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Vlad Korotkov, Reese Concrete Products employee, uses a boom truck to unload catch basins as construction on new homes continues on Zeus Street on Thursday, Dec. 13, 2018, in Moxee, Wash. Yakima County has had $315 million in new construction projects in 2018 with more than $121 million of that coming from single family homes. 

YAKIMA, Wash. -- New construction in Yakima County is finally rebounding from 
the Great Recession, doubling in total value from two years ago.

This year, new construction countywide totals more than $315 million, 
 compared with $156 million in 2016, according to the county assessor’s office.

Construction of single-family homes accounts for the largest value segment this year: projects on 1,219 parcels totaling more than $121 million. Manufacturing construction follows, with 28 projects totaling more than $64 million.

New homes could help take pressure off the housing market, where bidding wars on properties were commonplace last spring and summer. More construction also means more jobs, a broader property tax base and an increase in sales tax revenue to help fund governments.

“When they buy new lumber to build a house or new concrete to build a house, they pay sales taxes on that, so that’s tax revenue to somebody,” said Yakima County Assessor Dave Cook. “We are booming.”

Tax revenue

New construction this year has generated an additional $1 million in sales tax revenue and another $500,000 in property taxes for the county alone, said Yakima County Treasurer Ilene Thomson.

“It helps us pay the bills, that’s for sure,” she said.

When the 2008 recession hit, it sent the county into a financial tailspin. Construction largely halted, sales tax revenue declined and the county jail lost several contracts worth millions of dollars to house inmates from other communities. About 100 county workers were laid off.

But there has been a steady turnaround in recent years, with revenue from retail taxes improving and the jail securing new contracts to house inmates from other communities. Construction began showing signs of improvement about two years ago, with the total value of $156 million in 2016 growing to $193 million last year.

Multimillion-dollar school construction projects are expected to help steady the increases over the next couple of years, Thomson said.

For example, new construction of East Valley High School that began this year will continue into 2020. That project alone is expected to generate about $415,000 in sales tax revenue by the time it’s complete, Thomson said.

“When you look at sales tax, we’ve been seeing increases for a while now because a lot of those construction projects started in 2017. There are schools, higher education facilities — three new hotels over the last two years — and some projects continue into next year,” Thomson said.

Property tax bills

Rising property values and recent changes in school funding may have some worried they will pay more in property taxes next year, but that’s not the case, Cook said.

Typically, property value increases — which averaged about 16 percent over the past 18 months — equate to higher tax bills even when assessments remain unchanged.

But property owners will see decreases in assessments for school funding at local and state levels in 2019.

When the state changed its school funding approach, assessments increased from $1.89 per $1,000 of property value to $2.70 per $1,000 of value. Next year, the state school levy fund assessment rolls back to $2.40 per $1,000 of value, and a $1.50 cap on local school levy assessments takes affect.

Local school levies of more than $2 per $1,000 in property value became common in Yakima County, and some reached more than $3.

Even though property values have increased, property owners will see 2 to 3 percent decreases in the overall amount of property taxes they pay when the caps takes effect.

For example, the overall property tax assessment — which includes other local levies — in the West Valley School District this year was $12.88 per $1,000 of value. Next year it drops to $11.45 per $1,000, according to Cook’s figures.

“So if we have a $255,000 property in West Valley and its value increased to $275,000, the estimate to pay in property taxes would be $140 less in 2019,” he said.

The housing market

Just how much impact the new residential construction will have on the market is unclear, said Greg Bemis, managing broker at John L. Scott West in Yakima.

This spring and summer, sellers were getting three or four offers the day their homes were listed for sale, he said.

“We were selling as fast as they were going on the market,” he said. “There were a lot of buyers gobbling them up fast.”

Buyers drastically outnumber homes listed for sale, he said. That’s because when the 2008 recession hit, construction halted, sales dwindled and many construction companies went under.

As the economy began to recover, a wave of buyers emerged without much new construction. Bidding wars over a limited housing stock were common, and home values shot up as a result, Bemis said.

He’s not sure how much pressure the new construction will take off of the housing market.

“A lot of the new homes are being built for people specifically buying before they’re built,” he said.

Some may be people from the west side of the state who sold their property there to retire here, where it’s cheaper to live, Bemis said.

However, he said, given the peak in prices here — where the average home lists for $230,000 — locals buying new houses are likely to sell their current homes,

Either way, Bemis anticipates a strong year in home sales next year.

“My guess and the industry’s guess is that number is going to increase because these people realize it’s peaked and say, ‘I’m going to get the most out of my house,’” he said.