For Jason Wilkinson, one of the best parts of being a homebuilder comes at the end of the process.
“It’s when I hand keys to the buyers, knowing they’re going to make memories in something I built. That’s really satisfying to me,” said the co-owner of the Tri-Cities-based Prodigy Homes Inc.
Wilkinson started the high-end home company with his wife, Jasmine, in 2007. Prodigy has gained a reputation for craftsmanship and racked up accolades since its founding, including taking top honors in the “Best Workmanship” category at the Parade of Homes for 10 years running.
Still, there have been ups and downs.
Higher mortgage rates
Like other homebuilders in the Tri-Cities and across the country, Wilkinson said business this year has been a bit sluggish, largely because of higher interest rates. A 30-year mortgage averaged 7.19% in late September, according to mortgage buyer Freddie Mac.
“The summer was pretty bleak,” said Wilkinson, who also serves as vice president of the Home Builders Association of Tri-Cities. But he said buyers are adapting.
“I think it’s starting to level out,” he said, noting that buyers are getting used to higher rates and are learning about options and steps to mitigate. He also pointed out that home prices continue to go up, so buyers trying to wait out higher interest rates may not save in the long run by holding off.
Building permit statistics in the Tri-Cities show a drop in single-family home permits issued so far this year compared to recent years. As of August, about $253 million in permits were issued in the greater Tri-Cities area, from Prosser to Connell. That compares to about $313 million for the same period in 2022 and about $385 million for the same period in 2021.
‘Life events market’
Travis Davis, a broker with Coldwell Banker Tomlinson and president of the Tri-City Association of Realtors, said the market for selling homes also changed this year, driven by higher costs.
“Things have kind of moved into a ‘life events market,’ for lack of a better term. If people don’t have a reason to move, they’re not making the decision to move. I’d say that’s largely because of the cost of a new mortgage. People haven’t gotten used to the idea of 7% interest rates,” he said.
As a result, people aren’t putting houses on the market at the same rate they once were.
“They may want to upgrade their house or downsize, but they’re saying, ‘Wait a minute, my mortgage was locked in four years ago at 3% and it doesn’t make any sense to sell the house,’” he said.
Davis expects 2024 to be a stronger year for new residential construction compared to existing homes changing hands.
“I think the used-home market will be down, and I definitely see the new-home market picking up,” he said. “For the most part, I think you’re going to see probably flat-line units compared to 2023, but your mix is going to be more new construction. You’re going to see more stuff being built, and you’re going to see some lower price points for new construction. It’s just going to take some time.”
So far this year, a total of 2,189 homes have been sold, according to data from the Tri-City Association of Realtors. That is down from 2,920 from the same period in 2022.
In a recent study, the National Association of Realtors found that higher mortgage rates and home prices and lack of available homes in their price range were the biggest barriers for prospective buyers.
Wilkinson, from Prodigy Homes, said he’s optimistic about the coming year.
“After going through the year that we did, I’m excited to see what 2024 holds in store for us. I think it’s going to be on the uptick. That’s going to be great for everyone in this city,” he said. “Construction in the Tri-Cities has always been a big staple of the economy. It’s going to be good for everyone.”