According to a recent news release from the Building Industry Association (BIA) of Clark County, a recent study by the National Association of Home Builders (NAHB) shows that a $1,000 increase in the cost of median-priced newly built homes in Vancouver pushes 781 prospective buyers out of the market.
According to the NAHB study, the median new home price in the Portland-Vancouver-Hillsboro area is $499,279. The study shows that the annual income needed to qualify for that median price is $118,448. Out of 994,590 total households in that area, 781 are priced out of the market.
“This study illustrates how even a relatively small increase in price or interest rates can dramatically impact housing affordability,” said BIA of Clark County Executive Director Avaly Scarpelli, in the news release. “Housing affordability has reached crisis status in communities across our state. Rising interest rates, regulatory barriers, higher building materials costs and labor shortages all add to the cost of a home, and are preventing households from achieving the goal of homeownership.”
In the nearby area of Seattle-Tacoma-Bellevue in Washington, the NAHB study shows that the median new home price is $618,117, requiring an annual income of $146,365 to qualify. Out of 1,600,567 households in that area, 1,161 are priced out with every $1,000 increase. According to the news release from the BIA of Clark County, although the amount of a physical home is less expensive in the Portland-Vancouver-Hillsboro area than in the Seattle-Tacoma-Bellevue area, the home prices are the third highest in the state of Washington and continue to rise due to permits and fees.
Looking at the United States as a whole, the NAHB study shows the median new home price being $344,625, with an annual income of $85,533 needed to qualify. Out of 124,488,189 households, 158,857 are priced out with every $1,000 increase. At the state level, in Washington the median new home price is shown at $513,941, according to the NAHB study. This requires an annual income of $122,506 to qualify. Out of 3,009,210 households, 2,100 are priced out.
“There are myriad factors that can increase the price of a home, from energy code compliance, B&O and other tax increases, building permits, impact fees and state/local mandates,” said Jennifer Spall, director of communications & public relations for the BIA of Washington. “Every fee, tax and surcharge adds to the cost of business, which increases the price of a home. Our question for lawmakers at all levels is how can you make housing more affordable by making it more expensive?”
“As legislators convene in Olympia, they need to understand that by adding layers of regulation, taxes and fees, you cannot make housing more affordable,” Scarpelli said in the BIA of Clark County news release. “Over 25% of the cost of a new home nationally is the result of government regulation and does not include regulations imposed at the state and local level here in Washington.”
Spall said BIA of Washington’s government affairs efforts are focused in Olympia and this session they are watching a number of bills that increase the cost of doing business in Washington state, which in turn raises the price of housing. Some of these bills include HB 1395 – Direct Contractor Liability; SB 5412/HB1110 – Low Carbon Fuel Standard; and SB 6053 Wage Liens.
Additionally, Spall said they are working on a number of pieces of legislation that would help make housing more affordable, from streamlining lengthy permit approvals, to eliminating double taxation of materials. These pieces of legislation include:
- SB 6317/HB 2894 – Concrete Pumping
- HB 2886 – Permit Timelines
- HB 2667 – Energy Code Implementation
- HB 2672 – Flexibility for Limited Areas of More Intense Rural Development (LAMIRD)
- HB 2673 – Reduce Redundancy for Housing
- HB 2687 – Metrics for Attainable Housing Standards
The NAHB study in its entirety, as well as the methodology for what the NAHB studies year after year, can be found at http://www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=271366&channelID=311.