New-home construction on rise across region after dismal 2011
Danny Sullivan, owner of Danny Sullivan Construction, said 2012 has been his company’s busiest year ever.
He adds with a laugh, however, that he started the Spokane business six years ago, right as the region and the Spokane housing market began sliding into recession.
Sullivan’s view that the industry is looking up is seconded by other builders in the area.
The number of new-home construction permits in Spokane County is up 13 percent compared to 2011.
And in Kootenai County new- home construction permits are up 23 percent, according to data collection company Construction Monitor.
The numbers make builders and city governments feel more positive heading into the second half of 2012. The economic impact of new homes and new apartment buildings is much larger than sales of existing homes, said Joel White, executive officer of the Spokane Home Builders Association.
“New homes create more jobs (than existing home sales), and they generate a large net impact in total dollars spent in the economy,” White said.New home construction has big impacts on the sale of goods and materials, especially including furnishings, lumber and garden supplies, he noted.
But White said the market uplift needs to be seen in context. Last year was a dismal real estate period, and double-digit gains are not hard to obtain comparing 2012’s first half to those of 2011, he said.
In addition, while interest rates are historically low, the people who “most need the low rates are the ones who struggle hardest to get loan approvals from the banks,” he said.
Sullivan said his company is finding buyers for both custom and spec-built homes, at prices between $250,000 and $300,000. He’s building in the Five Mile area of northwest Spokane, he said.
White said new construction is also strong this year in Liberty Lake and Deer Park.
New home construction in the city of Spokane is up by 15.5 percent compared to one year earlier. Most of those homes are being built primarily in two locations: Kendall Yards, the Greenstone mixed-use project along the Spokane River, and Eagle Ridge, on the west side of U.S. Highway 195.
Jim Frank, CEO of Greenstone Corp., said the company got 30 permits for new home construction last year and about the same this year so far.
Lori Henriksen, vice president of operations for the company building out Eagle Ridge, said that development added 63 new homes last year, and expects to add about 30 more in 2012.
Homes are selling, she said, but there is no urgency for buyers.
“You don’t get the feeling (among buyers) that the home will be gone if they don’t buy it today,” Henriksen said.
New home sales are tied closely to sales of existing homes, White noted. Nearly all the homes built end up in the possession of homeowners who first must sell the home they’re in – and generally those involve families upgrading to larger, more expensive homes, he said.
Both the Spokane and Coeur d’Alene Realtors’ associations report clear gains in sales of existing homes and the median prices paid for those properties.
Steve White, co-founder of Coeur d’Alene-based Copper Basin Construction, said his company has seen a 30 percent increase this year in new homes under construction. “We’re doing just homes for now, but there’s also activity (in Kootenai County) for new apartment projects,” he said.
Frank, of Greenstone, sees the surge in multifamily activity underlining the continuing uncertainty about the economy. Area residents concerned about jobs and wages are holding off investing in homes, and increasing the demand for apartments, he said.
The numbers support his position: so far 18 apartment projects for 411 units have been approved in Spokane County, compared with 2011’s 14 projects and 316 units, measuring January through June.
In Kootenai County for the same periods, four apartment projects totaling 175 units have been approved this year, compared with five projects totaling 98 units last year.