Home builders here say a tightening supply of lots is triggering heightened competition for parcels and raw, developable land, and also is prompting more talk about expanding the urban growth boundaries mandated by the states Growth Management Act.


Those boundaries, outside of which development is restricted, are going to be reviewed next year. Contractors already are warning that with less land available, lot prices are rising sharply, and, coupled with the surging demand for homes, housing prices are climbing as well.


Artificial constraints are being put on the ground with growth management, and this is what were experiencing, says Brad Spears, vice president of Spokane custom home builder Northwest Equity Builders Inc. You couple increased demand with artificial constraints, and you have this shortage.


The Growth Management Act, enacted as a tool to fight urban sprawl and encourage in-fill development, requires each county to review its urban growth boundaries periodically. Spokane County set such boundaries in late 2001 and expects to have its first review completed by the end of 2006, says County Commissioner Mark Richard.


Richard says the countys growth management steering committee will begin meeting within soon.


Buster Heitman, owner of Landmark Builders Inc., of Spokane, says, Im not advocating that the thing be split wide open, but as it is now, they are moving people to Post Falls and Coeur dAlene for entry-level housing. There should be a way to make land available that is easily developable.


Its unclear how many lots are available in the Spokane area; county officials say they dont track the total number. The county, however, does keep track of the number of lots it plats each year, and that number has been rising.


According to figures published in the Spokane-Kootenai Real Estate Research Committees most recent report, the city of Spokane and Spokane County platted 1,962 lots through the first three quarters of 2004. Even without the fourth-quarter numbers, thats up over full-year 2003, when those two jurisdictions platted 1,497 lots. Comparatively, the city and county platted 1,080 lots in 2002 and 1,198 lots in 2001.


Randy Barcus, chief economist with Avista Corp., says the increase in number of lots being platted is due to an established supply of lots being whittled down in recent years and developers trying to keep up with demand. Barcus says he doesnt think the current lot market is impeding development, but he senses that if the boundaries arent expanded, a shortage could arise quickly.


Im a proponent of growth management because growth mismanagement is unacceptable, he says. Growth management is working, but it can be an impediment if we ended up with a shortage of available area.


Corey Condron, vice president of Condron Construction Inc., says that Spokane builders goal is to have enough lots secured to handle five years of construction. Condron Construction built 146 houses in 2004 and expects to construct about 230 homes this year. At that rate, it would need 1,150 lots over the next five years.


Condron says the company is 75 percent of the way to that goal.


Lots are out there, but not in the quantities they have been in the past, Condron says. We are pursuing lots and raw land more aggressively, but were not buying more than we need to dry up the market.


Heitman says Landmark tries to keep a 10-year supply of lots, which he typically develops himself. The company, on average, builds 10 homes a year and currently has enough lots developed to keep its pace steady for the next decade. Looking forward, though, he says the market will be more challenging.


There is a shortage of lots, and land that is left is harder to develop, he says.


Aware of the demand, many land owners are marketing their lots to home builders at premium prices compared with what they could get just a few years ago.


Home lots that are 80 feet wide typically are sold for $40,000 now, Heitman says. A few years ago, he says, similar-sized lots in many areas went for $25,000, and in the mid-1980s, the price was closer to $15,000. Even 50-foot-wide lots are being priced at around $37,000, Condron says, though he adds that Condron Construction hasnt bit at those asking prices.


Availability of lots varies in different parts of the market, Condron says. On the West Plains, he says, developable land is readily available, though demand there is strengthening. At the other end of the spectrum, most lots on Spokanes South Hill continue to sell at prices outpacing the rest of the market, he says. On Spokanes North Side and in Spokane Valley its becoming more difficult to find land inexpensive enough to build entry-level homes, Condron says. Entry-level homes currently are in the $140,000 to $180,000 price range, he says.


For newly constructed homes sold through the Spokane Multiple Listing Service in January and February, the average price was almost $210,000.


Home-construction activity, meanwhile, is brisk.


Last year, Spokane County and the cities of Spokane and Spokane Valley together issued 1,807 permits for homes worth a total of $286 million, compared with permits for 1,591 homes worth $233.8 million in 2003.


County Commissioner Richard says a variety of factors will be considered when deciding whether to expand the urban growth boundary, including population, a city or countys ability to provide services, and housing affordability.


This will be Spokanes first boundary review. A number of other counties have had their urban-area boundaries in place longer than Spokane County and already have gone through the review process. Richard says, however, he isnt aware of any trends toward either keeping the boundaries intact or expanding them.


Housing affordability is a significant factor here, though, Richard says. He says the percentage of people in the city of Spokane who own homes is lower than the state and national averages. Countywide, he says, the homeownership rate is close to that of the state average, but still is below the national average.


While considering affordability, though, the county must adhere to the intent of the act, Richard says. We have to find an adequate balance of available land and encouraging in-fill development, he says.


Bruce Hunt, a senior planner for Spokane County, says the county will perform whats called a land-quantity analysis to determine whether theres enough land available within the urban growth boundary to accommodate future growth.


That analysis will involve determining the amount of vacant land and underutilized landsuch as a large parcel of industrial-zoned land with one house on itthat exists within an urban growth boundary and coming up with a gross available land figure.


The county then will reduce that number roughly by half to account for potential infrastructure improvements, market factors, and critical areas, such as steep slopes and wetlands, to come up with a net available land figure.


The number will amount to a conservative estimate, Hunt says, meaning that there likely would be more land available for development than will be accounted for in the net figure.


To determine whether theres enough land available in the urban boundary to accommodate growth, the county will compare the amount of landand the number of living units that land could accommodateto population growth projected for Spokane County by the Washington state Office of Financial Management, Hunt says.


When the county performed its last land-quantity analysis in 2001, it found that there was enough land to accommodate 29,000 additional dwelling units in the unincorporated county. At that time, it included what now are the cities of Spokane Valley and Liberty Lake.


Dwelling units include both single-family homes and multifamily units. Using the states population-growth estimates and factoring an average of 2 1/2 people per home and 1 1/2 people per apartment unit, the county estimated in 2001 that there was enough land available in the current boundary to accommodate 20 years of growth.


Hunt says the county hasnt started a new land-quantity analysis yet. The population here thus far hasnt been growing as fast as had been projected, suggesting initially that land within the boundary should be adequate, he says.