What keeps housing costs high? There are many factors that can impact the cost of any given home – location, size, condition, and features. At the most basic level, our economic system influences the cost of housing. The lack of housing supply drives up the cost, therefore we need more supply to provide affordable choices for more people.
Housing experts know that rising housing prices are caused by lack of supply and increased demand. Increasing supply means that prices will eventually fall. It seems straightforward–because it is. Rents in cities that added housing increased 1 – 7% compared to the overall U.S. rent increase of 31%. Supply is a major factor in determining housing costs—but it isn’t the only one.
The cost to build a home—like everything else these days—is also high and impacts the ultimate price of a home. Homebuilders not only pay for materials and labor, but also taxes and fees for the property and various permits. Generally, the lower the cost to build, the lower it is to rent or buy. This means the type of housing we build matters, too.
In one Snohomish County neighborhood, a homebuilder constructed a townhome for $200,000 less than it cost to build a single-family home with similar household capacity and materials. When we say we need more types of housing, this is what we mean. More homes of more types will ease prices and make housing more attainable to more people.
Housing supply also impacts traffic congestion, emissions from long commutes, and the amount of time people spend in their cars. Many workers in the Puget Sound region can’t afford to live where they work. By adding housing supply of all types in our economic hubs, our region can reduce our carbon footprint, provide more affordable housing choices, and give more people the opportunity to live closer to where they work.