Smart Growth isn’t cheap.

by Mike Gustavson, Director, Kitsap Alliance of Property Owners

Until recently, 8,000 homes (new and used) were sold annually in Kitsap County, with median home prices at $265,000. Now that bank loans require 20% down and 28% of income qualifying toward principle, interest, taxes and insurance, median priced homes must be no higher than 3.0 times Kitsap’s median income of $60,000. That means median priced homes must come down $85,000 to a new median price of $180,000. The additional $85,000 amounts to an additional $509/month on a 30 year, 6% mortgage.

The cost of smart growth for Kitsap is:

$509 x 12 months = $6,108/year x 8,000 homes sold per year = $48,864,000

$48,864,000 x 6 past years* of houses sold under these regulations = $293,184,000 excess mortgage cost being paid annually out of Kitsap homeowner’s pockets

This is discretionary money that could have been used for new car payments, vacations or whatever.

Since each dollar created circulates through an average of seven purchases:

$293,184,000 x 7 times each dollar turns over = $2,052,288,000 in retail sales lost to Kitsap County x 0.1% Kitsap County General Fund portion of sales tax = $2,052,288 County sales tax revenue lost annually just due to the cost of “permission to build” regulations.

Additionally, the “Cost of permission to build” of $85,000, added to the $60,000 cost of a typical lot under the current regulations, leaves only $35,000 remaining for cost of construction. As you can see, few houses will be built for $35,000 each. Under current bank lending practices, construction will not recover until the cost of lots is reduced through reduced regulation.

* Note: This originally appeared in Mike Gustavson’s account of a joint Planning Commission / Board of County Commissioners meeting on May 4, 2009.

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