2024 March/April Building Insight

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425.641.8093 | BIAWHEALTHTRUST.COM

EDITORIAL STAFF COMMUNICATIONS DIRECTOR Janelle Guthrie

FEATURED

CONTENT SPECIALIST Hannah Cassara

12 BIAW members’ hard work brings mixed results in 2024 session

VISUAL DESIGNER Lena Anderson

BIAW members and staff fought against bills that continue to add to the cost of homes in our state, but they were successful in shepherding several bills through the legislature that will bring positive effects to our industry.

BIAW MANAGEMENT EXECUTIVE VICE PRESIDENT Greg Lane

22 New Homes Month: National & local building trends

EDUCATION & WORKFORCE DEVELOPMENT DIRECTOR Al Audette

Check out what we found to be trending nationally and locally in new home builds as the home building industry celebrates New Homes Month in April.

COMMUNICATIONS DIRECTOR Janelle Guthrie MANAGING DIRECTOR OF EXTERNAL AFFAIRS Jan Himebaugh MANAGING DIRECTOR OF OPERATIONS Stephen Hyer

IN THIS ISSUE

20 Housing Affordability Index:

ROII DIRECTOR Jenn Kavanaugh

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President’s message

26 Q1 Economic snapshot

ASSOCIATION SERVICES DIRECTOR Brenda Kwieciak

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Executive Vice President’s message

28 Local happenings

GENERAL COUNSEL Ashli Tagoai

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Associate spotlight

30 ROII: What is Kept On Salary

Homes less affordable today

(KOS)?

10 Building codes update CONTACT US For editorial inquiries, contact hannahc@biaw.com Interested in advertising in Building Insight? Contact communications@biaw.com www.BIAW.com Building Insight magazine is published on behalf of the Building Industry Association of Washington by Print Northwest.

33 Lock in great health insurance rates through 2025

15 2023 Top Spikes

34 Trending: WA represents in Pro Remodeler’s Forty Under 40

16 Highlights from the

ON THE COVER

International Builders’ Show

Roughly 150 BIAW members, staff and local association staff boarded three buses from Tacoma to Olympia to meet with legislators during BIAW’s Legislative Action Day on January 30.

19 Luellen Smith becomes chair of NAHB PWB Council

WE’D LOVE TO HEAR FROM YOU

@BuildingIndustryAssocWA

As always, we want to hear from you! We invite you to take a quick survey about your thoughts on Building Insight. Happy reading!

@biawofwa

@BIAofWA

Building Industry Association of Washington

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President’s message It’s been a busy first quarter of 2024!

With our first BIAW board meeting, our 2024 Builder Legislative Action Day and Reception, the International Builders’ Show and a busy legislative session behind us, it’s a great time to reflect on the value of membership in one of the largest home building associations in the nation.

Building influence with state legislators With more than 8,000 builders, remodelers and associate members across 14 local associations, BIAW is the state’s largest trade association. With our size comes a great deal of influence, as evidenced by some of our successes in the 2024 legislative session.

Jay Roberts

President

More than 100 of you joined us at the state Capitol in Olympia in late January to help us educate legislators about our priority issues during our Builder Legislative Day and Reception. Then many of you also participated in our weekly legislative calls and signed in on bills to help further support efforts to make it easier to build the homes our state needs.

Some of you even came to Olympia to testify before the legislature. And a couple of you shared your perspectives at a news conference in Olympia to fight efforts to increase property taxes.

Thanks to all your hard work, we passed five priority bills, and fought off that property tax increase, a proposed rent control bill, an increase in real estate taxes, unemployment benefits for striking workers and much more. That’s the power of your membership in our state.

We didn’t win it all though. The legislature passed a disappointing bill setting the stage for a natural gas ban in Washington. I’ll have more to share on how we can use the power of our membership to change that outcome and preserve energy choice and security for the people of our state.

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Solid presence at the International Builders’ Show More than 700 builders and roughly 300 associates and staff traveled to Las Vegas in the last week of February for the National Association of Home Builders (NAHB) International Builders Show (IBS). As your 2024 BIAW President, I was impressed by the leadership our members demonstrate at NAHB. I’d like to congratulate all the BIAW leaders who took on new leadership roles at IBS. I’d also like to recognize BIAW Executive Vice President Greg Lane who was sworn in as secretary of the NAHB Executive Officers Council.

Congratulations, Greg!

With so much leadership present at IBS, it was no surprise our delegation took up nearly half the room at the Area 15 Caucus.

Why does this matter? NAHB is one of the most powerful voices at the federal level, working to ensure Congress opposes measures that hurt our ability to build homes. They need to hear from us about how they can help protect our interests in Washington, DC—and our strong presence at national meetings like IBS gives us a chance to make sure our voices are heard.

Leveraging opportunities to grow membership Right now, both BIAW and NAHB have membership drives underway.

This is your chance to help build our ranks and our influence on issues that really matter to our customers and our industry. Advocacy is a great selling point when you’re talking to potential new members. Both BIAW and NAHB track new government proposals and help you stay ahead of things so you’re successful in your business.

Building our membership benefits you, your recruits and our industry. I look forward to seeing everyone this year as I travel to our local association meetings and events.

Register at: biaw.com/classes

UPCOMING CLASSES

* Free for ROII participants

Certified Lead Renovator - Initial

CESCL Recertification

May 3 | BIAW - Tumwater

May 20 | Online

Certified Lead Renovator - Refresher

CPR, AED and Basic First Aid Training

May 3 | BIAW - Tumwater

May 20 | CWHBA - Yakima

Competent Person: Residential Fall Protection

Code Compliance Workshop

May 6 | BIAW - Tumwater

May 23 | NPBA - Sequim

DOSH Inspections: Don’t be caught unprepared*

Certified Lead Renovator - Initial

May 8 | Online

May 24 | BIAWC - Bellingham

CESCL (Certified Erosion & Sediment Control Lead)

Certified Lead Renovator - Refresher

May 14-15 | Online

May 24 | BIAWC - Bellingham

Certified Lead Renovator - Refresher

Certified Lead Renovator - Initial

May 16 | NPBA - Sequim

May 31 | BIACC - Vancouver

Heat-Related Illness Awareness*

Project Management

May 17 | Online

May 31 | Online

Hall of Fame Recognizing lifetime achievement in support of the homebuilding industry

The BIAW Hall of Fame honors men and women who have made significant and lasting contributions to BIAW. Nominate your homebuilding hero!

NOMINATIONS DUE: JUNE 1 Learn more at: www.biaw.com/program/awards-recognitions

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Executive Vice President’s message

Greg Lane

Executive Vice President

Reflecting on the 2024 legislative session, I am left impressed yet again by how well our membership works together with BIAW’s outstanding Government Affairs team each year to engage in the legislative process. Thanks very much to the dozens of members who continued to voice their viewpoints supporting or opposing legislation affecting the building industry and those we serve.

The bad

Despite BIAW members and staff having to spend much of the 2024 session fighting against bills that will continue to add to the cost of homes in our state, we were successful in shepherding several bills through the Legislature that will bring positive effects to our industry.

This measure directs Puget Sound Energy (PSE) to develop a plan to move its more than 800,000 residential natural gas customers toward wholehome electrification. If implementing a natural gas ban is not alarming enough, PSE customers will also bear all the costs.

The good

Consumers will pay higher energy bills now, both for electricity and natural gas. And, when PSE ultimately shuts off natural gas service, those customers will also be forced to pay both to convert all their gas appliances to electric and to expand the electrical capacity of their homes. These costs will range from $40,000 to $70,000 per homeowner.

SB 5980 improves the timeline for the Department of Labor & Industries to issue safety violation citations. n SB 5792 eases rigorous condominium development regulations to allow builders of multi-unit residential buildings/ condominiums that are two stories or less with 12 or fewer units to add one story of above or below-ground parking or retail space. n SSB 6140 allows for more flexibility in rural development and will bring both jobs and essential services to rural areas. n SB 6120 addresses concerns with the imprecise and confusing maps used to develop the state’s Wildland-Urban Interface (WUI) code. After the governor signed SB 6120, the State Building Code Council voted to suspend the new WUI indefinitely. n SB 6291 streamlines the State Building Code Council operating procedures and creates more certainty.

SB 6120 took effect on March 15, while the rest of the bills will go into effect on June 6.

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Many of you and others came together to fight one particularly egregious measure – HB 1589 – which paves the way for banning natural gas in new and existing construction. This bill was signed into law and immediately went into effect on March 28 after the House of Representatives finally approved it in the dark of night on the morning of March 5.

The policy of banning natural gas is unnecessary, unreasonable and cruel.

Banning natural gas is bad policy and consumers deserve to have energy choices.

Moving forward The fight against a natural gas ban in our state is not over. We are joining forces with a broad coalition that is filing a citizens’ initiative to protect natural gas as an energy choice and ensure energy stability and security in Washington. Stay tuned for more information to come on this effort.

I would like to thank all of our members who took the time to sign in to support or oppose bills, as well as those who testified during committee hearings.

Working to protect the American Dream of homeownership here in Washington state wouldn’t be possible without your help.

February 1 - May 31, 2024 The BIAW Bracket Battle is a state membership drive offering members the chance to face off against each other to see who the top recruiter will be while also building membership in each local association.

Around the 15th of each month, BIAW will share updates on the competition and who is still in the brackets! The competition started with 54 players, 16 of which moved on to the March brackets. Only four advanced to the April brackets, and the final two will compete against each other in May. The final results will be shared at the BIAW Summer Board Meeting in June.

Prizes will be awarded to each of the final four participants, with the finalist winning hotel and airfare for two to the 2025 International Builders Show in Las Vegas. The runner-up will receive a private full day of winery tours in a region of choice for them and a guest.

Every player, including those already eliminated, has a chance to win $100 for every bonus point they earn. Bonus points are given when a new member joins ROII or the BIAW Health Trust.

Any member scoring five points or more during this time will receive an invite to an exclusive recruiter reception at the 2025 International Builders Show. Local associations will also earn cash incentives for each new member who joins.

During the first month of the competition 188 new members joined. We can’t wait to see how many more we gain!

To view all bracket updates and review the official rules, terms, and conditions visit

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Associate Spotlight

Spotlighting Ryan Smith of Homer Smith Insurance & Kristen Mesner of STCU

by Hannah Cassara Content Specialist

A cornerstone of our association and industry, associate members provide the support, trade skills and materials that make our industry’s day-to-day operations go round. Building homes would not be possible without them. That’s why each year BIAW’s Associate Advisory Council acknowledges associate members who actively contribute to the advancement of our industry at local, state and national levels with Associate Star Awards.

Join us in congratulating two recent recipients of this award, Ryan Smith of the Jefferson County Home Builders Association (JCHBA) and Kristen Mesner of the Home Builders Association of Tri-Cities (HBATC).

Ryan Smith Homer Smith Insurance, JCHBA Ryan Smith began working for Homer Smith Insurance shortly after graduating from Port Townsend High School in 2006.

Over the years, he has taken a more active role in assisting his father, Homer Smith III, with managing the company.

Kristen Mesner received her bachelor’s degree with a focus on Business Administration and Economics from Central Washington University in 2006. She has since become an experienced loan officer with a demonstrated history of providing superior service in the banking industry.

Homer Smith Insurance was founded by Homer Smith, Jr. in 1950. The company has remained in the family with Homer Smith III taking over in the 80s and continuing the tradition of providing competitive pricing with outstanding personal service.

After nearly a decade of working as a loan officer in the TriCities area, Mesner began her role as a mortgage loan officer with STCU in early 2023. She says meeting new people is her favorite part of the job as she helps homebuyers navigate the diverse Tri-Cities market.

A third-generation family-owned company, Homer Smith Insurance was one of the original founding companies of JCHBA. Like his father and grandfather, Ryan has been an active member of JCHBA as well. He has served on the JCHBA Home Show planning team for the last 10 years, on the board since 2019, and as treasurer since 2021.

Mesner has participated on the HBATC Membership Appreciation Committee since 2019 and joined the Parade of Homes™ committee in 2023 where she was a standout volunteer despite it being her rookie year. She is also a regular volunteer at HBATC events including the annual charity golf tournament and Regional Home & Garden Show.

“Ryan is the perfect board member,” said JCHBA Executive Director Lizanne Coker. “He offers advice when it can truly help a situation, and he is thoughtful and highly respectful of the other board members.”

Outside of her work with the HBATC, Mesner serves as an ambassador for the local Chamber of Commerce and has taught Junior Achievement classes to elementary students.

Homer Smith Insurance has offices in Port Townsend and Sequim and provides services to customers throughout Washington, Oregon, California, Idaho, Nevada and Arizona. Learn more about Homer Smith Insurance at www.homersmith.com.

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Kristen Mesner STCU, HBATC

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STCU is a not-for-profit, member-owned cooperative helping members serve the community since 1934. Learn more about STCU at www.stcu.org.

2024 Scholarship & Grant Applications are now open!

APPLICATIONS CLOSE SOON! Deadline: May 1, 2024

Who can apply for scholarships? n Washington state residents only n Students who will be applying to any Washington state accredited community, vocational/technical college, or university

Apply now

n Students who demonstrate a need for additional funding to complete their programs in a construction industry-related field of study

Who can apply for grants?

Apply now

Organizations requesting funding in a construction industry-related field of study (including but not limited to construction career training, continuing education, apprenticeship programs, and skills assessment programs). b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Codes Update

The 2021 building codes are now in effect What this means for BIAW’s litigation against the State Building Code Council and you going forward

by Sydney Phillips BIAW Associate General Counsel

After years of delays due to litigation and other issues, the Washington’s 2021 Building Codes went into effect on March 15, 2024. But litigation continuing in Thurston County Superior Court could force the State Building Code Council (SBCC) to roll the codes back if the BIAW and others are successful.

Here’s how BIAW’s legal team continues to fight for you.

BIAW and others seek legal intervention to block new codes In January, BIAW and a coalition of partners in the building and natural gas industry filed a second amended petition for declaratory judgment against the SBCC and sought a stay in Thurston County Superior Court on March 8.

The proposed stay requested that the 2021 codes not go into effect on March 15, 2024. It also requested the 2018 codes remain in effect until the court made a final ruling on the litigation brought by BIAW and its coalition. The judge denied the motion for the stay.

The motion for a stay in this case was based on the arguments that the SBCC exceeded its statutorily granted rulemaking authority, and that even if it had the statutory authority for rule-making, the SBCC disregarded the statutory rulemaking procedures.

The Superior Court judge ruled that at this stage in the litigation, there was insufficient evidence before the court to show that the SBCC was not following 10

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statutory rulemaking procedures, or acting arbitrarily and capriciously.

In denying the stay, the judge cited the burdens on all the parties. She then added that because the requested stay impacted both the energy and building codes, she believed it to be overbroad.

Background Since early 2023, BIAW and a coalition of trade associations, businesses, unions and individuals have been challenging the SBCC amendments to the building and energy codes. Just last year, despite major backlash, the SBCC decided to move forward with the 2021 code cycle and what is ultimately a de facto ban on natural gas in new homes.

BIAW and its partners saw these steps by the SBCC as an attack on an affordable energy source used by thousands of Washingtonians for heating, cooking and powering appliances. The rule challenge alleges the SBCC violated the state Open Public Meetings Act (OPMA), the Regulatory Fairness Act’s requirement for a small business economic impact statement, and the Administrative Procedures Act (APA).

BIAW and the others asked the court to: n Declare the SBCC’s code amendments invalid. n Declare null and void its actions during the November and December meetings as violations of the OPMA. n Award the coalition its costs and fees.

Next steps Despite the fact the 2021 Building Codes are in effect, the coalition’s lawsuit continues. BIAW’s litigation is just in the initial stages, and there are still opportunities for the court to declare the SBCC’s changes to the code invalid.

BIAW is also exploring additional challenges to the SBCC’s decisions regarding natural gas, including potential federal litigation based on the Energy Policy and Conservation Act (EPCA). The Ninth Circuit Court of Appeals invalidated the City of Berkeley’s natural gas ban based on EPCA violations so we believe we could prevail based on that decision. We will keep all of you updated when we take our next steps.

The bottom line The 2021 building code is in effect in Washington as of March 15, 2024.

All applications for building permits properly submitted to the appropriate building or planning department prior to March 15, 2024 should be subject to the 2018 building code. Any permit request submitted after March 15, 2024, will be subject to the 2021 building code.

TOP 10 CODES CHANGES YOU NEED TO KNOW

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NATURAL GAS

The Washington Energy Code severely disincentivizes natural gas appliances for space and water heating. If using natural gas in new builds, builders should expect to see a three-fold cost increase compared to allelectric compliance options. However, remodeling and HVAC contractors should note that if customers are replacing their existing gas appliance with a new one, it should be a like-forlike system – meaning these appliances cannot be replaced with appliances that provide added heating capacity.

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ENERGY CODE CREDITS

Each segment of housing construction saw an increase in the number of credits needed to comply with the energy code.

The new credit requirements are listed below, based on the size of the dwelling unit: n Small (less than 1,500 sq. ft.)

– 5 credits n Medium (1,500 sq. ft. to 4,999 sq. ft.) – 8 credits n Large (5,000+ sq. ft.) – 9 credits n Additions (150-500 sq. ft.)

– 2 credits n Group R-2 – 6.5 credits n Small additions (under 150 sq. ft.): exempt

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CONTINUOUS INSULATION

You will need to use continuous insulation if you are following the prescriptive code requirements.

However, if you opt to earn points in R406.3 (options 1.1 – 1.4) and meet or surpass the reduction percentages for total UA, there’s potential to forgo using continuous insulation. To use this option and prove the reduction, you will need to use the C3 calculator published by WSU Energy. Since 2009, the C3 calculator has been a state-endorsed compliance tool.

For more information regarding the UA alternative option, please visit www.biaw.com/codefaqs.

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SMALL ADDITIONS

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AIR LEAKAGE

In the previous code, additions less than or equal to 500 square feet had to earn 1.5 credits for compliance. Unsurprisingly, this created issues for homeowners seeking to add a walk-in closet or similar type of small addition that did not increase water or space heating loads. Under the newly adopted code, small additions 150 square feet and under will no longer have to earn additional credits.

In a win for the industry, Daimon Doyle, BIAW member and residential home builder representative on the SBCC, was able to negotiate an air leakage rate of 4 CFM instead of the proposed 3 CPM (the current rate is 5 CFM). During the November 4, 2022, code adoption meeting, Doyle stated, “There are so many factors that go into air sealing… builders need to be educated on how to get to 4 CFM. It’s a real struggle. There is no one-size-fits-all.”

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EV CHARGING

Despite the International Code Council ruling that EV charging falls out of the scope of the International Residential Code, Washington has adopted this requirement in its version of the IRC. That means all new homes with attached private garages or attached private carports will have to pre-wire for EV charging. A minimum of one 40-amp dedicated 208/240volt branch circuit must be installed in new electrical panels. The branch circuit should terminate at a junction box, receptacle outlet or EV charging equipment.

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LOFTS

The code is not silent on lofts anymore, as a code change submitted by the Washington Association of Building Officials has been adopted. Essentially, lofts are now treated as mezzanines in the code, as opposed to a habitable attic. These changes allow for a lower ceiling height, unrestricted use of space, and more.

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EXISTING BUILDINGS AND STRUCTURES

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RADON

Appendix J of the IRC has been moved (and restructured) to Chapter 45. There’s a whole host of changes to the code language that covers repairs, alterations, additions, and relocations that are worth checking out. A huge thank you to the City of Tacoma for submitting the adopted proposal that gives more flexibility for existing construction that should make it less expensive for existing homes to comply with the building codes.

If you build in a county that has to follow Appendix F because of high levels of radon, the new testing requirements may be a cause for concern. If your county requires radon reduction systems, you must achieve a test result at or below 4 pCi/L. If not achieved, further mitigation and retesting must occur until 4 pCi/L or below is met. Proper planning for when to test for radon and mitigate is necessary to ensure this new requirement does not hinder closing status of homes in highradon counties.

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KITCHEN EXHAUST RATES

If you’re familiar with kitchen exhaust rates in the mechanical code, you’re probably aware that the current airflow rate is 100 CFM. With the new suite of code changes, this will change dramatically, depending on the type of range you’re installing in new homes.

For example, a hood over electric range will now require at least 160 CFM, whereas a hood over combustion range will require a minimum of 250 CFM.

Questions?

Please visit www.biaw.com/codefaqs or email andreas@biaw.com.

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BIAW members’ hard work brings mixed results for building industry this session

by Janelle Guthrie Communications Director

Throughout the 2024 Legislative Session, members repeatedly stepped up to share their views supporting or opposing legislation affecting the building industry and those we serve.

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LPC to hear updates and provide input.

But how do BIAW government affairs staff and lobbyists select which bills to advance? And which to oppose? The wisdom and experience of members across the state play a vital role.

Still, others reach out directly to staff with issues they’d like to see resolved. Such was the case when multiple builders reached out to BIAW complaining the state Department of Labor & Industries (L&I) was failing to quickly notify builders of alleged safety violations and instead issued fines months later. Another builder reached out seeking more flexibility for youth on jobsites.

Some members serve on the Legislative Policy Committee (LPC). Others join Tuesday morning phone calls with the

Stories of real-life issues affecting the homebuilding industry help paint a picture for legislators.

Strong presence for Legislative Action Day and Reception That’s why members attending the 2024 Builder Legislative Action Day in late January wore buttons encouraging legislators to ask them about their experiences. Builders chose from six buttons: n Ask me how I got into homebuilding n Ask me how I would fix the WUI (Wildland-Urban Interface code)

Members of Master Builders Pierce meet with House Speaker Laurie Jinkins.

n Ask me how long it takes to build a home n Ask me the highest impact fee I pay n Ask me what city/county I prefer to work in n Ask me how the energy code is affecting home prices Government Affairs staff crafted the buttons to align with legislative priorities and help legislators learn more about the people behind Washington’s residential construction industry.

Roughly 150 people boarded three buses from Tacoma to Olympia to meet with legislators. Later that afternoon, they made their way to the Hammers & Highballs Legislative Reception at Nicole’s Bar, a popular spot for the Olympia crowd.

The Spokane Home Building Association gathers in the Capitol Rotunda before meeting with legislators.

Mixed results Despite a strong legislative agenda and robust advocacy efforts, residential home builders and the BIAW lobbying team spent much of the 2024 session working to stave off costly new taxes, environmental policies and labor measures—all of which add to the cost of homes in Washington.

“The cost of new homes in Washington runs more than $200,000 higher than the rest of the nation,” said BIAW Executive Vice President Greg Lane. “Washington still needs to build thousands of new homes to meet the state’s demand. Yet legislators continued to reject opportunities to increase density, expand available land to build or reduce the cost of housing construction.”

BIAW members Christina Janis and John Erwin joined Senate Minority Leader John Braun, R-Centralia, and others in a news conference on Feb. 8, urging legislators to reject a new property tax increase. Thanks to their assistance, the majority party opted to kill that measure this year.

But we couldn’t fight off all the bad legislation. Builders and others valiantly fought another attack on energy choice (HB 1589). Sadly, the House of Representatives approved it in the wee hours of March 5 and sent it to the governor for signature.

BIAW President Jay Roberts and others meet with House Republicans.

The bill allows Puget Sound Energy to pass the costs of its decarbonization efforts onto its natural gas and electric customers through higher energy bills. It also directs them to develop a plan to stop serving natural gas customers, forcing homeowners to make costly conversions from natural gas to allelectric homes. Gov. Jay Inslee signed the measure into law, and it immediately went into effect on March 28. b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Recognizing the need for more flexibility in rural development, Managing Director of External Affairs Jan Himebaugh joined local governments and others in supporting SSB 6140. A bipartisan bill, SSB 6140 eases rural development restrictions and will bring both jobs and essential services to rural areas.

Builders, the environmental community and local planning professionals all voiced concerns over the imprecise and confusing maps used to develop the state’s Wildland-Urban Interface (WUI) code. BIAW’s lead staff on the building code, Policy and Research Manager Andrea Smith helped pass SB 6120. This bill allows local governments more opportunity to weigh in on these maps to help ensure better land management and more opportunities to build.

SB 5980. Photo: Legislative Support Services Photo Department

Improving safety After builders complained about L&I notifying them of safety violations months after the alleged violation occurred, BIAW Lobbyist Tom Kwieciak worked with Sen. Karen Keiser, longtime Chair of the Senate Labor & Commerce Committee, on a solution.

After the governor signed SB 6120, the State Building Code Council voted to suspend the new WUI indefinitely.

Social media manager Sailor Rozema joined Smith and Gullion as the governor signed all three bills on March 15. SB 6120 took effect on March 15. The other two bills take effect on June 6.

Keiser joined BIAW at its 2023 Fall Board Meeting and later sponsored SB 5980. This bill improves the timeline for issuing safety violation citations. That means builders can fix potential problems sooner, creating safer workplaces and helping to eliminate unnecessary fines.

BIAW 2022 President Joseph Irons, lobbyist Tom Kwieciak, and Sr. Leg. Manager Tricia Gullion joined Sen. Keiser at the bill signing on March 13. The bill goes into law on June 6, 2024.

Easing regulatory barriers SB 5792 eased rigorous condominium development regulations to allow builders of multi-unit residential buildings/condominiums that are two stories or less with 12 or fewer units to add one story of above or below-ground parking or retail space. Previously, they had to build these structures under the more restrictive condominium codes. Gullion testified on this bill and collaborated with legislators to pass it into law.

SB 6291. Photo: Legislative Support Services Photo Department

Streamlining the building code, cementing certainty The governor signed SB 6291 into law on March 18. This measure streamlines the SBCC’s operating procedures and creates more certainty. Smith worked with Sen. Linda Wilson, a member of the building code council, on these important improvements. Smith and Wilson joined the governor as he signed this bill into law. It becomes effective on June 6.

Fighting off bad legislation Sometimes what members can kill is as important as what they pass. BIAW also worked to help defeat other anti-housing legislation: n HB 1893 – Extending unemployment benefits for striking workers. n HB 2276 – Another measure to increase real estate taxes.

SB 6120. Photo: Legislative Support Services Photo Department 14

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n HB 2114 – Rent control.

Builder bills left on the table Several bills promoted by BIAW to expand the workforce, create more opportunities for home ownership and reduce costs failed to pass through the legislature.

These included: n HB 2035 – Creating more opportunities for 16- and 17-year-olds in training programs to work on jobsites.

2023 Top Recruiters Each year, BIAW recognizes its Top Spikes at the winter board meeting. When home builders association members recruit and retain new builder and associate members, they earn credits or Spike points.

TOP SPIKE

1.

n HB 2087 – Limiting apprenticeship objections to create more opportunities in residential construction.

18 NEW MEMBERS

Sandra Teal, KBA

n HB 2451 – Increasing the consistency and transparency of impact fees. n SB 6285 – Ensuring the timely and balanced use of impact fees.

18 NEW MEMBERS

2.

Gary Questad, HBATC 16 NEW MEMBERS

3.

Thank you to everyone who signed in to support these bills, especially everyone who testified. We’ll revisit these issues in the future.

For more information on legislative issues, contact Managing Director of External Affairs Jan Himebaugh at janh@biaw.com or (360) 352-7800 x 135.

Chuck Neibert, BIACC 14 NEW MEMBERS

n HB 2126 – Authorizing accessory dwelling units in rural areas. n SB 6029 – Authorizing counties planning under the Growth Management Act to allow detached accessory dwelling units outside of urban growth areas.

Tracy Doriot, BIACC 16 NEW MEMBERS

n HB 1468 – Modifying the requirements for impact fee deferrals. n HB 1245 – Increasing housing options through lot splitting.

Dee Coppola, KBA

Caleb Blanton, BIACC 14 NEW MEMBERS

4.

Bob Disney, KBA 12 NEW MEMBERS

5.

Ryan Bittenbender, MBAPC 11 NEW MEMBERS

Ryan Moore, CWHBA 11 NEW MEMBERS

Associates spotlight Star Builders The Associates Advisory Council celebrated its Star Builders at the 2023 Winter Board Meeting. The awards recognize builders from each local association who have made significant contributions to their home builders association (HBA), their community and BIAW. Congratulations and thank you for everything you do!

 Tony Marnella, Marnella Homes, BIACC  Brice Baxter, Baxter Construction, CWHBA  Lori Tschohl, Eagle Pipe Heating & Air, JCHBA  Traci Tenhulzen, Tenhulzen Residential LLC, MBAKS  Miriam Villiard, Heritage Builders NW LLC, KBA  Eric Pucci, Newrock Homes, LCCA  Corey Watson, JK Monarch, MBAPC  Bob Johnson, Ward Johnson Masonry & Tile, SICBA  Gary Questad, New Tradition Homes, HBATC The Building Industry Association of Clark County gathers in the Capitol Rotunda before meeting with legislators.

 Sharla Jones, Greenstone Homes, SHBA  Dominic Moceri, Moceri Construction, BIAWC b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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International Builders’ Show Highlights

by Janelle Guthrie Communications Director

More than 1,000 Washington builders, remodelers, associates and staff joined 76,000 others in Las Vegas the last week of February for the 80th National Association of Home Builders (NAHB) International Builders’ Show (IBS).

Boasting the largest attendance since 2009, IBS attracted more than 1,800 exhibitors—800 of them new to the show. Washington home building association members and staff represented their state well, leading in a number of areas throughout the show.

Spokane Associate wins NAHB Young Professional of the Year Award After helping to steer the Spokane Home Builders Association’s (SHBA) Young Professionals Council, SHBA Next, successfully through the pandemic then serving as secretary and 2nd vice president for BIAW, SHBA member Nick Gilliland won the Young Professional of the Year for NAHB Region E. A member since 2017, Gilliland is a partner in Blasingame Insurance, active locally in supporting Cub Scout Pack 430, the NW Autism Center, YMCA’s Camp Reed and his daughter’s soccer team. BIAW leaders and staff joined SHBA staff and Gilliland’s wife in celebrating his award during the NAHB Young Professionals Council meeting.

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Green builder Ted Clifton chairs NAHB Climate Risk and Sustainability Committee With a lifetime commitment to building net-zero and environmentally-friendly homes, BIAW Hall of Fame member Ted Clifton was a logical choice to chair NAHB’s Climate Risk and Sustainability Committee.

The committee focuses on resiliency, energy efficiency and climate-related risk issues that may affect housing and the residential construction industry.

Clifton chaired the committee’s meeting, discussing how climate change models affect work with federal government partners.

Washington dominates Area 15 Caucus With close to 40 members in attendance at the Area 15 Caucus, Washington’s presence dominated the meeting. SHBA member Nick Scheel moved from his role as NAHB State Representative to National Area Chair (NAC), where he’ll lead Area 15 caucus meetings and gatherings of the other state representatives for two years.

Area 15 covers the Northwest US, including Alaska, Washington, Oregon, Idaho and Montana. BIAW 2021 President Tracy Doriot became BIAW’s new state representative and Imm. Past President Gary Wray will serve as the state’s Special Voting Member.

Members and staff attending the Area 15 caucus heard updates on issues from all the states and discussed concerns from those states as well. BIAW 2001 President Bob Camp encouraged fellow

Area 15 leaders to prepare to run for NAHB leadership, reminding his peers about the length of the process and planning necessary to succeed.

Master Builders Association of Pierce County leader Kurt Wilson urged NAHB leaders to pay attention to the electrification movement, warning that what’s happening in Washington and other states deserves national attention to preserve energy choice and protect energy security.

New NAHB roles for Washington staff On the staff side, BIAW Executive Vice President Greg Lane moved into his new role as secretary of the Executive Officer’s Council (EOC). The EOC also welcomed Building Industry Association of Clark County Executive Director Bart Hansen to its board of directors.

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Washington builders earn national awards NAHB Remodeling Awards NAHB recognized the best in craftsmanship, innovation and excellence in remodeling projects at the NAHB Remodeling Awards celebration on Feb. 28. They presented awards across a range of categories including entire home renovation, kitchen remodel, bath remodel, outdoor and creative use living spaces.

BIAW and Master Builders Association of King and Snohomish (MBAKS) counties member, Lochwood-Lozier Custom Homes, won awards in three categories! Congratulations on winning top honors for: n Home Kitchen Remodel, over $300,000 Culinary Cove - Mercer Island Kitchen Transformation n Creative Use Living Space Redmond Garage - The Dad Pad n Outdoor Living Space Issaquah Highlands Haven

Best in American Living (BALA) Awards At the BALA Awards Ceremony on Feb. 28, Urban Northwest Homes, owned by Building Industry Association of Clark County members, Jerud and Annakate Martin, won a Silver in the Healthy Home Category for “The Benton” in Ridgefield.

Exxel Pacific, a member of MBAKS, also won a Platinum Award Best in Region for Development 4-7 stories for its Alta Arlo project in Seattle.

Congratulations on your hard work and excellent craftsmanship!

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Smith shares vision as Professional Women in Building National Chair of PWB and facilitate meaningful connections among our members.

“I’m also excited for our members to take advantage of NAHB Connect, the all-member forum,” she said. “This platform will serve as a space for robust discussions on supporting our at-large members and local PWB councils.”

Mark your calendars: PWB National Day of Service Another key objective this year is expanding council involvement in the PWB National Day of Service, Smith said.

In late February at the 2024 International Builders Show, BIAW Imm. Past Second Vice President Luellen Smith became chair of the NAHB Professional Women in Building (PWB) Council.

Smith, who owns Rhino Wine Cellars and Cooling Systems with her husband, says her top goal for 2024 is fostering knowledge sharing and connectivity across the membership.

“As we step into 2024, there are boundless possibilities ahead for Professional Women in Building,” Smith said. “Together, we aspire to forge connections among women in the trades while nurturing the growth of emerging leaders.”

Leveraging resources already available through NAHB, Smith plans to arm leaders across the nation with tools to build both knowledge and networks.

Monthly Shop Talks Virtual sessions offered through NAHB, Shop Talks feature members nationwide discussing industry issues, exploring trends and collaborating on relevant topics.

“We encourage active participation in these Shop Talks,” Smith said. “They provide excellent opportunities to

learn from your peers and amplify your expertise.”

“

Together, we aspire to forge connections among women in the trades while nurturing the growth of emerging leaders.

— Luellen Smith

Streamlining NAHB PWB webpages Smith also looks forward to streamlining NAHB’s PWB webpages, enhancing accessibility, and expanding the resource library.

“Our newly introduced Idea Bank is a treasure trove of creativity, where members can share their ideas, programs, and events,” Smith said. “I encourage every member to take full advantage of this platform, contributing and extracting inspiration to strengthen their local PWB councils.”

“Launched in 2023, this initiative empowers our local councils to plan diverse outreach efforts aligned with their interests,” Smith said. “From community cleanup projects to skillsharing workshops, fundraising for local causes, and supporting shelters, our PWB goal is to make a positive impact in communities across the nation.”

With 90 councils across the nation, Smith and the NAHB PWB Council have an ambitious goal to establish a council in every state.

“We only have 14 states to go,” Smith said. “Momentum is on our side and it’s only a matter of time before we reach our goal!”

About PWB Nationwide PWB Nationwide: 90 councils in 36 states PWB councils in Washington: n Master Builders Association of King and Snohomish Counties n Olympia Master Builders n Building Industry Association of Clark County

Maximizing mentorship

n Master Builders Association of Pierce County

Smith says 2024 is a year for enhancing local council support and mentorship.

NAHB PWB plans to leverage NAHB’s Mentor Match program, a user-friendly online database, to elevate awareness

If your local HBA does not have a PWB Council, you can join PWB as an at-large member for $50 per year. All PWB members receive the same great benefits. b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Washington Center for Housing Studies

Housing Affordability Index: Homes less affordable today

by Andrea Smith Policy & Research Manager

Unsurprisingly, housing in Washington has grown less affordable since last summer, according to Washington’s Housing Affordability Index for the first quarter of 2024.

Produced by BIAW’s Washington Center for Housing Studies, the Housing Affordability Index is a Washingtonbased resource for understanding the extent to which county-level housing markets are providing a range of choices that are affordable – and thus, attainable – to the state’s workforce. It examines median income level by county, median prices of all homes and income necessary to purchase median-priced homes.

Income rises faster but not enough Despite strides made during the 2023 legislative session, median home prices continue to increase. Median home prices statewide grew from $430,000 in June 2023 to $586,100 in March 2024—a 36% increase.

At the same time, the median household income used in the study rose to $90,325. Only 16.2% of Washington’s population makes the $165,100 in household income necessary to afford to purchase a median-priced home. That means more than 84% of households are priced out of home ownership.

And it doesn’t matter if they’re going the conventional route or using a Federal Housing Administration (FHA) First Time Homebuyers loan. While the down payment and monthly payments differ, the end result remains.

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n n n n n n n n n

Washington’s median income: $90,325

Max purchase price budget: $346,300 Median home sales price: $586,100

Income needed to afford median-priced home: $165,100 Down payment needed: $117,220 Monthly payment: $3,862

Payment (as percentage of income): 51%

Percentage of households CAN afford – conventional: 16.2%

Percentage of households that CANNOT afford – conventional: 84%

Active listings on Zillow under $450k: 8,832 homes (includes manufactured and 55+ communities) n

Rural counties more affordable Housing affordability varies from county to county.

However, the report shows more rural counties have median home sales prices that allow more households to be able to afford a home.

For instance, nearly 40% of Garfield County households can afford the median home sales price of $230,000, whereas 27% of King County households can afford to purchase the median-priced home at $775,000. In Kitsap County, only 13.7% of households can qualify for the median-priced home of $549,990.

The more affordable counties, those with median-priced homes lower than $300,000, include: n

Columbia

n

Pacific

n

Pend Oreille

n

Stevens

the cost to build new homes. Unfortunately, the bulk of those bills failed to pass.

In the 2023 legislative session, the legislature passed a handful of bills that aimed to make housing less expensive to build and, therefore, less expensive to purchase or rent. Even so, much work is to be done if the state is to add one million homes that Washingtonians can afford by 2043.

While many of the variables that make up the housing market are largely out of the state and local governments’ control, there are a number of variables we can control with logical public policy to ensure homeownership opportunities can persist for generations to come.

Regulatory reform n

The easiest solution to our state’s housing underproduction quandary is reforming the GMA. Various housing policy scholars and academics have concluded that state growth management acts are responsible for about half the cost of added costs to home prices since their inception. This is unsurprising due to the artificial, and sometimes arbitrary, constriction of land.

n

A re-examination of some building codes that don’t impact the safety or wellness of occupant(s) is necessary.

Codes that disrupt the supply chain and add significant cost to the owner or renter but do not improve the life safety or personal health of the occupant(s), should be questioned as to their appropriateness in being placed in the code instead of in legislation.

n

Developing single- and multi-family housing units is a risky business, full of uncertainty and unforeseen obstacles. Any process improvements from the state and local governments at each area of interaction between the government and project owner will be important to creating a more predictable building environment. More predictability will bring shorter construction timelines and reduce costs for the buyer or renter.

All these counties have median home sales prices that allow 40% or more of households to qualify for a home.

In the least affordable counties, a combination of more costly median-priced homes and lower wages meant only 10% of households could afford a median-priced home.

Those counties include: n

Chelan

n

Clallam

n

Jefferson

n

Whatcom

Not surprisingly, King County listed the most expensive median-priced homes at $775,000. At that price, 27% of King County households could afford to buy.

Attempts to increase access to housing languish BIAW supported bills in the 2024 legislative session designed to create more housing opportunities and reduce

About the Washington Center for Housing Studies Dedicated to comprehensive analysis and research of housing trends, policies and challenges in Washington state and situated at the intersection of academia, government and industry, the Center plays a pivotal role in shaping the discourse and strategies surrounding housing attainability.

The Center equips decision-makers with the knowledge and tools needed to address the complex and evolving housing policy landscape.

The information in this report is self-reported data points and personal perceptions of respondents who work in departments such as planning, community development and code administration.

To view the full report as well as the rest of the Center’s special reports, visit biaw.com/research-center.

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TRENDS

2024

NEW HOME

by Hannah Cassara

Kitchens with a mix of stained wood and painted cabinetry are high on the desirable list.

Content Specialist Photos courtesy of Brett Lott Homes, Kennewick

As the home building industry celebrates New Homes Month in April, we looked into what is trending with new home builds nationally and in Washington state.

A National Association of Home Builders (NAHB) survey reveals what consumers look for when house shopping. The survey asked first-time buyers and existing homeowners about the features they consider essential in their next home.

Smaller homes trending According to NAHB’s latest What Home Buyers Really Want study, home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago. The country’s average size of a new home in 2023 was 2,411 square feet, the smallest size in 13 years.

Builders are acting on this trend, working to close the gap on housing affordability by cutting home prices through 22

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smaller builds and more affordable finishes. According to an NAHB survey of single-family home builders, 38% of builders indicated they built smaller homes in 2023 to help support home sales, and 26% indicated they plan to build even smaller in 2024.

Smaller homes are also trending locally, according to TriCities custom home builder and Home Builders Association of Tri-Cities (HBATC) member Brett Lott of Brett Lott Homes in Kennewick.

“There is definitely a trend towards smaller homes due to rising home costs and increased interest rates,” Lott said. “We are also seeing an increased interest in multi-generational homes that have either a mother-in-law suite or a separate accessory dwelling unit.”

Not only is less square footage desired by home buyers, but also fewer rooms such as bedrooms and bathrooms, according to the NAHB survey.

Transitional LED lighting and backsplash tile to ceiling are popular in bathrooms.

Transitional over traditional While home buyer preferences are trending smaller, open design concepts such as great rooms and nine-plus-foot ceilings on the first floor remain desirable. Lott said they are seeing a trend toward more transitional designs, stepping away from traditional designs. LED light fixtures help provide more of a transitional look, he said.

In kitchens, walk-in pantries are popular with added features such as a countertop and outlets to allow for appliances to be tucked away and off the kitchen countertops. Pantries with more cabinetry, a dishwasher and a sink are also high on buyers’ wish lists, Lott said.

Also trending in kitchens is a mix of stained wood with painted cabinetry.

Even if painted cabinets are used in the kitchen, a stained cabinetry island is desirable. Fluted wood paneling is also gaining popularity in kitchen design.

Carpet is becoming less and less popular and hard surface flooring throughout the home is more common. Lott said they have recently built several homes with zero carpet flooring.

On the exterior, multiple siding types are trending. Lott said they are seeing combinations of materials such as stucco, cultured stone and composite cladding. Black window frames inside and out are also becoming more popular. Wood finishes are included both inside and outside the home to add warmth and character.

“

There is definitely a trend towards smaller homes due to rising home costs and increased interest rates.

— Brett Lott, Brett Lott Homes

Home features that remain at the top of buyers’ wish lists include four outdoor features, two kitchen features and two related to energy efficiency, according to the NAHB survey: n Laundry rooms n Patios n Energy Star windows n Exterior lighting n Ceiling fans n Garage storage n Front porches n Hardwood flooring n Full bath on the main level n Energy Star appliances n Walk-in pantries n Landscaping n Table space in the kitchen

Walk-in pantries with added features such as a countertop and outlets allow for appliances to be tucked away and off the kitchen countertops. b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Technology and energy efficiency increasingly popular NAHB asked builders about energyefficient features that will likely be in new homes in the coming year. At the top of the list were energy-efficient lighting, programmable thermostats and Energy Star appliances.

Technology features are becoming increasingly popular, most notably security cameras, wired home security systems, programmable thermostats, video doorbells, multizone HVAC systems and energy management systems.

Other home features that have seen strong growth in popularity over the past ten years, according to NAHB, include:

On the exterior, multiple siding types are trending. Lott says they are seeing combinations of materials such as stucco, cultured stone and composite cladding.

n

Quartz or engineered stone for kitchen countertops

n

Lighting control systems

n

Outdoor fireplaces

n

Outdoor kitchens

n

Built-in kitchen seating

n

Exposed beams

More stained wood and warm colors are trending in kitchens, Lott said. Fluted wood paneling is also gaining steam.

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Washington Center for Housing Studies

Analyzing a decade of construction: Trends in building materials and labor costs

by Andrea Smith Policy & Research Manager

As housing costs continue to make headlines and impact the everyday lives of Washington families, understanding what is driving cost increases is crucial. A recent report published by the Washington Center for Housing Studies delves into the intricate relationship between building materials and labor costs in the construction industry.

This report lends insight into why construction costs are skyrocketing. While home builders can sometimes mitigate these costs through proactive planning, many of these costs are largely out of the industry’s control. One such example is the cost of lumber, in which national trade relations and state laws can impact the cost that is passed down to the home builder — and, ultimately, the home buyer.

Key findings: n

All phases of construction have experienced tremendous increases in material and labor costs.

n

It’s become more evident that new construction costs are increasing more rapidly as more onerous energy code provisions are adopted.

n

The cost of labor has exploded in recent years. This could be occurring due to the aging workforce and shortage of skilled workers which trigger higher wages for those with these needed skills. Also important, but hardly given attention, is the impact payroll taxes and mandatory state benefits have on the cost of labor.

BIAW subscribes to RSMeans data, the industry standard for construction cost data on materials, equipment and labor, to inform its studies into construction costs in Washington. For this report, we used the Seattle metro area data, as this is the state’s most populated area.

Increases across all phases All phases of construction experienced increases of at least 16% over the last decade. The most substantial increase observed was for site work, increasing at a rate of 107%, which we predominantly attributed to the shortage of skilled labor.

The second-highest escalation was recorded at 80% for exterior walls, driven largely by the energy code’s “envelope” (insulation and windows) minimum requirements. Following closely, framing saw a 66% increase while electrical costs surged 65%, both influenced by the labor shortage.

Not far behind framing and electrical is plumbing, seeing a cost increase of 56%. It does not appear material costs increased but nominally, so we attribute this increase to the shortage of skilled workers.

Labor costs explode Foundations experienced a 42% uptick due to increased costs in both materials and labor associated with this phase of construction. Mainly due to the shortage of skilled workers, the concrete labor disputes that made headlines in 2022-2023 could have played a role in these cost increases.

Experiencing an increase of 32%, the labor market for roofing has played a large part in increasing costs related to this phase of construction. Roofing holds one of the state’s highest workers’ compensation premium rates, as it’s one of the riskier segments of the industry for worker safety.

Lastly, interior finishes saw a relatively modest increase of 16% in the last decade, primarily influenced by the increase in the cost of flooring and drywall products. Again, the shortage of skilled labor also speaks to the rise of costs more broadly.

In summary, the construction industry should expect to see material pricing where government policy drives demand.

Expect to see high-efficiency, low-emissions materials remain elevated for the foreseeable future.

To view the full report, visit biaw.com/research-center. b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Q1 Economic snapshot Inflation is persistent, talk of rate cuts is premature and the consumer soldiers on

by Noah Blanton

BIAW has teamed up with WFG National Title Insurance Company’s Noah Blanton to offer quarterly economic forecasts to assist members in making decisions for their businesses. Contact him for more information at (503) 431-8506 or nblanton@wfgtitle.com.

Figure 1

President, Oregon Direct Operations, WFG National Title Insurance Company

One year ago, a recession seemed a near certainty, with the US Gross Domestic Product (GDP) decelerating for four consecutive quarters and the Fed rapidly raising interest rates. At that point, the overnight bank funding rate was 4.5%.

But we have thus far avoided a recession, primarily due to the stubbornly resilient consumer, continued massive deficit spending and poorly performing economies outside the U.S. Welcome to your Q1 economic snapshot.

Inflation & interest rates Mortgage interest rates peaked in the current cycle in October 2023. However, the easing of rates that has followed has been anything but predictable, and rates have not broken through a floor of 6.6% for 10 months. (See Figure 1) Factors influencing mortgage rates include sticky inflation, continued Quantitative Tightening by the Federal Reserve, ongoing deficit spending, and the disassociation of the 10-year treasury bond and the 30-year rate (marketbased rates).

Inflation remains persistent, with headline inflation stuck in the 3% range and no longer moving consistently downward. In fact, headline inflation Figure 2

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has increased in four of the last nine months. Shelter inflation continues to outpace most other categories, still well above 5%. (See Figure 2) This challenges housing inflation, as the “lock-in effect” of low rates keeps inventory low and prices relatively stable. Lower interest rates would increase demand, driving prices and shelter inflation higher. Shelter is nearly 26% of the weighted average of the Consumer Price Index. Shelter inflation matters and there is no clear path to bringing it under control other than damaging demand (which has remained relatively strong so far).

The Federal Reserve is comfortable with Figure 3

mortgage interest rates at current levels, as evidenced by continued quantitative tightening. The Fed has reduced its holdings of mortgage-backed securities by $312 billion since April 2022 and shows no signs of slowing this pace.

Expect a hands-off approach to mortgage rates by the Fed for 2024.

They will maintain a neutral stance, allowing the market to dictate rates. This explains, in part, the large and persistent gap between the traditional spread between a 10-year Treasury and a 30year mortgage. Historically, it has been around 1.7%, but the spread increased to nearly 2.9% in September 2022 and has remained in this range ever since. Expect to function in a 6-7% rate environment

for the duration of the year. The market has proven it can function in this range.

Talk of Fed rate cuts is premature. With the decline in overall inflation slowing, housing inflation elevated, energy deflation retreating, and continued deficit spending, the outlandish calls for 5-7 cuts have been pared back to 1-3 cuts this year. A single rate cut would do little to the economy one way or the other, but for three cuts to materialize, we would need to observe significant weakness in the economy.

Demand for housing Population growth and household formation drive the base for housing demand. Employment and wage growth determine the strength of that demand.

Figure 4

I will address employment more fully as the overall economic cycle develops.

In brief, there has been no significant erosion of employment. A national recession and the Chinese economy disproportionately impact Washington’s employment, so this will be a focus of future updates.

Figure 5

housing, and homebuilders continue to subsidize purchases to maintain velocity. One of the nation’s largest home builders recently disclosed that 70% of their purchases include a rate buy-down. The “subsidy effect” is a future issue the homebuilding industry will contend with.

The desire for home ownership is undiminished, and the consumer remains remarkably resilient. But regardless of desire, affordability remains a challenge.

Inventory remains low, so new construction remains a historically high percentage of available product on the market. Low rates continue incentivizing existing homeowners to stay in place, keeping prices stable.

Washington State population growth projections remain relatively strong, driven by continued inbound migration.

The state forecasts population growth to bottom 2024-2025 and recovers from there. (See Figure 3) The state will break through a population of eight million this year and end the decade at nearly 8.5 million. We will need additional new housing to accommodate this growth.

Washington grew its population by 1.1% in 2023, with nine counties outpacing the average, including Benton, Clark, Douglas, Franklin, Grant, King, Mason, Snohomish, and Whatcom. (See Figure 4)

The more present concern is wage growth and household income, which need to keep pace with inflation. On average, the state median household income increased by 3% in the last year of available data (2022). (See Figure 6) For housing, this was not enough to combat the 2020-2022 rise in prices coupled with interest rates doubling.

Affordability remains the issue for

Inflation is slowing but remains too high.

But wages and household income are catching up. The consumer has accepted the current rate environment and is attempting to function in it. Expectations now match reality. There’s no cognitive dissonance for the consumer.

Challenges remain, but the outlook for new construction and the home building industry is strong in 2024.

Figure 6

The population density is highest in King and Clark County. (See Figure 5) This simultaneously presents the most significant areas of need for housing and challenges for homebuilders. The dwindling land supply and geography make the densest markets the hardest to bring affordable supply to. (See Figure 5) b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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Local Happenings

1

2

3 [1] Thanks to Regence Market President Claire Verity, BIAW Senior Officers and staff were able to join the Beyond the Build Luncheon to support Habitat for Humanity Seattle-King and Kittitas counties on March 27. (l-r): Imm. Past President Gary Wray, Second Vice President Nicole Ahola, First Vice President/ Treasurer Kent Arola, Regence BlueShield Director of Account Management Bryan Marsh, Regence BlueShield Director of Marketing Jeremy Whelham, Past President of Habitat for Humanity SKKC Kat Sims, BIAW Communications Director Janelle Guthrie and BIAW Managing Director of Operations Steve Hyer.

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[2] The North Peninsula Building Association (NPBA) held its 25th Annual Building, Remodeling and Energy Expo February 3-4 at Sequim Middle School. During the expo, NPBA also hosted the 2nd Annual Building Block Challenge, a free event for kids five through 12.

[3] Members of the Olympia Master Builders, Christina Janis and John Erwin, joined leaders of the Senate Republican Caucus at a news conference on Feb. 8, urging lawmakers to reject a bill that would have increased limits for local property tax increases without voter approval from 1% to 3%. After the news conference, supporters of the property tax bill pronounced it dead for the session.

4a

4b

6

5

[4a] The Building Industry Association of Clark County’s Inaugural Pink Hard Hat Awards on March 6 recognized local women in building with honors ranging from Women of Development and Community Leadership to Up & Comer and Industry Champion.

[4b] Winners included Erin Wriston (left), owner of Kingston Homes as Industry Trailblazer, Alexa Lee (4th from left) of GRO as Industry Champion, and Elizabeth Gomez (2nd from right), owner of Bridge City Contracting, who won the Community Leadership award.

[5] Building Industry Association of Clark County staff Daniele Killian and Elsa Temme pose with BIACC Executive Officer Bart Hansen and Building Future Foundation scholarship winner Sophia Reyes at the inaugural Green Tie Gala on Feb. 23 in Vancouver. The event raised $77,000 for the foundation!

7

[6] Members of the Master Builders Association of Pierce County, BIAW and ROII staff supported the TeamWorks carpentry and cabinetmaking competitions at SkillsUSA Washington’s state championship on March 22. (l-r): Al Audette, BIAW; BIAW First Vice President/Treasurer Kent Arola; Jesse Balbin, ROII Field Representative; Alan Rainwater, JK Monarch and Master Builders Pierce; Jason Rasmus, Master Builders Pierce BOLT Vice Chair; and Alex Harrington, Master Builders Pierce BOLT Executive Director.

[7] NAHB Chief Economist Robert Dietz joined a packed house at the Kitsap Building Association’s (KBA) March Membership Luncheon on March 13. KBA board members joined Dietz for a photo. b u i l d i n g i n s i g ht | m a rc h /a pr i l 2 0 2 4

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WHAT IS KEPT ON SALARY (KOS)?

And why do we ask our participants to do it?

by Logan Gillihan ROII Claim Representative

Have you heard your ROII claim representative mention Kept on Salary or KOS before? Well, it’s likely because you’ve had an employee get injured on the job, have full restrictions and they’re missing time from work.

to the employer and retro group at a higher amount compared to a claim with no compensable costs. A compensable claim will also disqualify a member from continuing or receiving a claim-free discount through L&I.

to work on modified duty as soon as possible. This will allow your employee to understand your goals up front and have a mutual understanding of KOS being temporary, with an end goal of getting back to work as soon as possible.

When a worker is injured on the job and is restricted from performing their regular job, they are entitled to compensation in one of two ways: either time loss compensation paid by the Washington State Department of Labor and Industries (L&I) or Kept on Salary paid by the employer.

A time loss payment on a claim also triggers L&I to assume that there may be a return-to-work issue, leading them to assign additional services to the claim, such as a vocational counselor. These additional services will be charged back to the employer and retro group increasing the claim cost and potentially keeping the claim open longer than necessary.

If you haven’t already, check out the blog article from June 1, 2023, “Why Should I Accommodate Temporary Light Duty,” found at roii.com/Post/why-should-Iaccommodate-temporary-light-duty.

This provides a lot of insight into the financial advantages of preventing L&I from paying time loss.

Keeping a worker on salary means the employer will continue to pay the worker their usual wages and benefits for the days they are not able to go to work due to the injury.

The purpose of paying Kept on Salary while a worker is off work is to prevent L&I from paying time loss benefits until modified duty is formally approved and offered.

Why pay Kept on Salary instead of having L&I pay time loss compensation?

When L&I pays time loss compensation, they categorize the claim as a compensable claim. Costs on compensable claims are charged back 30

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What can you do to be ahead of the game?

If you’re an ROII participant, always reach out to your ROII claim representative when you learn of a new claim and discuss any restrictions for your employee. During this conversation, clarify what days to pay and how much to pay your employee for KOS. These dates and amounts are very claim-specific.

Communicate your plan to your injured employee that you will pay them while they are off work due to their injury and your intention to bring them safely back

Since 1982, ROII has returned over $500 million in refunds to participating companies all over Washington state. Just this year alone, ROII has returned over $20 million in savings on L&I premiums for businesses all over Washington state. See how much money you could earn back on your L&I premiums at ROII.com/inquire.

FAQs

My employee only missed the day they were injured. Do I have to pay them for the date of injury?

No, workers are never entitled to KOS or time loss benefits on the date of injury.

As an ROII program participant, do I have to offer Kept on Salary?

Am I required to continue their healthcare benefits while they are being paid KOS?

Yes, Kept on Salary is required of all ROII participants on all workplace injury claims where there are full restrictions and the employee can’t work.

Yes, you are required to continue your portion of the healthcare benefits (medical, dental and/or vision insurance) while they are being paid KOS. If stopped, your employee would be entitled to benefits from L&I.

How long am I required to offer Kept on Salary?

Members are required to provide Kept on Salary for up to 30 workdays on a claim. It is our goal to have the worker return to work in a modified duty role before the 30 working days are reached.

My employee received an annual Christmas bonus.

Should I include that in their normal KOS?

My employees’ hours and wages vary; how do I determine their usual wage?

No, you do not include this in their average wages. If they receive bonuses monthly, quarterly, etc., speak with your ROII claim representative.

Always reach out to your ROII claim representative so they can help determine when and how much you are obligated to pay.

We do not want you to waste your time and money!

With everything there are outliers, so please reach out to your ROII claim representative for advice on how to navigate your current situation. Below is an illustration of how KOS is the first step to getting your injured worker back to work.

Does this mean you have to pay them as a salaried employee instead of hourly?

No, it is only a term that’s utilized by L&I. You would pay them their normal wages.

KEPT ON SALARY BRIDGING THE GAP TO BRING EMPLOYEES BACK TO WORK Kept on Salary, or KOS, is when an employer pays their injured employees' full wages (including benefits) when they are injured on the job because a doctor has certified that they can't work. The employer pays KOS in place of the Washington State Department of Labor and Industries (L&I) paying time-loss directly to the injured worker. As a program requirement, ROII participants pay up to a maximum of 30 working days of KOS – 30 days may happen consecutively or over the course of the claim. In addition to being a participation requirement, KOS can also help you avoid an increase in your workers' comp premiums, maintain a claim-free discount and earn maximum retro refunds.

INJURY HAPPENS, BEGIN KOS

EMPLOYEE RETURNS TO WORK OR STARTS LIGHT DUTY JOB, AND KOS ENDS

ROII COORDINATES RETURN TO WORK PROCESS WITH EMPLOYER

1

2

3

4

5

6

7

Employee is certified off work or with restrictions by doctor

Identify light-duty job options

Submit written job options to doctor

Doctor approves job

Submit written job offer to employee

Notify L&I of return to work date

Coordinate the Stay-at-Work reimbursement of up to $13,900

KOS IS USUALLY 30 WORKING DAYS OR LESS

3 REASONS YOU DON’T WANT L&I TO PAY TIME-LOSS LOSS OF CLAIM-FREE DISCOUNT This valuable discount can’t be reearned for another 3 years

RATE INCREASE With time-loss, your rates can nearly double - impacting the cost of every employee, every hour, for 3 years

CONNECTION The worker receives their full wages and stays connected to the employer.

END GOAL EARLY AND SAFE RETURN TO WORK KOS is a cost-effective bridge to bring the employee back to work. It ends as soon as an approved job begins.

WE’RE HERE TO HELP! ROII participants get start-to-finish claims support from their claim representative.

(360) 352-7800 | ROII.COM

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Everyone wins when you have a great safety program

by Leah Jaber ROII Marketing Manager

Want to be rewarded for safety in your workplace? Join the crowd—by joining the state’s largest, longest-operating construction Retro (Retrospective Rating) safety incentive program: ROII. It’s the workers’ comp safety program trusted by more Washington businesses.

Our goal at ROII is to eliminate injuries through improvements in workplace safety and preventative strategies. If an employee is injured, we’ll help you help them get better quicker with a

successful return-to-work experience. Businesses that participate and share our goal can earn an average refund of 38%. Only ROII has returned over $500 million in refunds to participating companies since 1982.

Wondering how your current Retro group stacks up against ROII? Fill out the online inquiry at ROII.com/inquiry to get a comparison and see how much you could have earned if you were enrolled in ROII. Ne num w b com ers Apri ing l 30!

IN-HOUSE SERVICES YOU CAN COUNT ON It’s not all about the refunds! While ROII offers more services than you can shake a 2” x 4” at, here’s a peek into some of our participants’ favorites:

Claims Assistance

Safety and Prevention

Our seasoned claim reps go straight to L&I on your behalf to get claims closed quicker. Rest assured; we’ll keep a pulse on your claim every step of the way.

The best injury claim is the one that never happens.

Because prevention is our top priority, we’re here to help you develop and implement effective safety strategies.

Risk Management

Return-to-Work

Our job is to identify risks and assist you with implementing preventative measures to avoid claims from happening. If a claim does occur, we offer strategies to help control the severity and cost of the injury.

Our goal is to keep injured workers engaged in the recovery process and connected with their employers to help ensure better outcomes. Each claim is unique, as is our customized return-towork strategy approach.

These are just a few of our all-inclusive services. We don’t believe in add-ons, surprise charges, or “we outsource that.” (Unlike some Retro programs that use additional fees to chip away at your bottom line—while adding to theirs.)

With rewards like these, not every business can qualify. Participants must share a high bar for excellence and safety. And in turn, they get to reap the rewards. Contact us to find out if ROII is a good fit for your business. Email enroll@biaw.com or call (360) 352-7800 or complete the online inquiry by going to ROII.com/inquiry.

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Lock in great health insurance rates through 2025

by Capital Benefit Services BIAW members can lock in great health insurance rates through October 2025. That’s thanks to great negotiations between the members of the BIAW Health Trust and Capital Benefit Services through our partnership with Regence BlueShield and Asuris Northwest Health.

Lock in your health insurance rates BIAW’s Health Insurance Program offers members an affordable group health insurance option. Over the last 30 years, the program has set the bar for association health plans with a commitment to great pricing, benefit plans and customer service.

If you’re not a member of the BIAW Health Insurance Program, and you have two or more employees, reach out for a free quote today at www.BIAWHealthTrust.com.

The extended rates also apply to renewing members of the BIAW Health Insurance Program.

Why offer health insurance benefits to your employees?

Most employers offer health insurance because they care for their employees and want them to be safe, healthy and productive.

But employers who offer health insurance benefits also have a competitive advantage over those who do not.

In a recent survey by Forbes Advisor, 67% of employees and 68% of employers believe health insurance is the most important benefit.

Lock in your health insurance rates today and enjoy freedom from rate increases for two full summer construction seasons!

Why join the BIAW Health Insurance Program?

BIAW’s program offers over 50 group medical plans plus dental, vision and life insurance. Each provides a wide range of benefits and deductible levels.

Every BIAW benefit plan includes 100% coverage for preventive care benefits such as baby care, screenings, annual physicals and more.

All plans include coverage for on-the-job accidents (when the claimant is not covered under a workers’ compensation program). Most other plans exclude these claims.

No matter which combination of BIAW benefit plans your company selects, you will receive only one monthly billing statement, and make a single monthly payment.

Members take advantage of significantly reduced rates well below the direct market. The pooling power of the members allows for competitive pricing from over 50 medical plans, including Regence BlueShield, Asuris Northwest Health, Kaiser Permanente, Delta Dental, VSP and Lincoln Financial Group.

Visit www.biawhealthtrust.com to request a quote today!

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Trending

WA represents in Pro Remodeler’s Forty Under 40 Ke rst in

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Three BIAW members were recently honored as part of Pro Remodeler’s Forty Under 40 Class of 2024! Pro Remodeler is the official remodeling publication of the National Association of Home Builders (NAHB). This year marks the 13th annual Forty Under 40 awards, a national celebration of remodeling’s rising stars showcasing the industry’s future.

Congratulations to Kerstin Cobb and Kyle Bridgan, members of the Master Builders Association of Pierce County, and Ian Martinez, member of Master Builders Association of King and Snohomish Counties, for being chosen as part of this year’s Forty Under 40!

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CEO, The Material Bar, Lakewood A native of Germany, Cobb’s background is in business. Her first industry role was with a countertop fabricator in Georgia, and she “instantly fell in love.”

Cobb threw herself into studying kitchen and bath design, opened The Material Bar, and quickly began winning industry accolades.

“There’s something great that happens when you go home to a space that reflects your true personality,” she says. In 2023, Cobb purchased a commercial building and moved into a new, larger showroom.

Kyle Bridgan, 29 Owner & Founder, Noble Solid Service Home, Tacoma/Seattle Bridgan became a contractor after his parent’s bad remodeling experience.

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“We have a really cool opportunity as this next generation to change people’s perspectives of what it’s like to work with a contractor,” he says.

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Bridgan hates the idea of bidding low and adding up change orders, so he’s firm on his fixed price, no change order promise to clients.

Ian Martinez, 35 Lead Carpenter, CRD Design Build, Seattle Martinez comes from a family of contractors, and always had mechanical aptitude and enjoyed working with his hands. Yet, as he recalls, the negative stereotypes around trade professionals left a mark.

“I remember in school they would say, ‘You’re going to end up being a plumber, one of those fat guys with his butt crack hanging out.’ There was a lot of negative imagery.” Today, Martinez sees that dynamic slowly changing due to the labor shortage, and the pride that many trade professionals take in their work.

Read the full Forty Under 40: Class of 2024 feature in the March/April issue of Pro Remodeler at www.proremodeler.com.

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Building Industry Association of Washington 300 Deschutes Way SW, Ste. 300 | Tumwater, WA 98501 (360) 352-7800 | BIAW.com |

Empower and inspire the next generation of builders

2024 SUMMER BOARD MEETING

JUNE 24-26 Skamania Resort 1131 SW Skamania Lodge Way, Stevenson, WA

MONDAY, JUNE 24 EIR Awards Reception Dessert & Drinks h 7 – 9 pm h Open to all

Contribute to the Washington Home Builders Foundation The Washington Home Builders Foundation (WHBF) was founded in 2012 by BIAW to address educational and workforce needs within the building industry through charitable activities.

The Washington Home Builders Foundation empowers and inspires the next generation of builders by advancing building-related education, unlocking academic opportunities and career possibilities while fostering a culture of innovation, enthusiasm and excellence in the building industry.

Since its inception, the Washington Home Builders Foundation and BIAW have awarded over $830,000 in scholarships and grants.

The Washington Home Builders Foundation is a 501(c)3 charitable organization as classified by the Internal Revenue Code.

Your donations may be eligible for charitable contribution tax deductions.

TUESDAY, JUNE 25 Membership Luncheon h 11:30 am – 1 pm h RSVP to your local association

Associate Advisory Council Mini Masters h 4:15 – 6:15 pm

Spike Party h 7 – 11 pm h By invitation only *Please note times may be adjusted BIAW’s discounted room block rate is $249, plus fees and taxes. To reserve your room, call (844) 432-4748, select option 1, and use booking code 1YR08V. The BIAW room block expires on May 24.

QUESTIONS? Contact Brenda Kwieciak at BrendaK@biaw.com or (360) 352-7800, ext. 113.

Learn more at:

www.biaw.com/board-meetings