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June 29, 2022

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Clark County homebuilders decry timing of new energy standards, say home prices will go up

By , Columbian business reporter
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3 Photos
A worker lends a hand at a house under construction in the Felida Overlook neighborhood Wednesday morning. A set of energy code updates is set to take effect Feb. 1, and builders have expressed concern that the new rules could drive up construction costs at a time when the COVID-19 pandemic has already pushed up home prices.
A worker lends a hand at a house under construction in the Felida Overlook neighborhood Wednesday morning. A set of energy code updates is set to take effect Feb. 1, and builders have expressed concern that the new rules could drive up construction costs at a time when the COVID-19 pandemic has already pushed up home prices. (Amanda Cowan/The Columbian) Photo Gallery

Vancouver-area homebuilders say a new round of energy-efficiency standards could add $15,000 or more to the price of new houses, according to the Building Industry Association of Clark County. The timing appears to be their biggest complaint.

“In a time when home prices are skyrocketing due to increased demand (caused by the COVID-19 pandemic and low interest rates), labor and supply chain disruptions, and historically low inventory of existing and newly built homes, this is the absolute worst time to institute new and costly building codes,” the BIA wrote in a press release.

The updates to the Washington State Building Code and Washington State Energy Code were adopted in 2019 and were scheduled to go into effect July 1, 2020. But during the chaotic first few months of the COVID-19 pandemic, industry leaders successfully lobbied Gov. Jay Inslee for more time to prepare.

Inslee announced in early April that he would delay implementation of the code updates until Nov. 1, and the State Building Code Council subsequently issued two more extensions — first to Feb. 1, 2021 and then to July 1. However, Inslee announced last week that he would overrule the second extension, moving the start date back to Feb. 1.

“Almost a year after the pandemic’s arrival in Washington and almost 18 months since the 2018 codes were originally adopted, there is no need for further delay,” Inslee wrote in a letter to the council.

Timing issue

Inslee’s veto came as a surprise to builders who had already begun to reorient their calendars around the July 1 date, and left them scrambling to bring themselves into full compliance in the remaining two weeks of January.

Most builders and industry groups appeared to object more to the timing of the implementation date rather than the rules themselves. The industry has had to work through labor shortages and rising material costs — particularly lumber — during the pandemic, leaving less time to focus on training about the new codes and lining up suppliers.

“I think we all know it’s inevitable,” said Patrick Ginn, owner of Vancouver-based builder Ginn Group. “It’s just the timing of it, with lumber prices high. Once they gave the extension, it took some pressure off, and then (Inslee) repealed it.”

Builders are also wary of changes that would add to the cost of new homes, according to Janelle Guthrie, communications director of the Building Industry Association of Washington, because high demand and material shortages have already driven home prices substantially higher since the start of the pandemic.

“Delaying the implementation date of these changes wouldn’t have changed the added $15,000 to $20,000 on average that builders and homeowners will eventually have to pay. However, it would have provided a little more relief at a time when the economy is still struggling,” she wrote in an email.

Home prices in Southwest Washington have increased rapidly in the past few years, and the pandemic hasn’t slowed that trend. The median home sale price was $265,000 in 2015 and had risen to $405,000 in 2020, according to reports from the Regional Multiple Listing Service. The most recent month on record, December 2020, had a median sale price of $420,000.

The Clark County BIA’s press release also stated that the code changes will add an average of $15,000 to $20,000 to the cost of new houses, although the impact would vary substantially based on the size of the home in question.

The code is based on a credit system that awards points for individual energy-efficiency features such as heat pumps or better insulation. Projects are required to achieve a specific minimum number of credits depending on the home’s square footage — the new update raises the minimums to three credits for houses smaller than 1,500 square feet, seven for houses larger than 5,000 square feet and six credits for those in between.

“For homes under 1,500 square feet, the impact would be minimal,” Ginn wrote in an email. “For homes above that, such as those being built in Felida Overlook (and most other areas in the county) it will in fact add $10,000 to $15,000 in cost which will be absorbed by the consumer.”

Larger home, greater cost

The costs would be greater for homes in the upper size bracket. Tracy Doriot, owner of Vancouver-based Doriot Construction, offered an example breakdown based on a 5,500-square-foot home. The additional insulation coating for the windows would likely total around $12,000, he said, and an added layer of exterior foam insulation on the walls could be about $25,000 for the whole house.

“You can definitely get into the $30,000 price point pretty quickly,” he said.

Some add-ons are more cost-effective than others in terms of earning credits. Rooftop solar panels could theoretically earn multiple credits on their own, he said, but not every home’s roof is oriented in a way that would make them practical.

That 5,500-square-foot home would likely be a $1.5 million project, Doriot said, so $30,000 doesn’t represent a huge percentage of the price tag, and the add-on cost would be much lower for smaller and more affordable houses. But Ginn said he was concerned that widespread price increases on medium and large houses could still prompt proportional price inflation at the lower end of the market.

Despite the timing concerns, Ginn and other builders spoke positively about the potential of the code changes to lead to higher-quality homes that better address climate change. Jon Girod, owner of Vancouver-based builder Quail Homes, compared the code changes to regulations that prompted the rise of fuel-efficient vehicles, and said he didn’t think the industry would improve without regulation.

“I understand the cost ramifications, believe me I do, but at the end of the day (buyers) are paying more for quality, and it’ll pay them back,” he said.

This isn’t the first time Washington has tightened its energy-efficiency standards for new homes, Girod added, but the new rules represent a push beyond efficiency and into the realm of emission reductions. There’s a particular emphasis on eliminating natural gas heating systems in favor of hybrid or electric systems, Doriot noted — a solely natural gas system now results in a point being docked from a project’s credit score, he said, effectively making it too impractical to build.

That change fits with a broader push toward carbon emission-neutral housing. Last month, Inslee’s office unveiled proposed legislation that would prohibit natural gas-powered air and water heating systems in new buildings starting in 2030. The legislation was introduced earlier this month as House Bill 1084 and is currently before the House Committee on Environment and Energy.

Columbian business reporter

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