News Release: Special report: Permitting delays add more than $22,000 to the price of new homes
February 4, 2022
Permitting delays add roughly $22,000 to the price of a new home. This is according to recent analysis by the Building Industry Association of Washington.
“At a time when housing prices continue to rise, Washington should prioritize timely permit processing so more people can find homes they can afford,” said BIAW President Joseph Irons. “We urge legislators to streamline permitting to reduce the time it takes to build homes for Washington families.”
To calculate the average cost of permit delays in Washington, BIAW first determined the “holding” costs. These are the costs associated with owning property while waiting for permit approval to build and finalize a home. These costs include financing or mortgage payments, property taxes, insurance, utilities, homeowners association or condo fees and business overhead.
Average permit approval timeline= 6.5 months
The association then multiplied these costs over the average number of months permits are delayed by county. The average number of months came from a recent study by the National Bureau of Economic Research. That study found project review time for permit approvals ranged from 3.13 months in Grant County to 17.79 months in Thurston County. The statewide average was 6.5 months.
Challenges ranging from staffing levels to process problems
BIAW’s report, Cost Of Permitting Delays in Select Jurisdictions in Washington State, acknowledges challenges local governments face. These challenges include things like staffing shortages, experience levels and process pinch points. The report then identifies areas for improvement.
Specific suggestions include:
- Limiting the amount of information required to process the permit
- Eliminating redundant and unnecessary internal processes
- Breaking down bottlenecks in permit processes
Consolidated permit review bill helps reverse damage
To help reverse the damage, BIAW is supporting measures like SB 5964, a bill to consolidate local permit review processes.
The bipartisan measure provides incentives for local governments to process residential permit applications within specified timeframes. It also creates a grant program to help local governments transition from paper permit filing systems to online systems.
The Washington State Association of Counties and Washington REALTORS joined BIAW’s Government Affairs Director, Jan Himebaugh, in supporting of the bill at a public hearing on Feb. 2, 2022, in the Senate Housing & Local Government Committee.
The bill passed out of committee on Feb. 3 and moved to the Senate Ways and Means Committee.
BIAW also supported HB 2049. This bill allowed local governments to approve plans prepared, stamped and submitted by a professional engineer or architect without substantial changes. Governments would still review the plans for general compliance with zoning or other land use control ordinances. However, this change would dramatically reduce timelines by allowing permitting professionals to rely on experts to develop and review the plans.
This bill remains in the House Local Government Committee and did not receive a hearing this year.
Washington’s housing crisis
A 2020 study found Washington needs at least 225,000 more homes to keep up with demand in our state. This lack of supply of housing of all types is driving up costs for new homes. This then affects the cost of other homes on the market as well as rents.
According to the NAHB “2021 Priced Out” study, the median price of a new home in Washington is $522,000. At that price point, roughly three-quarters of Washington households can’t afford a mortgage. For every additional $1,000 added to the price of a home, $2,500 more households are priced out.
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The Building Industry Association of Washington is the voice of the housing industry as the state’s largest trade association with nearly 8,000 member companies. The association is dedicated to ensuring and enhancing the vitality of the building industry so more Washington families can enjoy the American Dream of owning a home. Learn more at: www.biaw.com