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  • Written by Merri Ann Simonson

If one reads the posts on the various Facebook pages, numerous community members are looking for rentals and can't find them. Other participants chime onto the post about the cost of affordable housing on a regular basis and that San Juan County needs to do something about it. Some people are having to leave the island because they can’t find affordable housing, including people who have lived here for a long time. It is apparent, our County officials do not read Facebook.

Our real estate market in general is brutal on first time home buyers and middle and low income buyers as many don’t qualify for homes at our median price, which is currently $880,000for the last 12 months.  A person would need to have no other reoccurring debt, a ratio of 45%, earn $178,000 per year to qualify for a 90% JUMBO loan with 8% interest and they need $112,000 cash for their down payment and closing costs.   Our prices are so high, the borrower must utilize a JUMBO loan which is always at a premium. 

Every sale in the County generates approximately .5% that is targeted towards affordable housing.    The majority of which is paid by the buyer as an excise tax. It is ironic that the buyer that needs affordable housing must pay the affordable housing tax.  The total excise tax of 1.5% is a large burden on those buyers scraping together their down payment and closing costs.   In the case of homes at our median price in the County, that totals $13,200. 

What is the solution to creating affordable housing?

Since the 80s, we have continued to state that we don't want to become Jackson's hole or Martha's Vineyard, but we continue to create regulations that make it cost more to build in our County. These regulations increase the cost of home ownership and make it much more difficult to provide affordable housing.

The State of Washington has passed laws that allow for the creation of affordable housing through several avenues. Unfortunately, we don't meet the population requirements stated in those laws to allow for higher density, but could we opt in under the Growth Management Act (GMA) or obtain a variance?    I am sure the State would want our County to be aggressive and promote options towards affordable housing.  If there is a will, there is a way.

The higher density would be in the urban growth areas; not countywide.  It won’t be possible for a 4- plex to be constructed on a residential lot on the waterfront.  Nor would that make sense, the land price would be too high to support the concept.     Further, some private CC&Rs for plats may prohibit and override any State or County rules regarding higher density or Accessory Dwelling Unit (ADU) construction. 

I also think the higher density should not create housing that is built too tightly together as well.  Building detached homes on very small lots doesn’t afford the garage, carport or storage space that property owners and tenants desire and need.  Without these extra spaces, the homes can become cluttered on the exterior with tools and equipment.  Even though we need to create homes that are considered affordable, they need to have storage space and yards.   

The state also passed ADU laws that our County should seriously consider for adoption and these laws do not have population requirements. The ADU structure could generate income for homeowners while the property is rented out on a long-term basis.

Further, by allowing the construction of an ADU on a smaller than 5-acre parcel, (current regulation) that would create more affordable rental housing.  An ADU on a 1-acre lot would not offer as much privacy, would have a shared driveway, water and sewer source and would be a maximum of 1000 sf so it would rent for much less than a free standing 1000 sf home on a lot.  The County should also consider increasing the 100 feet maximum distance from the main home to allow for more privacy.

Under the new ADU law, the State is allowing the condominium law to apply.  Therefore, If the property owner decided to use the condominium process for the ADU, the property could become 2 separate units and they could sell off the ADU as a freestanding home that would be affordable.  

Of course, the lots would need to be large enough to support the extra construction and respect the lot setbacks and easements, if any.   Not all lots would qualify for detached ADU but attached might still be a good option. 

The town is currently drafting their ADU rules and issued a draft this week in the www.sanjuanislander.com.  Unfortunately, the draft prohibits the use of the condominium process but perhaps they will reconsider after they hear from the public.  Selling off an ADU on an existing lot would generate affordable housing.  

I don’t know if our County needs the State Law to change the ADU rules, they adopted the minimum 5-acre rule without a vote of the people so they should be able to change it back, if they were inclined to do so. 

Even though the State has made these laws effective now, they are allowing the Counties and Cities our size until July 21, 2028, to update their Growth Management Act plan, which will tailor the laws to the local circumstances.  

Without the two avenues above, it is very difficult for the private sector to build an affordable home.  If you consider recent developments in town, to build a 1000 square-foot home on a fee simple parcel for less than $500,000 is a major challenge.  The land costs are rarely under $200,000 when the $30,000+/- sewer and water hook ups are paid so that leaves $300 per foot for the construction of 1000 sf.  Due to expenses, the builders of these types of projects have been unable to include garages and yards.    Most of our contractors are quoting much more than $300 for new construction, many are closer to $500-$700 per foot, subject to the description of materials and the site difficulty.  

The builders/developers work for profit which I understand is typically 15-25%, and that number hasn’t changed over the 46 years that I have been in the banking, real estate and construction industries.  What has changed is the cost of materials and labor that the builder/developer must pass on to the consumer.  

Most of the building code regulations come into play during the foundation through sheetrock stages of new construction.  The consumer/builder must comply with building code that dictates framing, engineering, electrical, plumbing, storm water management, heat loss calculations for insulation, window and doors.    Mostly, the consumer is limited to selecting their land, size and design of the home, roofing and siding materials and interior finish design.     

Part of the reason it costs so much to build in this County is due to regulation and the time involved. Other components include that all materials must be trucked onto the island and our labor costs are extraordinary, but a few components in our control are that our land costs could be reduced by increased density in the urban growth areas and our permitting department could expedite their processes and reduce any unnecessary regulation.   

It's amazing that the homes that were built in the 70s and 80s with fewer buildings code regulations are still standing and fully functional for their owners. There must be a system that allows for affordable construction and environmental protection. Our new septic systems are at the highest technological level ever, of course they cost $60,000-$80,000. 

I know of a tract home builder in the King County region, and he quotes $150 per foot for the cost of his new home construction.   The type of home he builds would be similar to a home in Fox Hall.  Of course, he uses volume to keep his costs in check. 

In most metropolitan areas, they have builders that construct speculative housing for resale.  Our market is too small, land and building costs are too high and construction time frames too long to build speculative housing.  Over the years, only a few contractors have tried it in our area.  The entire concept of speculative housing is building timely and selling before the market changes.  With our permitting time alone taking 9-18 months, the exposure is too great for a speculative builder. 

If a speculative builder could have higher density on residential lots in the urban growth area, it would be more cost effective.  For example, building 4 homes in close proximity to one another, the subs and service providers may be willing to give a discount in the pricing.   It would “pencil” the best if the homes were modest.  If we could have higher density, perhaps speculative building would be considered and become one of the solutions to more affordable housing.    

The state also passed a law that requires Counties to expedite the processing of housing permits.  It will be interesting to have our County report on their progress regarding compliance with this future State law.   Most contractors or property owners currently waiting for their permits indicate the turn-around time is beyond the original quote.  I recognize that the County is also reducing the work week to 32 hours for their employees as they will be more productive and can enjoy a more balanced life.  This is a new change and only time will tell if the turn-around times will be reduced.  

Reportedly, the County has 300 permits in process, I assume that number includes new single-family homes, commercial, mechanical and remodels.    I tried to verify this with staff; however, they have yet to respond to my request.  One option to expedite the processing of permits is for the County to consider outsourcing to approved private companies. 

Some property owners consider building their home themselves under the owner builder program and can reduce their construction costs as they aren’t paying a General Contractor.   Hopefully, the County will retain this program as it is a viable cost reduction method of construction.   Other property owners that are qualified can negotiate with the contractor to work alongside them and do some of the installation themselves.  This also reduces their cost of construction as they are not paying the laborer the hourly wage for the work they complete. 

Affordable housing programs that require sweat equity such as Homes for Islanders or Self-Help Housing appear to work well in the islands, but we are out of developed land for the program.  They need 7-10 lots in close proximity to one another to make the program cost effective.  Further the program works best when the participants are building smaller, less difficult designed homes.  Larger homes are too much of a challenge for the inexperienced participant and further, they are more of a burden for these homeowners to maintain in the future. 

Unfortunately, most of the easy to develop land has been built on.  The unimproved lots left in our county are often challenged with topography, wetlands, and the obstacles of creating water and septic sources.  It doesn’t take much to explode a construction budget out of proportion if the foundation costs exceed $100,000. 

As agents, we often brainstorm about issues such as affordable housing in our office meetings. One agent recently suggested that perhaps we use some of the public lands held in the land bank as a basis for a forever affordable project. That sounded like a great idea as the land bank could easily carve off a 5-acre parcel here and there. These parcels could be divided, and the lots would be large enough to offer a home, storage and/or garage.  However, then we remembered that it takes the land bank 1-5 years after an acquisition to present a parcel to the public for use with just walking trails and parking.  We realized quickly, there's no way the land bank could develop property. It would take them 10-20 years to create a site plan, obtain permits and bring in utilities and create roads. Perhaps they could hire it out to a developer but the long plat or PUD regulations are very time consuming so the density would have to be government mandated.  As the minimum lot size in the County is currently 5 acres, the reality of using public lands is not viable without government intervention on the density.   

GMA states that we must create affordable housing and it allows for Counties to up zone.  Rocky Bay and Leeward Lane are examples of ones that have been processed by the County.   If the County provided low-cost lots, the private sector could come in and build affordable housing that is deeded as forever affordable.  

In reality, the Land Bank won’t even allow the food bank to use their lands for community veg patches so our citizens can grow some of their own fruits and vegetables and have the farming experience.   They do lease some of the hay fields out, but that is about the extent of their cooperation. 

Vacation Rentals as an option?

Many people claim on Facebook that if we could cancel all the vacation rentals permits in the islands that those homes would turn into long term rentals.  Then we would create adequate housing.   That would be pretty extreme, and the concept isn’t workable due to numerous reasons, including property owner rights violations.   Most of the homes that are under the vacation rental permit program would not rent for an affordable amount as long term rentals.  Successful vacation rental homes have numerous amenities to attract the vacationing public and would command a very high monthly rental under a long-term program.  The smaller homes in the program actually don’t “pencil” very well for their owners.  If the owners did the math, they would realize they may net more money and incur less wear and tear on the homes, if they rented long term versus the 100-130 days a year at summer rates.  Regardless, those individuals have made the decision to continue nightly renting their homes due to tax purposes on their schedule E or the convenience of renting out their home for the income stream when they are not using it.    However, as a homeowner, they have the right to do what they want. 

I don’t believe that stopping vacation rentals is a solution for affordable housing. 


I am not suggesting that we reduce the building codes to a point where property owners can build a shack that blows down during a windstorm but there must be a way to balance building code, the density and the environment to reach a resolution.   We can’t say we are a campground, and we are now full, that will not work.  Unless the powers that be, have a no growth agenda, we should be able to find a direction to take.  If they do have a no growth agenda, then we might as well consider ourselves The Martha of the Pacific Northwest.  

If we don’t start to change the path we are on, we need to be prepared for higher costs of goods and services.  Unlike other high-end locations, the majority of our work force must live here and can’t commute from neighboring areas.  

If our plumbers, electricians and the rest of the support work force, have to pay $3000 or more per month for rent, they or their employers will be forced to pass on their housing expense premium to the individuals that hire them so that they can remain working in the islands. If they don’t pass on the premiums for housing on to the consumer, we will continue to see the loss of our local businesses.  

As it is so expensive to live and work here, we are eroding the segment of our population that provides the goods and services and who work in our local businesses.  It won’t take much longer to start eroding the middle class of our population base as well.  What will be left are the wealthy property owners.

Based on the chart below, we have time to change the trajectory that we are on.

I believe that the solution is higher density in some areas either by zoning laws or density increases via government intervention.  The creation of ADU housing on smaller parcels is essential and we need to figure out a way to use publicly owned land such as some of the Land Bank property.  I recognize that the Land Bank’s current mandate doesn’t include affordable housing, but I would think if they went to the State and requested a rewrite to allow for land transfers or leases to County or private citizens for affordable housing, their request would be respected.   

We also need more land adjacent to the Town of Friday Harbor brought into the Urban Growth Area (UGA). This could be a source of lots for the Homes for Islanders projects.  The program is a great option for people who do not qualify for housing in the Community Home Trust areas, and who don’t have the funds for a down payment via traditional financing. 

Why is it important to provide more affordable forms of housing? Because it affects nearly everyone who works and lives here.  If residents want grocery stores, restaurants, plumbers, electricians, housing contractors, nurses, doctors, just to name a few, then we need to provide affordable housing.  

We need to get the discussion started!

As with all my articles, the opinions expressed herein are solely my own.  These opinions are based on my personal experience, observations, and from interviewing and reviewing both public and non-public information sources.  

Written By:

Merri Ann Simonson


Coldwell Banker San Juan islands Inc



Last modified onFriday, 09 February 2024 04:05