When Andrew Magallanez considered moving to the Tri-Cities, a few things caught his attention.

The area’s dry climate reminded the retired U.S. Navy veteran of where he grew up in west Texas. There were plenty of places to go hiking and mountain biking nearby. But the prices of the region’s homes – median prices around $430,000 – really got his attention as they were roughly two-thirds of what homes were going for on the Kitsap Peninsula where he lived.

“One of the things that drew me out here was affordability,” said Magallanez, who became CEO of the Tri-City Association of Realtors in September.

Tri-City homes continued to have the lowest prices of any of the state’s largest metropolitan areas through 2024, even as they crept up after falling off highs in 2022. Building permits for 1,158 single-family homes were issued through Nov. 30, 2024, hundreds more than in each of the past two years, helping to build inventory.

Yet affordable homes remain out of reach for many potential buyers, housing experts said.

Inflation, building regulations and a persistent shortage of skilled construction workers continue to affect homebuilders. Elevated interest rates are keeping people in their current homes longer as they hesitate to move and take on a higher interest mortgage. Those and other factors will influence how the region’s housing evolves in the coming years to control costs, from denser developments to more multifamily housing.

“Nothing’s getting less expensive, though we are doing better than other areas,” said Jeff Losey, executive director of the Home Builders Association of the Tri-Cities.

Housing demand steady

Data from the Realtors association bears out consistent demand for homes with stable prices. Through November, 3,235 homes were sold, just over the amount for all of 2023. That’s still considerably lower than the 3,985 homes sold in 2022, 4,986 homes sold in 2021 and the record high of 5,006 homes sold in 2020.

The average sold price for the year so far is about $460,000, up slightly from 2023 but still down from the historic average high of $465,900 in 2022.

Building permits for the Tri-Cities are up more than 30% for the year through November 2024, according to the builders association. Some communities in particular are booming, with Pasco recording nearly 50% more permits for single-family homes and West Richland nearly double for the same period.

Overall, Benton and Franklin counties remain the fastest growing counties in the state by population, increasing by more than 5% between April 2020 and April 2024, according to the Washington State Office of Financial Management.

There are a number of large developments of single-family homes in progress or planned, such as Sherman Heights in Kennewick and The Heights at Red Mountain Ranch in West Richland.

Creating affordability

But while prices of single-family homes are attractive to those moving to the Tri-Cities from other major metros or well-positioned retirees, many first-time buyers continue to have limited options.

“Affordable depends on what you’re looking for,” Magallanez said.

That’s why multifamily construction is becoming more common, especially as regulations loosen and state and local governments prioritize so-called “middle housing,” housing experts said.

Open pockets of land throughout the region’s cities are filling with townhomes and small apartment complexes, such as Wellhouse Heights in Richland and the cluster of townhomes being built on a former small orchard on 10th Avenue in Kennewick.

Those projects reflect property owners and developers finding ways to cut costs by increasing housing density, Losey said. That’s what may allow millennials, the next generation of homebuyers currently entering their prime earning years, to finally get into the housing market as current homeowners stay put in existing homes.

“If you can get into a townhome for two-thirds the cost of a detached single-family home, you’re going to do it. It gets you in,” Losey said.

Multifamily homes

However, even multifamily housing projects are facing challenges.

Affordable housing projects can receive state financial support from two programs: the Housing Trust Fund or the Low Income Housing Tax Credit.

A Kennewick Housing Authority project, the 16-unit Lilac Homes micro home complex at 128 E. 13th Ave., was among the projects that benefited from the Housing Trust Fund.

A report from the Washington Department of Commerce, however, showed those affordable housing resources are seeing dwindling returns, with fewer units on average built in 2023 compared to past years.

The median number of units built in 2023 – 56 – through the programs was nearly half compared to the prior year. The median cost per housing unit did fall to $301,744 – a decrease of more than $14,000 compared to the year before – but the cost per square foot was up 26% to $494, per the report.

Keeping up with demand

The market likely will stay roughly the same in 2025, housing experts said.

Interest rates could dip below 6% but likely will rebound to just above that level, Magallanez said. Demand for housing will stay steady, as employers continue to relocate or open operations in the region, making it attractive to workers. What the deciding factor will be is whether builders can maintain or even increase the pace of construction to keep up and more older homes begin going back on the market.

“The next year or two are going to say a lot about where housing will go,” Losey said.