In last Friday's "Safety Valve", the letter-to-the-editor portion of our local paper, The Wenatchee World, my friend Roger Dorner (a retired builder), wrote an interesting article on what has happened to the affordability of housing in the Wenatchee real estate market. Roger was a prolific builder in his day and he totally understands the economic dynamics of making affordable housing available. I have received his permission to re-publish his article and here it is in it's entirety:
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"In a Safety Valve letter Aug. 23 Marilyn Lancaster asks why there is no building of affordable homes here. That is a valid question, and deserves an answer. In Yakima, Tri-cities and Moses Lake there are large subdivisions of new homes selling for $150,000 and less. Why not here?
In this area subdivision land with utilities are many times as expensive as in the cities mentioned. Add development costs and imposed fees, and a builder pays about $85,000 for a building lot. Add permits and fees for water-sewer-electric hookups, construction financing, liability insurance and overhead. Expenses are over $100,000, before any construction begins. Then pay for materials, labor, subcontracting, selling costs. Add for the builder's earnings. The selling price is far above what is considered affordable housing.
In the cities mentioned, developer/builders are able to buy modestly priced land and develop building-ready lots for far less, then standardize construction methods for a limited selection of house plans. High volume in one location reduces costs of labor, subcontracting, financing and selling, and allows smaller margins for the builder. I have toured the Aho Construction subdivision in Yakima. Very respectable, and most houses less than $150,000.
Our affordability problem starts with the cost of the land. Land zoned for building, with utilities available, is so scarce that the price is astronomically high. Municipal and utility jurisdictions have imposed more and more costs on developers and builders. These high costs are compounded by the carrying costs (interest, taxes, overhead, selling). So it is not possible for a builder to build affordable housing as described above. To survive, builders must build expensive homes.
If we are to ever again produce affordable housing, the solution must start with the political process, to get the price of land down. Get utilities available. Then, at least as applies to producing affordable housing, lesser fees for developing and building. Then we could have some affordable housing.
So it is not "If we build it, they will come." "They" (people needing affordable housing) are here. It is "If it were possible, they would build it."
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Have a great day!
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