Story Photos
 Henry Gerhard talks about the Woodland housing market in the Meriwether Estates subdivision last week. Greg Ebersole / The Daily News
|
Economy, gas prices cool home sales in growing Woodland
Sunday, July 20, 2008 11:31 PM PDT
By Leila Summers
Printable version
E-mail this articleWOODLAND — Jim Groth planned to offer million-dollar homes in an upscale development along the Lewis River in Woodland.
"Then the market shifted," said Groth, a builder.
As a result, he's abandoned plans for the $1 million homes, and he's taking $200,000 less for some houses in River's Mist that could have fetched $500,000 two years ago. And he's stopped building new houses altogether while he sells off his unsold inventory of eight homes in River's Mist.
"It's a beautiful development," Groth said, but he said he can't continue losing money in the cooling market.
For years, Woodland's real estate market has been superhot, fueled by home buyers seeking more value than they could get in the Portland metro area. But troubles like Groth's are a sign that even the hottest real estate in Cowlitz County is feeling the effects of a nationwide housing slump.
Prices are falling, and city officials say 50 percent fewer homes are expected to be built this year than last year. And 2007 saw a 50 percent decline from 2006, said Bob Jones, who issues building permits for the city of Woodland.
"It's dead," he said of the housing market. "But it's trying."
In 2005, Woodland issued a record 134 building permits for single-family houses.
"This year, at the rate we're going, we might do 20 (permits) for the whole year," Jones said, noting that as of Thursday, the city issued about 10 this year.
He considers 30 to 40 permits the average for one year.
Sales of existing homes are slowing from last year. So far this year, only 42 homes have sold in the Woodland/Kalama area — a decline from 72 this time last year, according to the Northwest Multiple Listing Service.
A slower market is translating to lower home prices. According to the listing service, the median prices fell from $304,000 in June 2007 to $237,5000 last month.
Despite the fact that Cowlitz County offers cheaper land and lower taxes and utility rates than Clark County or Portland, Jones suspects gas prices are keeping buyers in the metro area. They're weary of making daily commutes, he said.
"People didn't mind doing that a year ago."
Rock bottom?
In addition to slowing construction, developer Henry Gerhard plans to start building one-story, less expensive homes in the Meriwether subdivision in East Woodland. The homes will be around 1,500 square feet, compared to 3,000-square-foot homes offered in phase one, he said.
"I would say it's something the market prompted," he said.
Some home prices in Meriwether Estates have been lowered, but not many, Gerhard said. Rather, the development team is offering "some incentives on financing, closing costs and upgrades" to entice buyers, Gerhard said. Homeowners get free access to a private club house — complete with exercise room and outdoor swimming pool — and private dog park, which opened two weeks ago.
"We use that to help draw people, give people a reason to chose us," he said.
Woodland is tied to the Portland/Vancouver metro market, which is also slowing, Gerhard said. He anticipates the market picking up again early next year.
"It's a matter of chewing through the inventory," he said, referring to the overall housing market.
He hopes building will pick back up again next year.
"Maybe not as fast as we originally envisioned, but it'll get there."
Developer Keith Pfeifer, who sold River's Mist lots to Groth for construction, said it appears the local market has hit rock bottom. He thinks things will pick up again late this year or early next year."It's certainly more difficult to sell lots," Pfeifer said. "And because of that we're ... pretty much just working off of current inventory."
Still, developers say Woodland's housing market is healthier than others in the nation — particularly California, where home prices are plummeting.
"Our prices didn't get run up as badly as some of the worst markets. That helped. There wasn't as much fluff in the values," Pfeifer said.
Impact on the city
The mid-decade housing boom was good for Woodland city coffers. But the cooling of home construction has punched holes in the city's wallet. Last year, revenues fell $310,000 below projections, partly because they city collected less in building fees and sales taxes related to housing construction. The city is expecting more shortfalls this year, too.
"As the city is concerned, it means we're going to have to tighten our belts a bit," Mayor Chuck Blum said.
On the up side, the housing stall gives the city time to improve its streets and utilities and especially address traffic congestion, Blum said. The city's population — now 5,000 people — has grown 40 percent in the past 10 years.
"In one way, it's kind of good, it gives us a breathing spell, help us get a handle on this transportation issue," Blum said. "Maybe we can solve some of those problems."
Sellers must be realistic
Gary Gonder, a broker with Coldwell Banker Real Estate in Woodland, said part of the problem with the current market is when people price their houses above the current market value. It's a trend becoming too common and has prompted Gonder to turn down some listings.
"There's a lot of houses on the market that are overpriced," he said. "If it's been on the market more than 30 days, I tell people it's overpriced."
It's becoming common for people to sell their homes for less than they owe on it and working with banks to forgive the difference, Gonder said. Banks, he said, would rather homeowners sell a house for what they can than go through the expense of foreclosing and marketing houses themselves.
"I'm working with one right now that there's like a $30,000 discrepency," Gonder said. "And it's simply because what these people have done is they're chasing the market down. They originally put the house for sale at $335,000, and it should have been $300,000. Now it's for sale at $249,000."
Gonder said the Woodland market isn't dead — but people need to understand they've got to price houses to sell.
"It's O.K. if you have to sell it at today's market (price) because you get to buy at today's market" prices, he said. "You can get more house for your money than you've ever been able to. ... Once the market takes another slight correction, these houses are going to be worth a lot more."
BigMike wrote on Jul 21, 2008 7:57 AM:
kitten wrote on Jul 21, 2008 8:47 AM:
The Stig wrote on Jul 21, 2008 9:07 AM:
worker bee wrote on Jul 21, 2008 12:24 PM:
jbinwa wrote on Jul 21, 2008 12:48 PM:
worker bee wrote on Jul 21, 2008 2:17 PM:
MomOf wrote on Jul 21, 2008 2:47 PM:
As for the high school, some may think it's good that the bond didn't pass now, but I hope it does in the next few years. 2 of my kids attend the primary school, which has had to hire more teachers over the last couple years, just to keep classes under 30 kids. Classes are full but the teachers are wonderful. According to the school website, in 2006-2007 school year, there were 561 students in just 4 grades, K-3. Quite high for a town of population 5000. The school is busting at the seams now, and without a larger school down the road, their educations will suffer.
Just my 2 cents. "
columbian wrote on Jul 21, 2008 7:29 PM:
Past Month's Most Commented Stories