(The Center Square) – Eastern Washington remains one of the more attainable parts of Washington for homebuyers, but a new housing report and local housing officials say rising construction costs, limited supply, mortgage rates and everyday expenses are putting pressure on that advantage.
The Washington Center for Housing Studies’ second-quarter Housing Attainability Index found that roughly 75% of Washington households cannot afford the state’s median-priced home under the report’s methodology.
The report puts Washington’s median home price at about $601,000 and estimates a household would need to earn approximately $175,678 annually to qualify for a mortgage on that home. The calculation assumes a 3% down payment and allocates 28% of household income toward mortgage payments.
But housing affordability varies significantly across the state.
BIAW’s analysis found that Eastern Washington generally remains more attainable than Western Washington. Yakima County, for example, was the most affordable of Washington’s 10 most populous counties, with the median-priced home, requiring a household income equal to about 127% of the area’s median income.
For buyers in the Tri-Cities, however, affordability is about more than the listing price.
Arielle Hays, a Tri-Cities Realtor and broker with ERA Skyview Realty, said buyers are increasingly focused on what their monthly mortgage payment will leave them with after the bills are paid.
She said she has seen buyers who were already pre-approved for mortgages hesitate when they see the monthly cost of a home.
“If I’m paying $2,850 per month…what if my car breaks down?” Hays said.
Hays said buyers are also dealing with rising costs for childcare, food, gas, medical care and vehicle expenses, all of which compete for the same household income.
She estimates only about one-third of Tri-Cities households can currently afford homes under the market conditions she is seeing, while home prices in Benton and Franklin counties generally remain above $400,000.
At the same time, Hays said new construction is giving some buyers additional options.
Builders are increasingly offering incentives through preferred lenders, including lower mortgage rates, closing-cost assistance and down-payment programs, she said.
Hays said roughly one-third of listings in Benton and Franklin counties are new construction, creating additional competition for sellers of existing homes.
That can force existing-home sellers to negotiate more aggressively on price or make improvements to compete with builders offering financing incentives, she said.
While buyers are feeling the affordability problem through their monthly budgets, local officials and the building industry are focused on another part of the equation: how much it costs to produce housing in the first place.
Yakima Mayor Matt Brown said local governments can help by making it easier and faster to build.
“Yakima is still one of the few places in Washington where a working family can buy a home, and we intend to keep it that way,” Brown said.
Brown said Yakima is working on faster permitting, fewer restrictions on what property owners can build on their land and a comprehensive plan that supports additional housing construction.
But Brown said some of the policies he believes are contributing to higher housing costs are controlled by the state.
He pointed to Washington’s energy code and Growth Management Act.
“The real wrecking ball is in Olympia,” Brown said.
Brown said the state’s energy code has increased the cost of new homes and argued that restrictions associated with the Growth Management Act limit the amount of land available for development.
The Building Industry Association of Washington made a similar argument.
Andrea Smiley, legislative director for BIAW, said the biggest challenges facing Washington builders can be summed up as “land, labor and liabilities.”
On land, Smiley said the state’s Growth Management Act limits the amount of land available for development, which she argues contributes to higher land and home prices.
BIAW’s analysis says 3.74% of Washington’s land is inside urban growth areas, where development is generally concentrated.
According to the state, the GMA has successfully reduced inappropriate land conversion and preserved the unique rural character of Washington’s landscape. In state planning updates, officials highlight that without the tight boundaries of Urban Growth Areas, the state would have faced massive fiscal liabilities from spread-out infrastructure, such as delayed emergency response times.
Smiley also said Washington faces a shortage of skilled construction workers.
“You can’t solve a housing shortage with a worker shortage,” Smiley said.
She said Washington needs more electricians, plumbers, carpenters and other skilled workers, but the workforce pipeline has not kept pace with demand.
Labor shortages can increase construction costs, delay projects and limit how many homes can be built, Smiley said.
The third issue, she said, is the cost of regulations.
Smiley said BIAW estimates Washington’s energy code has added more than $40,000 to the price of a new home since 2009.
BIAW is advocating for a temporary pause in additional energy-code changes after the next update, arguing that giving builders several years of regulatory certainty would allow them to increase housing production.
“We’re working … to hit pause, not rewind,” Smiley said.
The group argues that increasing housing supply is necessary to improve affordability over the long term.
What can local governments do?
While many construction requirements are set at the state level, local governments control zoning, permitting and other land-use decisions that can affect how quickly and what type of housing gets built.
Brown said Yakima is focusing on those areas.
The city’s draft Comprehensive Plan 2050 identifies housing affordability and supply as challenges and calls for additional housing opportunities, including multifamily development, infill and redevelopment.
The plan says Yakima added 2,341 housing units between 2019 and 2024, with about 70% of those units being multifamily.