The Columbian | Serving Clark County, Washington

No one knows when Clark County’s demand for new homes will return.

In the meantime, prices may continue to decline as the supply of vacant housing lots stacks up.

Nearly 4,000 vacant Clark County home lots stood ready for construction — complete with utilities, streets, curbs and gutters — in the three months ending in September, according to a report from NAI Norris Beggs & Simpson. And with nearly 3,300 additional lots platted and waiting for development, it’s no surprise that lot prices are down.

The report, compiled by Portland consulting firm Johnson Reid, found there were 10,200 ready and empty housing lots within the four-county Portland metro area. About 56 percent were concentrated in Clark County.

“Portland has a much tighter UGB (urban growth boundary),” map lines that keep new development to the fringes of populated areas, said George Diamond, president and broker of Real Estate Investment Group in Portland. The company is in the process of buying 59-lot Canyon Ridge subdivision in Ridgefield.

“You’re going to be saving anywhere from 40 (percent) to 50 percent on the original cost of the lot. Once that burns off, you’ll see increased values,” he said.

In some parts of Clark County, a single-family lot that would have sold for $100,000 at the peak of the home-building boom has dropped to between $55,000 and $65,000.

The lots have already gone through entitlement, an expensive and time-consuming government permitting process that can take anywhere from two to four years to get all the approvals.

“When you buy finished lots, you can sell them immediately when the market turns,” Diamond said.

‘Patient money’

Bargain residential tracts are bringing a trickle of investors into the market, according to real estate experts, who say those who buy now might make a killing by selling the lots back to builders when a rebound comes.

But just like house flippers who turned profit by buying and selling houses, finding the best time to buy is the trick for investors eyeing the backlog.

Buyers (or investors) must have “patient money,” or capital they don’t have to pay back right away, unlike most local home builders who were caught holding quick turn-around construction loans when the housing market cooled.

“The holding period we’ve used for our analysis has been two years,” Qualman said, but he acknowledged that it could take three years before there’s a robust market for the lots.

Builders and developers say little bank financing is available to help buy up the lots.

Crystal ball

Just when the demand for new homes will return is an educated guess, experts say.

Through November, local builders have been issued 360 permits to build homes with an estimated total value of $84.6 million. It will be the worst year for home building in 20 years, even if builders take out another 40 permits in December to make 2009 an even 400-permit total.

“It’s like looking into a crystal ball,” said Terry Wollam, a real estate agent with Re/Max Equity Group’s Vancouver office, who does not expect a burst of new-home construction until mid-2012.

Wollam and others expect a second wave of homeowners will be hit with adjustable-rate mortgages, set to bump higher in the next two years.

“There could be another six to nine months of foreclosures after that,” Wollam said.

Builders, in the meantime, are trying to ward off foreclosure on the housing lots they purchased at much higher prices.

Today, those ready-to-build lots pose a burden for many home builders, who have scaled back production, and for banks that are stuck with defaulted construction loans.

“You’re paying for what it was valued for at the time,” said Jon Girod, a builder and owner of Vancouver-based Quail Homes. His company built 22 houses this year, down from a six-year high of 70 houses a year, he said.

“I truly feel like we’ve bottomed out now,” Girod said, among the chorus of home builders who say new-home construction and jobs will go hand in hand.

Many say a stronger job market in Clark County will be the key to increasing home sales. But with months of double-digit unemployment rates, the county ended November with the fourth-highest jobless rate out of Washington’s 39 counties.

“The housing problems will take care of themselves with job growth,” said Ott Gaither, a Vancouver home builder.

At the peak of home building in 2005, the county handed out 2,142 building permits for new homes worth $392.5 million. That year, the industry was paying wages to more than 13,000 construction workers — carpenters, electricians, plumbers, roofers and concrete workers. In November, the construction sector had lost 1,600 of those jobs.

“In addition to jobs, we’re also trying to do everything we can to take the unnecessary fees out of the price of building a home,” said Mike Bomar, the political affairs director of the 930-member Building Industry Association of Clark County.

It’s a common theme among all jurisdictions, especially those with a high number of lots on reserve.

Public policy

In Ridgefield, where more than 650 vacant lots await homes, the city council has discussed ways to partner with developers to take care of first-time fees for sewer and water, parks and schools.

“We’re also talking about deferring the payment,” to be made when the home is occupied, said Justin Clary, city manager.

In Clark County, commissioners extended the deadline for impact fees to the end of this year. Vancouver lowered its fees for development review and building by 0.7 percent.

“It’s starting to move in the right direction, but we’re not out of the woods yet,” Bomar said.

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