Will new houses in Clark County ever get as cheap as they used to be?
Even after the big price drop of the last two years — last month, the median local house sold for $215,000 — homes are still harder for the average local family to buy than they were in 2003.
That’s assuming the family can get a loan at all.
If a study released Wednesday by Clark County’s government is right, the easiest way to bring down the cost of new homes wouldn’t be to slash fees and eliminate zoning rules.
It’d be for builders to sell, and buyers to demand, smaller homes.
All told, local regulations, fees, permits and delays account for 17 percent of average Washington home costs, county analysts figured. In general, construction costs account for 50 percent, and contractors’ profits 14 percent.
“The size of the houses keeps getting bigger,” Commissioner Steve Stuart said after seeing the study. “We get all these big houses on postage-stamp lots, and say, ‘Why the heck would you do that?’ Well, they do that because they can make more money off big houses, and it shows.”
Profits on the wane
A spokesman for local builders questioned the county’s numbers, which drew on research by the Washington Association of Planners, data from the National Association of Home Builders and figures shared anonymously by four local developers.
“Obviously, I’m skeptical at this point,” said Mike Bomar of the Building Industry Association of Clark County. “It’s definitely a contrast with what I hear on a day-to-day basis.”
The county’s study was by Marty Snell and Marlia Jenkins of its community development department and Adriana Prata of its budget office.
Bomar cited a different study by the University of Washington in 2008, which found that state and local regulations have added 31 percent, or $71,000, to the price of a Vancouver home.
Profits may have been healthy during the housing boom, Bomar added. Today, the weakest housing market in a generation has killed developer profits completely.
“Builders are building at a loss, but just enough to keep their business open until things turn around,” Bomar said.
Even when the economy rebounds, though, Bomar said profit margins may stay low.
That’d bring more big home builders into the market, he predicted, and squeeze out local companies.
“There’s going to be consolidation,” Bomar said. “You’re going to have larger companies taking more of the market share.”
That might shave home prices lower. So might homeowners’ changing tastes.
“I expect house square footage to continue to go down,” Bomar said. “People are going to be living in smaller homes.”
Fees’ impact
The county’s study had another surprising finding: the burden of so-called “impact” fees, flat fees slapped on every house regardless of size, might fall more heavily on the rich.
The fees aren’t based on income. But the county found they have more effect on the price of a more expensive house than the price of a cheap one.
Including finance costs, every dollar that a fee goes up added $1.88 to the price of a high-end home, the county found. The same dollar would add just $1.18 to the price of a cheap home.
Bomar said that might be because pricey homes are usually built on single, pre-owned lots, while cheap homes are built in big tracts.
Amy Peterson, a Battle Ground real estate agent and home builder, said Wednesday that wealthier buyers do tend to be less price-sensitive.
But even if high impact fees don’t drive up the price of low-end homes, they may prevent more cheap homes from being built in the first place.
“When you’re paying $16,000 in fees up front, that’s a big hunk of money before you even break ground,” Peterson said. “On the smaller homes, when you’re talking 8 to 10 percent of the cost in permits, that’s a problem.”
