Affordability Pinch - liability costs for condo builders up to 50k per unit
Housing affordability is on just about everyone's mind these days. I've recently written about a widening condo shortage caused in part to the costs associated with the liability local regulations and state laws place on developers.
Last week, we had the Master Builders Association of King and Snohomish Counties (MBA) present at my monthly Northwest Independent Brokers Association meeting. Gina Clark, the King County Manager of Government Affairs, touched on a variety of trends and topics facing the builder community, and one that caught my eye was the eye popping cost of condo liability, which can be in the 30k - 50k range per unit. That's one reason developers have largely gravitated towards building apartments instead of condos.
Builder costs aren't just unique to condos. Gina also referenced local fees builders pay as well, fees that cover things like natural area / wetland protection and pay for cities' road improvement projects - some cities can be higher than others.
In North Bend, fees can end up being as high as $90,000 per lot. It is important to note that the conversation about fees simply revolved around what builders are experiencing and was not an exercise in political stance or opinion.
Fees and liability costs builders pay are part of the price equation, but the supply side is an obvious component
as well. The MBA notes that development is not keeping pace with population growth - there was a growth of 20,600 households between 2015 and 2017, but only 14,000 units built to house them.
The population growth has also led to moratoriums being placed on new development - the city of Sammamish currently has a development moratorium due to traffic concerns, and Issaquah just lifted a moratorium they had in place.
One alarming side effect of the housing pinch in supply and affordability is its affect on homelessness. According to the MBA,the amount of homeless children in Washington public schools grew 81.8% from 21,826 students in 2010 to 39,671 students in 2016.
The Master Builders Association of King and Snohomish Counties was founded in 1909 and has more than 2,900 member companies from the likes of architects, remodelers, interior designers, developers, builders, real estate professionals, sub contractors, engineers, and consultants - 85% of member companies consist of 1-10 person businesses.