Cost of construction, selling and buying real estate in the islands has continued to increase based on the requirements to meet the current regulations, overall material and service cost increases. One could say that it costs more and takes longer to comply with the various regulations that govern the real estate and related construction industries.
Based on the median home price of $675,000 during the last 12 months, a cash buyer will spend an average of $13,500 in basic closing costs; that includes their half of escrow, title insurance for their lender, recording fees, 1% land bank tax, ½% affordable housing tax and home inspection fee, but it doesn’t include the prorated taxes, insurance, homeowner’s dues, loan closing costs or well water testing. If the buyer needs a loan, they will have monthly payments of $3,651 based on a $135,000 or 20% down payment, 3% interest and a 30-year loan. The monthly payment includes principal, interest, taxes and insurance. The payments would be higher if there are HOA dues or have Mortgage Insurance; if the down payment was less than 20%. Generally, our real estate tax rate is $8.03 per $1,000 of assessment.
A buyer would need to make around $87,642 annually or $7,300 per month to qualify with a ratio of 50% in order to purchase a $675,000 home. ($3651 x 2 = $7301 monthly income needed x 12 = $87,625 annual income) This income requirement calculation is only based on the principal, interest, taxes, and Insurance and assumes this buyer has no reoccurring debit, such as charge cards, car loans, HOA dues or mortgage insurance. This is typically not the case. Even if you pay your charge cards in full each month, the underwriters will use a minimum payment amount in the calculation.
The San Juan County Annual Median Income is $33,216 for an individual and $63,622 for a household.
The seller will spend on average $57,375 based on the median home price. This does not include any repairs that may be necessary as part of the contract or the seller’s prorated items; it is merely closing costs, septic inspection and a tank pump.
In the current market a buyer can still purchase a home for less than the cost of new construction and in some cases, under the home’s replacement costs, however, this is changing. As we continue to have multiple offer situations with escalating prices, many of the properties are being bid up over market value/list price. However, market value is a moving target these days.
The ability to purchase a home below the cost of new construction is diminishing as our housing inventory is being absorbed and the result is less selection. We are experiencing upward pressure on our prices and buyers are starting to seriously consider custom construction as a viable alternative. The advantage of custom construction, is a buyer is able to have built the exact home they had in mind, and it will be ready for occupancy in about 20-24 months, more time may be needed if size and complexity are above average. This also assumes that the contractor selected does not have a waiting list. The design and architectural process typically take 1-3 months, permits take 3-4 months, and the actual construction will take 6-18 months.
Below is a detailed list of typical rates and fees that as a REALTOR we note in the industry when we are managing a transaction from listing or selling a property through the closing. Most real estate transactions require several of these service providers during the contract period.
The list is not meant to be all-inclusive nor relied upon; it is merely for general information purposes. In most cases, I provided the actual cost or the floor of the price range but have not included sales tax. As in the case of any project, you can always spend more money.
$3,000-$3,200 – Septic perc, design and permit. Good for 5 years and can be renewed for a fee, subject to change
$500 – If backhoe is needed to dig the perc holes
$38,000-$65,000 – Septic system, subject to the type of system.
$30,000-$40,000 – Drain field replacement
$300 – Each riser installation
$300-$3,000 – All maintenance components; risers, observation ports and cleanouts.
$1,000-$1,200 – Septic pump, subject to size of tank
$250-$300 – Septic inspection and report
$50 per hour Septic on-site labor (digging for inspection purposes)
$650-$800 – Home inspection, additional $50 for each outbuilding, $250 for guest house
$500-$1500 – Sump pump for crawl space
$250-$500 – Roof inspection and certification
$20,000-$30,000 – Well Budget. Average depth is 400 feet, $22.00 per foot. The pump, plumbing, testing, and electrical are over and above the drilling costs. The outbuilding is another $15,000-$20,000.
$12,000-$15,000 – Installed water storage tank with all electrical and plumbing components, plus trenching
$100 – Bacteria test as stand-alone
$300 – San Juan Short List – Quality well test for seven items
$300-400 – Drawdown test on well for quantity, one hour assumes pump and power.
$500-$600 – Drawdown test on well for quantity four hours.
$1200+ – Pump test with no power and no pump
$8,000-$10,000 – Private hydrologist for shoreline draw-down tests. Tests on the waterfront may only occur July –Oct and are required if the wellhead is within 1000 feet of the shoreline
$200 – Monthly in town water, garbage and sewer minimum
$30,515 – In town water, sewer and stormwater hookup fees: $13,750 water; $15,205 sewer; and $1,560 stormwater.
$25,000+ – Roche Harbor water and sewer hook-up fee: $9,000-$13,000 for water and $16,000-$18,000 for sewer, subject to location
$500-$15,000 – Water hook-up charge to various community systems
$45,000+ – Hook up to existing desalination plants
$1000-$1,500 – Plumber’s water meter installation fee
Varies – Cost to bring secondary power to site with transformers. Call OP&L to confirm location of nearest transformer
$10,000 – New Transformer and installation
$140 per hour – Excavation equipment and clearing, plus a set-up fee w/$400 minimum
$190 per hour – Rock hammer w/$500 minimum
$90 per hour – Dump truck
$90 per hour – Labor: chipping, shovel work, tree removal clean up
$55 per yard – Gravel/fill dirt/U-haul
$90 per yard – Topsoil/sand/U-haul
$250 per load – Debris hauling
$16+ per foot – Trenching in dirt for utilities
$20+ per foot – Trenching in rock for utilities
$20-$25 per foot – Fiber Line trenching and installation for last mile
$4,400 – SJI Average Cost of High-Speed Fiber Internet (Share of middle and last mile)
3.1% or $20,925 – National Average added value to having high-speed fiber internet. $20,925 is based on our median home price
$350+ per foot – Cost of construction for a low-end priced home with Formica and vinyl
$450-$550 – Cost of construction for a mid-level priced home with hardwoods, marble, tile, Corian, mid-level appliances
$600+ per foot – Cost of construction for high-end priced home
$75-100 per foot – Cost of construction for garage or storage outbuildings
25% more – Cost of construction on a non-ferry serviced island
$90 per foot – Cost of cedar deck including support framing, handrails
$80-100 per hour – General Contractor; licensed, bonded with tools
$200-$250 – Annual service of furnace or heat pump – no parts
$60-$75 per hour – Handy man or casual labor
$50-$75 per hour – Landscaper- design and install
$40-$50 per hour – Yard maintenance
$40+ per hour – House cleaning person
$50+ per hour – Window washer, roof and gutter cleaner
$800-$2,500 – County Approved Residential Pre Application (RPA) including consultant and SJC fees (SJC = $450 + consultant )
FREE Pre-Application Review with SJC
$2,350 – County Fee for Provisional Use Transient Rental Permit zoned rural residential. $1050 if no public hearing.
$800-1200 – Consulting fee to process Transient Rental Permit
$1,200 – Marine environmental impact analysis
$6,000+ – Mooring Buoy install and registration
$300,000 – Shared Dock permit, legal work and installation
$2,000-$10,000 – County Conditional Use Permit with public hearing- and Consultant. SJC Fee of $2350-$3550.
$400+ per hour – Attorney’s fee
$125-$150 hour – Land Use Consultants
$100 per tree – Tree removal plans base of $250 + SJC fee of $105
$20,000 minimum – Design or Architectural expense for home, subject complexity
$28,000 – Avg Architectural expense for home
$100 per hour – Drafting/design work
$2,500-$3,000 – Flood Insurance Letter of Map Amendment
$2,500-$6,000 – Property Survey
$2,200-$4,000 – Boundary Line Modification
$2,000-$4,000 – Find corners via Surveyor and re-stake
$600-$2,500 – Wetlands Reconnaissance
$2,500-$20,000 – Wetlands report and delineation, if needed
$3,000-$5,000 – Archeologist Report, subject to parcel size and findings
$250 per hour – Archeologist on-site while excavating
$3,000-$4,500 – Biology Critical Area reports for building in the shoreline
$1,150-$2,000 – Geotechnical Reporting for Category II geo hazards
$3,000-$8,000 – Geotechnical Reporting for Category I geohazards
$8,000+ – Geotechnical for bulkheads or other shoreline stabilization measures
Bid Only Civil engineering design is bid based on project
$4,000-$6,000 – Stormwater management design
$54.87 – Title cancellation fee minimum
1.78% Excise – Typically charged to the seller
.50% Affordable Housing Excise Tax – Typically charged 99% to the buyer and 1% to the seller.
1% Land Bank Excise Tax – Typically charged to the buyer
30%-49% – Residential Monthly Property Management Fee based on gross income
6% – Commercial Monthly Property Management Fee based on gross income.
LIVING HERE: Priceless but …
This list of prices may be startling to some, but it is the reality of living in our islands. Some of the General Contractors struggle to process competitive bids as there are so many variables and unknowns to each project. One of the largest issues is that our labor in the construction and related industries has, in some cases, become transient. If a framer cannot find an affordable rental, he/she will relocate to a city that not only offers a good wage but has rental housing available.
Another issue is the current level of inflation on building materials. General Contractors said they have experienced a 600% increase in materials within the 12 months. This is attributed to low existing housing inventory, which is pressing buyers to build, COVID and low staffing levels at the mills and warehouses. This should correct over time.
If you have any questions regarding our real estate market, please be sure to contact me. If you would like a list of the service providers including land use consultants that I recommend, please email me.
Merri Ann Simonson
Coldwell Banker San Juan Islands Inc