New-construction permit values in Spokane County totaled more than $1 billion over the past year, marking the first time that dollar amount was exceeded since 2008.
It’s also the second-highest dollar amount in history that’s been added to Spokane County’s tax rolls, trailing only $1.08 million in new construction values in 2008, according to the Spokane County Assessor’s Office.
The rise in new-construction values this year signals there’s more construction projects in Spokane County compared with recent years with 60% of permits issued for residential housing and 40% for commercial development.
Spokane County Assessor Tom Konis said new-construction values this year aren’t surprising, given the region’s booming housing market.
“We could see it coming. Just the sheer number of permits we had to look at was amazing,” Konis said. “What I don’t see is a real end in sight for us, especially with Amazon coming in and needing employees and Fairchild Air Force Base adding airmen. The multifamily housing market is really going to be having to work hard to meet the demand.”
More than 22 residential and commercial appraisers physically inspected 4,600 parcels individually throughout the county. Most of the new-construction permits occurred in Spokane County, followed by Spokane, Spokane Valley and Liberty Lake.
Commercial projects that drove up construction values included Amazon’s $181 million fulfillment center being built on the West Plains, the Inland Northwest Behavioral Health hospital at Fifth Avenue and Browne Street, Katerra’s cross-laminated timber facility in Spokane Valley and the Northern Heights apartments in Airway Heights.
“What this will do is allow the county, Spokane Valley and the city of Spokane to have more funds available next year to work on roads, public safety and things to that effect,” said Konis, referring to addition of the new construction to the county’s tax rolls.
Although existing home sales are down 5% compared with August 2018 in Spokane, the average sales price for new construction is up by 7%, said Rob Higgins, executive officer for the Spokane Association of Realtors.
Existing-home prices have been increasing because of low inventory in the market, he said.
“It’s certainly a tight market as far as inventory,” he said. “Even in new construction, we are going to continue to see prices go up. The county is growing, there’s no doubt about it.”
Joel White, Spokane Home Builders Association executive officer, said buyers – especially from out of town – are building more custom homes at higher prices compared with entry-level homes.
“I do believe there’s wealth coming in based on people selling their homes in Seattle, taking equity in their homes and bringing it over to Spokane,” White said. “They can use that equity to build.”
A shortage of construction workers is resulting in builders paying workers more than in past years, and that seems to be driving up new-home prices, he said.
White said as the county continues to grow, so does the need for more housing types, such as apartments, duplexes and condominiums. But that’s challenging because the county can’t expand its urban growth boundaries to add more housing until 2025, resulting in higher land costs.
Avista Corp.’s Chief Economist Grant Forsyth said permit activity in the county has been robust over the past three years, but housing market activity in 2008 was driven by single-family home construction.
Now, it appears there’s more activity in the multifamily sector, with an increase in residential and commercial infill stretching from Rathdrum to Cheney, he said.
Forsyth said construction activity is flourishing in part because the nation is experiencing its longest period of economic growth.
“It’s allowed for a lot of construction activity to occur,” he said. “We’ve had a long expansion with very low interest rates to finance projects, and that has supported construction activity.”
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