Real Estate Information Archive

Our inventory of “homes for sale” remained essentially unchanged from the month of July 2010.  Our total sales experienced as slight decline from the previous month, but substantially less than a year ago where 342 sales were reported during August 2009 as compared to 223 sales for August 2010.  One reason for the discrepancy is that the federal stimulus funding caused buyers to buyer sooner than they had originally planned. It will take the market to adjust to this external influence.   Our total sales for the year so far have exceeded the sales for last year.    The growing economy and the federal stimulus are primary reasons for this growth.  

If we review the pending sales for the period May-Aug, we have indications that the market may be slowing.  For instance, last year during this period we had a total of 1655 pending sales as compared to 1167 pending sales for this year.  Our market continues to indicate higher average and median prices than one year ago.

Personally, I believe the upcoming election may have an influence on the Tri-City market.  If the federal government reduces its overall spending, this could have an impact upon local budgets.  Budgets impact upon jobs and jobs impact upon the housing market.

Kiplinger  E-News identified the ten best places to raise a family. The communities were rated for healthy economies, strong schools, low crime rates and an abundance of parks and more. The City of Kennewick was identified as being the third best location in the nation following Ann Arbor Michigan and College Station Texas.   The study cites the region as including Kennewick, Richland and Pasco.  The report states, “The Tri-City region is noted for its strong research-based economy.  It weathered the recession with an unemployment rate of just 6.2% and plenty of high-tech jobs pursuing nuclear and other forms of sustainable energy.  Overall, the schools are strong, especially in the Richland School District, and parks and playgrounds are plentiful.”  The low cost of living has always been an attraction in our community. 

A few years ago, our community was recognized as being among the “safest” places to live.  That study included crime statistics and the low probability of having a natural disaster.

The Tri-Cities continues to be the “bright spot” for housing in the Pacific Northwest.  The statistics for single family building permits show a positive housing market.   The City of Richland is reporting 217 building permits this year as compared to the same figure for the entire year of 2009.  Kennewick has issued 216 building permits this year as compared to 248 for 2009.  Pasco continues to lead the building industry with 365 permits this year as compared to 463 for last year. With five months remaining in the year, all cities are likely to have more building permits issued this year than last.

The years of 2003 through 2006 experienced the major “building boom” in the Tri-Cities.   Following this period, we resumed normal and healthy new home construction.

As you may know, I recommend that everyone be mortgage free, if possible, when retirement approaches.  With mortgage rates being in the mid 4% range, this may be a good time to refinance and make additional mortgage payments to retire the debt.  One has to calculate the “pay back” period prior to making this decision.

Our sales, as expected, experienced a decline in July. As you may recall the federal tax credit program expired June 2010.  We dropped from a record high of 446 home sales in June to 224 sales in July. Even with this drop for the month our total sales exceed those of last year by 316 homes.   It appears that the lower priced homes have had a major impact upon the spring sales.  Our average and median sales prices reached new highs for the Tri-Cities with $219,400 and $202,100 respectively.

Our pending sales are substantially less than last year at 294 sales versus 414 for the previous year during this period.  Our late summer and fall sales may be projected to be less than those for the previous year, but our “total sales” may be similar.  

 Some buyers are having difficulties finding sufficient options to meet their needs.  Our market continues to be influenced indirectly by the national recession. Weekly I meet potential home buyers who have a home to sell elsewhere.

Our market overall seems to be a sellers’ market below $175,000 and a Buyers’ market above $475,000.  Overpriced properties continue to sit on the market while those in good condition and priced well, are selling.

As we closed out the statistics for the first half of 2010, one has a better understanding of the Tri-City growth patterns.   The City of Pasco continues to lead the Tri-Cities in new platted residential lots.  Last year the City of Pasco had a total of 267 new residential lots.  As we closed out June 2010, Pasco already had 305 new residential lots.   Many of these lots were developed for lower priced homes.   The City of Kennewick reported 107 new lots for last year and zero for this year.   

I assume with development money being limited, it is difficult to borrow for lot development.  The builders, who develop their own lots, seem to be having a distinct advantage.

National news reported last week as having the lowest mortgage rates in 30 years.  Rates were slightly over 4 ½ percent.  This situation has caused home owners to relook the option of refinancing a home. As I have previously reported, one has to approach the refinance business with clear thinking.  By that I mean one has to understand the “payback” period.   It’s computed by comparing the cost to refinance with the monthly savings reflected by the lower rate.  At some point in the future, one reaches the break-even point.  If one is not planning to stay in the home until the breakeven point is reached, it may not be in the home owners’ best interest to refinance.

One argument that I have heard by owners is my lender does not charge to refinance.  Lenders do not work for free.   The cost to refinance is normally applied to the principle; thereby building the cost into the loan.  Another option is the charge a higher rate to make a profit on the backend when the loan is sold.  

My recommendation is to analyze your needs and do the math.  If you need assistance, give me a call.

This month’s podcast addresses this subject.  Go to http://www.talkrealty.com/donhavre

I started my real estate career during the early 90’s.  At that time many homes I sold were in the Kennewick Park neighborhood.  This community has a common border with the City of Richland.  Over the years, we heard rumblings that the Steptoe Road Extension could occur at any time. (The future road would be the dividing line of the two cities.)  Many welcomed these remarks because the extension would provide easier access to the South Kennewick/Richland areas from the Steptoe off ramp of Highway 240. With this extension road traffic could be diverted from Columbia Center Blvd in Kennewick and Leslie in Richland.  The extension would allow increased development of the southern areas of both cities.

Last week construction finally started on the Steptoe Street extension. The project includes construction of curbs, sidewalks, storm drains, lights and landscaping with irrigation. Much of the funding is from federal sources.   I believe communities like Hanson Park will benefit greatly from this road.   Some home buyers have been reluctant to purchase in this area because of the routing necessary to travel to the North Richland Business Campuses.

This road extension is just another sign of the Tri-Cities’ growth and good community planning.

A good home inspector can save you thousands.  Recently I have noticed an increase in home inspections revealing major short comings.   Many buyers are of the opinion that new homes do not need to be inspected.   In a few cases where I know the builders and their quality control measures, an inspection may not be required, but is  recommended.  In most cases it makes good cents to have a home inspected prior to purchase.  

The best home inspector for you is based partially on your personality and expectations.  If you are not going to be present during the inspection, an inspector using numerous photos can be helpful.  If you plan to observe the process, an inspector with good interpersonal skills is desired.

For more on this subject, listen to this month’s podcast at http://www.talkrealty.com/donhavre

I reviewed the newly platted residential lots through May 2010.  Our total newly developed lots in Pasco have already exceeded those developed during 2009.  Last year Pasco had 267 new lots as compared to 305 for this year. The City of Kennewick is lagging behind last year. So far no new lots have been developed this year as compared to 107 for last year.   Richland’s lot developments are similar to last year.  Throughout the Tri-City area we have had 468 lots developed as compared to 647 for last year.

The concentration of new lots appears to be for homes priced below $200,000.  This is in keeping with our average sales price of $191,000.

As expected, the number of pending sales dropped during May 2010.  We experienced a decline in pending sales from 529 in April to 259 during May. The federal tax credit expiration attributed to this decline.  As you may recall the program expired on April 30, 2010 for contracts being prepared.  Contracts prepared prior to this date must close prior to July 1, 2010 to be eligible for the tax credit.

When we review the year, our total sales have experienced a 4% increase over the prior year. Both the average sale and median prices have increased as well.  Some believe the federal government incentive provided increased demand and therefore, increased prices.  I believe this situation to be true in the entry level market. If we experience a small decline in average and median prices within the next two month, this opinion will be supported.

Newer homes priced below $325,000 are in high demand. Most buyers are seeking newer homes and will purchase an older home if their budgets do not support new. Upper end older homes are in an over-supply situation.  Homes priced above $475,000 have supplies ranging from one to three years.