Housing boom offsetting smelter uncertainty in Ferndale

Construction work at the new residential project The Meadows in Ferndale on Feb. 10. This residential project is one of several in Ferndale; once built it will add 157 new single-family homes to the community.
Construction work at the new residential project The Meadows in Ferndale on Feb. 10. This residential project is one of several in Ferndale; once built it will add 157 new single-family homes to the community. The Bellingham Herald

While this community waits to find out the fate of the nearby aluminum smelter, another part of the economy is booming: residential construction.

House construction recently got going at The Meadows, which will have 157 homes on Thornton Road near Horizon Middle School. Prices start at around $350,000, and the development features 28 acres of open space, a trail system and views of the Canadian mountains, Mount Baker and Lummi Island. The homes will be phased in over the next few years on the property, which totals more than 60 acres.

It is a higher-end development that is expected to attract second-time homebuyers and retirees in Whatcom County and from out of the area, said Christine Cicchitti, who works for RE/MAX Whatcom County and is handing the selling of homes at The Meadows with fellow RE/MAX agent Bryant Davis.

Along with the Meadows, several other projects are in the works, including 154 homes scheduled to be built in Malloy Village. Other smaller single-family homes as well as several multifamily residential buildings are in the works, with the multifamily projects totaling more than 100 units, said Jori Burnett, the city’s community development director.

“The city is busy right now and we will see a lot of construction in 2016,” Burnett said.

The uptick in residential construction comes at a time when the fate of one of Whatcom County’s largest employers remains uncertain. Last fall, Alcoa announced it would idle the aluminum smelter portion of the Intalco Works plant because of a global glut of aluminum and plunging prices. The company recently announced that it was delaying the curtailment of the Ferndale smelter until the end of June. If the smelter is idled, it would mean the loss of about 465 jobs; about 100 would stay on to work at the plant’s casthouse.

Aluminum prices, which are a factor in Alcoa’s decision to idle the smelter, have been rising in recent days. According to the London Metal Exchange, the price of aluminum was $1,572 a ton on Tuesday, Feb. 23, up from under $1,500 a ton earlier this month. Rising prices are good news for the Intalco workers because they mean the supply glut is easing.

Why is construction booming at a time of economic uncertainty for this community? One factor could be the real estate market itself.

In her recent report about 2015 home sales, Lylene Johnson of The Muljat Group noted that while home sales rose 18.1 percent in Whatcom County, sales increased only 0.8 percent in Bellingham. The market share for single-family homes in Bellingham is decreasing as it becomes more difficult to find land within the city limits to build new homes, she said.

“Inventory levels have dropped more in Bellingham and prices are generally higher there than for a comparable home in other areas,” Johnson said when the report came out in January. Her report noted that in Bellingham, the median price for homes sold jumped 8.7 percent in 2015, to $325,000.

One factor in the low inventory of homes in Bellingham was a slowdown in single-family construction in the city. According to Bellingham building permit documents, the city averaged 77 permit approvals annually to build new homes between 2008 and 2012. Ferndale permit documents indicate it averaged 75 permit approvals a year during the same period.

In 2011 and 2012, Ferndale issued more home permit approvals than Bellingham even though Bellingham’s population is nearly seven times larger.

Single-family construction in Bellingham has picked up in the past two years, with 138 home permits approved in 2014 and 126 in 2015.

The influx of new homes in Ferndale could lead to other economic activity for the community, Burnett said. For years Ferndale was small enough to serve as a bedroom community to Bellingham, with national retail businesses locating in the larger city. Commercial developers look at the number of rooftops nearby when making decisions on whether to open a store in the community, Burnett said, and Ferndale is close to reaching that critical mass that will attract new businesses.

With more people buying homes in Ferndale, it also means changes for the community. Burnett said the city received plenty of feedback from a mid-November community meeting attended by more than 100 people. While some people expressed concern that the community was changing, Burnett said most were accepting of that but wanted to plan accordingly. They wanted Ferndale to keep that small-town feel but also be economically vibrant, he said.

With that in mind, Burnett said they continue to look at fixing traffic problems, particularly in the downtown core. They also want to make downtown more vibrant by having residential units in the area. The market is helping with that: As the single-family homes in downtown age, the land they are on is being redeveloped with more multifamily buildings, creating more density. Property owners are finding that the value is in the land rather than in an old house, he said.

They also have been working on other amenities in the area, including the Star Park project, improving the riverfront area and the new library.

For a project as large as The Meadows, working successfully with several agencies on the environmental aspects was crucial, said Eric Weden of Weden Engineering. The original plan had smaller and more numerous wetland areas, but the developers worked with local, state and federal agencies to come up with larger wetlands that don’t need to be surrounded by fencing.

“By consolidating small ‘isolated’ wetlands into one central, large mass has proven over time to preserve wetland integrity by reducing outside impacts. Think of it as reducing the amount of perimeter exposed,” Weden said in an email.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz