction on their new home, built to suit them as they get older, SharRon said. “We’re able to make things the way we need them for the future,” she said.
The fact that Tri-Citians are feeling more confident and buying homes again is encouraging. More than 220 homes went under contract in April, compared with about 230 a year ago, according to MLS information. And the inventory of homes in lower price ranges is getting ever tighter.
In the $125,000 to $149,999 range for example, it would take less than three months for inventory to run out based on the number of homes on the market in March and the number that went under contract.
Historically low interest rates and an $8,000 tax credit for first-time homebuyers also are starting to stimulate the market, officials said.
The tax credit is available to buyers who haven’t owned a home in three years and who buy a home before December 1, according to the Internal Revenue Service. The credit applies mostly to those whose income is capped at $75,000 for single filers and $150,000 for joint filers. And the credit doesn’t have to be repaid if the buyer stays in the home for three years.
Statewide, the tax credit and low interest rates made for a March that was improved over an “abysmal” January and February, said Glenn Crellin, director of the Washington Center for Real Estate Research, a Washington State University research group.
“There’s a lot of unwillingness on the part of potential buyers to actually pull the trigger and to undertake a long-term commitment,” he said.
But home prices are lower and interest rates continue to hold below 5 percent, according to the Mortgage Bankers Association.
“This is a good time to make a purchase,” Crellin said.