Better days are ahead for Thurston County’s housing market, according to new South Sound home-sales and residential construction data, although the market remains slower than in the boom years of 2003 to 2006. Real estate experts, too, see signs of recovery, but they acknowledge that the housing market still has lots of room for improvement.
As home sales have slowed, so has the number of new homes being built here, according to single-family residential building permits issued by the county and its four largest cities. Through July of this year compared with the same period in 2008, the single-family residential building permit data show:
Lacey: Permits fell 37 percent.
Tumwater: Permits fell 68 percent.
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Yelm: Permits fell 47 percent.
Thurston County: Permits fell 26 percent.
Olympia: Permits rose 30 percent.
The Olympia growth is an encouraging sign for home builders, bucking a recent trend in which all residential building statistics were uniformly lower than in previous years.
Single-family residential building permits in the city rose to 39 through July of this year from 30 in the same period last year. And although permits fell in Thurston County in the same year-over-year period, the county’s permit-assistance center surpassed its revenue goals in July and August, said Cliff Moore, the county’s director of Resource Stewardship. That slight increase in revenue allowed the department to hire two associate-level planners and a building inspector on a temporary basis, Moore said.
“They are the volume business that we really rely on,” he said about building permits.
When the housing market cooled after 2006, a year in which more than 4,000 homes sold here, the county quickly began to feel the effect of that slower pace. Since, about 40 percent of the permit-assistance center staff has been cut, Moore said. The center’s hours also have been cut to 8 a.m. to noon, down from 8 a.m. to 5 p.m., he said.
Home builders are adjusting to new market conditions, too, Tumwater development-services director Roger Gellenbeck said. Based on the permits he has seen, builders have shifted their focus to the first-time homebuyer market, building new homes in the range of 1,400 to 1,800 square feet, rather than the more expensive range of 2,400 to 3,000 square feet.
And why not? Federal stimulus programs have created tax-credit incentives for the first-time homebuyer to help stimulate the economy.
Once Matt Haugh and Kaylene Smith of Olympia realized they could qualify for an $8,000 tax credit this year, they turned up the heat on their search and bought a 1,500-square-foot house in the city’s south Capitol neighborhood, near Lincoln Elementary School.
“The stars were aligned,” Haugh said, adding that they not only qualified for the tax credit but also purchased the house on a 30-year mortgage at a 5 percent rate.
Home builders are cautiously optimistic that the market is starting to improve, said Laura Kimbrough, executive officer of Olympia Master Builders, a trade association that represents builders in a five-county area, including Thurston County.
Kimbrough said the National Homebuilders Association is lobbying congress to extend the tax credit through the end of 2010 and to open it up to all buyers, not just first-time buyers. One concern is that lending remains tight for developers, especially those who develop raw land to sell lots to builders. Without that kind of financing available for developers, there could be a shortage of homes in three to four years, she said.
Meanwhile, home sales through July of this year are down from the same period last year, according to Northwest Multiple Listing Service data.
Sales have fallen 20 percent to 1,544 units from 1,936 units, the data show, but sales of single-family residences in June rose on a year-over-year basis for the first time in recent memory.
“We’re making progress, but we’re not out of the woods yet,” said Ken Anderson, broker and owner of Coldwell Banker Evergreen Olympic Realty. Like the residential construction market, there are bright spots in the home-sales data, he said.
For one thing, fewer home sellers are having to reduce the price of their houses to sell them, according to data compiled by Anderson’s office. In July, 58 percent of sellers had to reduce the price of their houses, down from 71 percent at the beginning of the year, he said.
The history of the Thurston County housing market also shows that excluding the boom years from 2003 to 2006, the area has produced steady price and sales appreciation.
The current recession still is unlike anything the county has seen before, Anderson said, but a study of the county’s housing market shows that over the past 20 years, the norm has been annual home price appreciation of about 5.9 percent and sales appreciation in the 4 percent to 6 percent range.
“Overall, we’re on the doorstep to better times,” Anderson said.
Rolf Boone: 360-754-5403