In Kennewick West Kennewick is the major sales leader with 417 sales last year.  The most expensive area is SW Kennewick (Badger Canyon and the Reita area).     In Richland the most sales and most expensive neighborhood continues to be South Richland (south of the Yakima River). 

West Pasco had 744 sales, far more than any other neighborhood in the Tri-Cities. 

Most expensive neighborhoods were South Richland, SW Kennewick, North Pasco and North Richland respectively.

Most sales by units were in West Pasco, West Kennewick, South Richland  and West Richland respectively.  If I were buying a home in the Tri-City area, I would consider this data for re-sale purposes. 

Wishing you and your family a wonderful holiday season and Merry Christmas!    Don Havre

And.. remember to give us a call for your real estate needs. 

Taking the Pending Sales Procedure I analyzed all neighborhoods in the Tri-Cities WA area.  The chart below indicates that West Pasco continues to be the hottest real estate market while SE Kennewick is the slowest with over 9 months of inventory.  The SE Kennewick area is best defined as south of 10th Avenue, East of Hwy 395 and west of Washington Avenue.  Canyon Lakes is in the NW corner of this neighborhood.   I believe this area is more sluggish because of its distance from North Richland where many high tech jobs are located and the Umatilla Chemical Storage area is near closure.

The most expensive area is SW Kennewick which includes the Badger Canyon and East Pasco is the least expensive area.   As a home buyer or seller it’s recommended you consider this data when making your real estate decisions.

As far as building permits are concerned, Pasco has been very active building on available lots.  Unless lot development increases, Pasco may be facing a lot shortage.  Last week I wrote on offer representing a buyer on the second to last lot for a major builder in North Pasco area.  What makes this area especially attractive is that the area is within the area qualifying for USDA loans.  USDA  loans require zero down and the seller may pay closing costs.  The majority of the sales for this builder have been financed by USDA loans.  This builder is moving its operations to Kennewick where it most likely will face higher lot development costs and will not be within a USDA area.  Therefore, economic factors imply the company may be facing an uphill challenge as compared to its Pasco development.

With interest rates at record lows, the buyers continue to require down payments to purchase unless qualifying government loans are available.

One of the best measures of a community’s growth is the monitor the area’s newly platted residential lots.    The September 2011 stats indicate that City of Pasco had 691 newly platted lots last year; therefore to be on a consistent time-line, the city should have approximately 518 lots through September.   The chart below indicates the city had only 231 lots.   Meanwhile, West Richland is showing similar lot development as last year and both Kennewick and Richland are well ahead of last year’s lot development.

Total sales through September 2011 were 2145 homes.  This is the lowest sales to September for the last three years.   The median sales prices continue to climb.  New construction and lot development are contributing factors.

Quarterly Washington State University publishes housing statistics for the State.  For the Second Quarter of 2011, I selected some counties to provide a comparison with the Tri-City area.   It is interesting to note that Benton County and Franklin counties had a 30% decline in sales as compared to the previous year while the state average indicated a decline of only 11.3%.    One reason for this difference is that other counties have experienced major sales declines during previous quarters.   The Tri-Cities continues to have a median sales price less than the State average and the prices are continuing to climb.  Our high percentage of new home sales is contributing to this situation.   For the lowest priced homes Lincoln and Wahkiakum Counties are the places to live and San Juan County is the most expensive.   I suspect many are building their retirement homes on San Juan Island.

The Housing Affordability Index (HAI) measures the ability of a typical family to make payments on a median priced home.  It assumes a 20% down payment and 30-year amortizing. For First-time buyers it assumes a less expensive home, lower down payment and lower income.   Based upon this measure the Tri-City area continues to be an affordable place to live for both first-time buyers and move up buyers.

I believe three major forces are impacting on the negative news.  One is the massive foreclosure backlog in some areas.   In states where a court order is required, it will take several years to process the paperwork.    The New York Times reported that it will take lenders 62 years to repossess the 213,000 New York homes currently in foreclosure.  New Jersey will take 49 years and a decade for Illinois and Massachusetts.

The second factor is the tight lending guidelines and the third is job market situation.   Until these factors are brought into alignment, our national market is not likely to become positive.

Secondly, low rents can be another factor of a healthy real estate market.  If it’s cheaper to purchase than rent, more will consider the home buying option.  One technique to assist in this analysis is the “15 times annual rent” formula.  For instance, if annual rents were $12,000 multiplied by 15, this equals $180,000.   If one were able to purchase for less than $180,000, buying may be a better option.

Finally, the article identified forecloses.  Healthy communities have low foreclose rates.

I believe the article misses a major point and that is price trends.  If one measures the average and median sales prices, one can identify a change in market direction.  We publish these statistics monthly and view the trends.  If this information would be of value, send me an email to Don@Key2Homes.com

PS for First Time Home Buyers, you may want to view my new video at http://youtu.be/5kg6rm8fkUE

Therefore, if one uses prices per square foot as a measure of value, one has to ensure that all other factors are essentially the same.  For instance, if one were comparing” track homes” all of the same size and features “plus the same lot cost”, this would be a valid comparison.  Otherwise one is comparing apples and oranges resulting in bananas.

Unfortunately, many real estate agents do not understand this concept and continue to use price per square foot as a means to determine value.   They take three comparables and determine the average price per square foot; then multiply that factor by the subject's total square feet.   Appraisers would never consider using such a method.

For access to Washington State University’s report CLICK HERE

Last week an excellent video was produced.  It is the first part of the Hanford Story.  It is approximately 17 minutes in length.  I recommend you view it if time permits.  As addtional videos are produced, you will be able to view them here.

Nearly daily I receive emails from home owners across the nation.  Their message is common, “We want to move or buy in the Tri-Cities, but our market is very soft.”  Until they are able to sell, they are unable to purchase here.  David Chu, the economist for the National Association of Realtors, provides his forecast for the national job and housing markets.    See the video below.