Build a new home under $500,000? It’s almost impossible, Thurston developer says

Trying to build a new, single-family detached home in the area for less than $500,000 is almost impossible, a prominent Thurston County home builder told a real estate forum audience on Thursday.

That builder, Rob Rice of Rob Rice Homes, took part in a roundtable discussion during the Thurston Economic Development Council’s forum at the Lacey campus of South Puget Sound Community College.

Rice was joined by Lacey City Manager Rick Walk, Tumwater City Council member Leatta Dahlhoff, Interfaith Works executive director Meg Martin and Olympia Federal Savings’ chief credit officer Carrie Whisler.

The discussion was moderated by commercial real estate broker and Port of Olympia commissioner Amy Evans Harding.

One question she posed to Rice was this: What can you do to make housing more affordable in Thurston County?

In preparation for the discussion, Rice said he crunched some numbers to see if he could build a new home for under $500,000 and he couldn’t do it.

“It’s really hard to,” he told the audience. “With all of the rising costs of land and infrastructure development, the cost to build a home, to provide something under $500,000 on a single-family detached product is next to impossible.”

There are other factors adding to the cost of homes, including energy code requirements and the state’s gasoline tax, he said.

“I know we all want to have energy-efficient homes,” he said. “We want to lead the nation in what we’re doing here. But from our standpoint, the last six years, it’s added about $35,000 in cost to an average home.”

That kind of cost can be easily absorbed in a million-dollar home, but not on a starter home, he said.

“When you’re trying to build entry-level homes, it’s a real challenge,” Rice said. “And on top of that, things like the gas tax. We have the highest gas tax in the nation. Everybody that drives to my job site, every piece of material delivered to my job site, is getting hit by those higher fuel costs.”

How do we get to affordable?

Rice thinks the townhome, which sometimes looks a bit like a duplex or tri-plex but that doesn’t occupy as much land, is about to increase in popularity.

“You’re going to see more and more townhomes,” he said. “I’ve seen some projects come through that are exclusively townhomes. And I’m really curious to see how those do.”

He also supports more infill development in existing neighborhoods.

“A big part of solving this affordability problem is going to be infill,” he said. “There’s a huge opportunity out there, across all jurisdictions, to do infill development. A lot of the lots that were developed back in the 1950s, 60s and 70s are on acre lots, acre and a half lots that now have utilities in front of them.”

But development standards need to change to stimulate that type of development, he said.

“I’d like to see agencies revisit their codes, to look at infill under a different light,” Rice said. “That has the potential to solve a lot of this affordable housing.”

Rice said he first came to Thurston County in 1988 to build new homes. It was a time when the cost of a home was rarely more than $100,000.

“It’s sad to think of where our kids are,” he said. “You know, we want our kids to be able to grow up in this community, but what are they going to buy? Everybody’s going to end up in multifamily units.”