Sagging property values and a difficult lending environment continued to put a damper on Clark County’s homebuilding recovery in November, according to a report issued Monday.
The county’s Department of Community Development issued 29 permits to build single-family houses last month, down 21.6 percent from the same month last year. November’s downturn followed similar drop-offs in October and September, as measured by permits handed out to build single-family homes.
The three-month backslide overlaps with a post tax-credit slump in local home sales. First-time homebuyers who signed sales agreements by April 30 of this year, and closed by the end of June, were eligible for up to credits of up to $8,000. A credit of $6,500 applied to move-up buyers who were selling a primary residence.
With those tax breaks in place, home construction more than doubled in the first half of the year — with 329 permits issued, compared with 159 permits issued from January through June 2009. Pre-owned home sales were up 41.3 percent, year-over-year. Then the tax credits expired, and real estate activity cooled.
In October, there were 334 sales of new and pre-owned homes in Clark County, down 43.4 percent when compared with 590 homes sold here in October 2009.
“Most of it is attributable to the expiration of tax credits,” said Tracy Doriot, a Washougal homebuilder and president of the Building Industry Association of Clark County.
Despite Clark County’s drop in housing starts over the last three months, overall homebuilding activity increased 35.6 percent in January through November compared with last year. The eleven-month period generated 487 building permits for single-family houses, up from 359 permits handed out in the same period in 2009.
Financing tight
Without the tax-credit incentive, some buyers have simply lost interest in new homes, Doriot said.
Moreover, he said most builders can no longer secure the financing to build higher-priced “speculative” homes without pre-approved buyers.
“Speculative financing is extremely difficult to get. A lot of us just aren’t interested in building spec at this point in the economy,” Doriot said.
That’s because most high-end custom home builders can’t compete with the price of comparably sized homes that are already built.
A lot of the homes on the market are either repossessed homes, foreclosures or short sales, Doriot said. “The market is down, so I can’t build a new house as cheap as you can buy one. That’s one of the issues we’re facing right now.”
