Affordable home ownership is key to climbing into the middle class, but energy code changes next year won’t help mend the wealth gap. Larry Gropp, a Pullman-based architect designing primarily single-family homes, worries about what the new codes will do to affordability.
“I suspect 90% of architects in this state are unaware, and builders are just starting to get a clue,” Gropp said.
According to Gropp, the latest residential energy code will add 30% to the price of a new home. Prior to 2015, builders in Pullman could produce a 2,500-square-foot custom home at $130 per square-foot. Prices jumped to $185 per square-foot after the previous code update in 2015, partially driven by additional requirements for insulation and heating systems.
The new code will bump the price again. Formally adopted by the State Building Code Council in 2019, implementation of the 2018 edition of the energy code has been delayed twice. It is now set to take effect on Feb. 1.
The Spokane Homebuilders Association is already clued in.
“We’re hearing from our members a range of $15,000 to $25,000 added cost per home overnight from Jan. 31 to Feb. 1 for compliance with the new energy codes,” said Isaiah Paine, government affairs director for the organization.
The impact of meeting Gov. Jay Inslee’s energy goals for net-zero housing falls hardest on those with lower incomes.
“We know every $1,000 increase in home prices shuts out 219 Spokane and Spokane Valley families from home ownership,” said Paine, according to a 2020 study by the National Association of Homebuilders.
Housing affordability is driven by “land, labor and lumber,” Paine said. Restricted supply inside urban growth boundaries and increased demand by cash buyers relocating from high equity markets have pushed up land prices. Labor shortages have been created by decades of emphasis on college as the only path to job security, leaving well-paid essential jobs in all skilled trades going begging.
“Most of our members could put someone to work tomorrow if they had someone willing,” Paine said.
Paine also said lumber cost has more than doubled since March 2020 when mills slowed down supply anticipating a drop in demand. COVID-19 lockdowns energized the do-it-yourself market and low interest rates increased construction demand by those who could afford it.
Across the board, cost increases and supply-chain issues are common. Compliance with regulations and taxation is baked into the system. B&O taxes on gross revenue are collected at each level of subcontracting. Sales tax is added on the final total, including the sales tax recently adopted by the City of Spokane for an affordable housing fund. A tenth of a percent here, a tenth of a percent there, and it all compounds faster than interest at a payday loan shop.
Increasing costs affect every housing project, whether new or remodel, and regardless of funding source.
Al French, an architect as well as Spokane County commissioner, sits on the State Building Code Council. SBCC staff provided an estimate of $10,000 as the average additional energy code cost to the average Washington home, whatever “average” is in a state as diverse as Washington.
French didn’t support the adoption.
“We’re just starting to see the dramatic impact these code revisions are going to have on affordability. I’m concerned we’re going to price out a large percentage of folks in Spokane County and around the state,” he said.
French, Paine and Gropp agree the energy code is designed to discourage use of natural gas and encourage all-electric homes with a system of credits giving limited choices towards energy efficiency.
An efficient natural gas furnace earns zero credits toward meeting the six required by the 2018 code. The favored solution is an electric heat pump, which requires a climate where the average winter temperature is above freezing. At low temperatures, the higher electric bill is a budget buster for anyone running a household on a median income. One of Gropp’s clients burns three to four cords of wood each winter to compensate for her “efficient” heat pump in cold weather.
French expressed frustration with the West Side-dominated building code council. Five out of 12 months east of the Cascades have an average low temperature below freezing.
“It’s a stark contrast between eastern and western Washington,” French said. “This is just the beginning of the impacts we’re going to see of these policy decisions forced on our citizens, especially those at the lower end of the economic scale. They’ll be paying the price to achieve these goals, and that’s unfortunate.”
Government can be part of the solution to housing affordability, but only when it isn’t the source of the problem. And more subsidizing of affordable rental housing doesn’t touch deeper issues.
“Home ownership is key to closing the wealth gap and opening up other opportunities. We think home ownership is part of the solution,” Paine said.
It’s not a term conservatives use often, but housing affordability is a social justice issue.
Sue Lani Madsen can be reached at email@example.com.
Editor’s note: This column was updated on Oct. 22 to reflect the accurate price increase per square-foot of certain homes in Pullman since 2015. An earlier version overstated the increase.