Vancouver is conveniently located along the Columbia River and just right at the edge of the Washington-Oregon border. The city was home to numerous Chinook people that brought salmon and a trade-based economy to the area. Its economy then shifted to fur trade and timber, in which the supplies are housed inside the historic Fort Vancouver. The city experienced an economic boom in the 1940s, but as soon as the old-growth forests depleted, its economy shifted to the current high tech and service sectors. The port of Vancouver still operates today and handles over 400 seafaring vessels annually, along with a myriad of barges that travel up the river going as far as Lewiston, Idaho.
Vancouver’s economy is also buoyed by border trade with its neighboring city Portland, Oregon. The state of Washington has a property tax that is lower than the national average, but it imposes a sales tax higher than the national average. On the other hand, its neighboring city, Portland, doesn’t enforce sales taxes. This resulted in Vancouver residents shopping in Portland and then living and working in Vancouver. Additionally, this attracted numerous retirees who have decided to relocate to the city.
The Cost of Building a Home in Vancouver
According to the National Association of Home Builders (NAHB), the average cost to build a new home in the country is $485,000. Home Builder Digest suggests a lower median value of $400,000 or $155 per square foot. Both estimates have increased by at least $1,000 — a total of $3,000 since 2020 — contributed to COVID-19-related issues, such as labor shortages and production constraints.
Vancouver’s median home building costs are 55% higher than the national average, at $240 per square foot. More specifically, value-conscious homes range from $150 to $240 per square foot, and mid-range homes cost $241 to $300 per square foot. Luxury or high-end homes cost the most, ranging from $300 and up depending on the customization. Building a 2,500-square-foot custom home in Vancouver will roughly cost $375,000 to $750,000.
It’s difficult to give an accurate figure for how much it costs to build a house in Vancouver because of all the variations. As mentioned earlier, the construction industry faces several issues that directly affect the home building costs until resolved. Additionally, the owner’s wants and demands will determine the overall building cost. Each modification has its own price. It will be dependent on the location, size, quality of materials, and level of finish, among other factors. These elements are divided into two categories: hard and soft costs.
Hard costs pertain to the factors involved in the physical building of the home. This includes the construction costs, materials, labor, and landscaping. Extra amenities or home additions are also included in this category, alongside heating, ventilation, and air conditioning (HVAC), electrical, and plumbing systems.
The average cost of constructing a home in Vancouver is approximately $150 per square foot. It could cost as low as $100 per square foot or as much as $210 per square foot — ranging from $250,000 to $525,000 for a 2,500-square-foot home. These prices, however, only represent basic home building aspects and finished livable spaces. Adding extra amenities and using better materials raises the overall construction costs, along with site difficulty and intricateness of designs.
The value breakdown according to job or task is as follows:
Labor costs are often included in the estimates mentioned above. However, these contractors could bill project owners depending on the contract and negotiations. If that’s the case, here’s how much each service costs, according to ZipRecruiter:
- Construction Manager: $38 per hour
- Framer: $19 per hour
- Roofer: $20 per hour
- Electrician: $24 per hour
- Plumber: $22 per hour
- HVAC Technician: $21 per hour
Soft costs refer to the fees that go beyond the actual building of the physical home. Usually, these expenses are planned and settled before the construction begins. This category includes fees associated with land acquisition and development, authorizations from the local government, and the overall appearance and layout of the home.
Cost of the Land
According to recent listings in the real estate marketplace Landwatch, the median land cost in Vancouver is roughly $400,000 or $21 per square foot. The cheapest land available costs around $220,000 for a 43,560-square-foot plot of land — about $5 per square foot. It is located on 199th street in northeast Clark County. On the other hand, the most expensive land costs $550,000 for a 12,632-square-foot land — about $44 per square foot. It is located in Lake River Estates, a gated luxury neighborhood in Felida.
According to the city’s municipal code library, single family detached dwellings must have a minimum lot size of 5,000 to 20,000 square feet. The required lot size is determined by the density of the surrounding neighborhood. Following the regulation set upon by the city government, acquiring residential land in Vancouver will cost $105,000 to $420,000.
Permits and Other Fees
Project owners must obtain a permit from the local government before beginning any construction. Members of the board will look through the plans and decide whether or not the project is feasible. If the proposal is accepted, the project owners will receive a permit that will serve as a go signal for the project. If it is rejected, modifications must be made, and the plan must comply with the regulations. This is a crucial stage since it ensures that the structure and property are safe for both the homeowners and the surrounding community.
According to the city government, the building permit fees for new single family homes in Vancouver are calculated based on the overall construction expenses. The following are the fees for each valuation:
There is a minimum fee of $76.84 for every permit issued and a plan review fee for every project draft. This cost is calculated by getting 35% of the total building permit fee plus a submission fee that costs $78.74. Suppose that building a 2,500-square-foot home costs $375,000. The total building permit fee for this project would be roughly $4,500.
Based on permits found in Clark County’s permit database, homeowners in Vancouver paid an average of $10,600 for their home building permits. The least amount paid for a building permit fee costs around $2,020, and the most amount paid costs around $15,830.
Architecture and Design Fees
Architects and designers charge in a variety of ways for their services. Percentage and hourly are the two most common methods. When project owners and architects negotiate, other strategies, such as a hybrid of the two, are adopted. The pricing is also determined by the designer’s experience, expertise, and reputation. Prominent designers are more likely to charge higher design fees than newer designers.
Architects in Vancouver often charge 14 to 15% of the total construction cost. Depending on the size, workload, complexity, and intricateness of details, this rate may increase or decrease. For example, assuming that a 2,500-square-foot home in Vancouver costs $375,000 to build, a new single family home’s total architectural fee will range from $52,500 to $56,250. Any additional services are usually charged hourly.
The average hourly fee for architects in the city is around $43 per hour, as per ZipRecruiter. For basic architectural services, which take approximately 480 to 600 hours to complete, the design price ranges from $20,650 to $25,800. On the other hand, complete architectural services require more time and effort; thus, they will take longer. A preliminary estimate is 1,095 hours; however, this is subject to change. This will cost around $47,100 in design fees alone.
How do Vancouver’s custom home building costs compare to nearby cities?
Data from BuildZoom (BZ) shows that homes recently built in the Portland Metro Area — Portland-Vancouver-Hillsboro, OR-WA — have an average cost of $210 per square foot. More specifically, value-conscious homes cost $165 to $210 per square foot, and mid-range homes cost $210 to $315 per square foot. High-end homes cost the most, with $315 per square foot and more.
In terms of home building costs across major cities in Washington, BZ estimates that the median ranges from $185 to $480 per square foot, or roughly $465,000 to $1,200,000 for a 2,500-square-foot home. For context, BZ reports that Vancouver’s median home construction cost is around $210 per square foot. The following shows the median home building value for each city, as well as the percentage difference from Vancouver:
- Seattle: $250 per square foot, 19% more expensive
- Spokane: $190 per square foot, 10% cheaper
- Tacoma: $185 per square foot, 12% cheaper
- Bellevue: $480 per square foot, 129% more expensive
- Kent: $330 per square foot, 57% more expensive
What Leading Custom Home Builders and Architects that Serve the Vancouver Area Say
The following are viewpoints expressed by local home builders and architects serving the Vancouver area. These refer to the city’s present challenges and trends, as well as more information on the construction industry and housing market.
Justin Ross, the owner of Design Doctors Construction, expressed that his firm is experiencing huge backlogs of projects. The pandemic-related supply chain issues brought this problem, which is still growing. Numerous materials, such as cabinets, doors, and windows, have extra-long wait times. This also led to rising construction prices, including labor, by at least 30% since 2020. Despite the rising prices, the firm’s services are still in high demand as many clients still have great interest in building.
Lewallen Architecture + Build owner Michael Lewallen confirmed that the supply chain issues have been a tough challenge for the industry, along with labor shortages and the economic recession. Additionally, interest rates are consistently climbing and remain intact. This will possibly slow down the increasing home demands and housing market. Lewallen gave advice to aspiring homeowners: “Build quality over size. A high-quality design by an architect will be money in your pocket.”
Jason Krenzler, the owner of Krenzler Homes, expressed that the next two years of the industry might not be positive. He said that the building sector is “on the verge of a bubble that could easily burst” because of the various issues in the industry. This pushed prices to inflate dramatically and might lead to people not able to afford new construction projects, especially if the interest rates climb even higher. Krenzler believes that the rising prices are mainly brought about by supply chain issues and home shortages. Builders can’t build fast enough to meet the current market’s demands. “The demand side would have to change in order for the market to cool down to a more reasonable level,” he added. On the bright side, people are still excited to build, and the waiting list keeps getting longer. He advised clients to lock in a deal to avoid future loan rate hikes to combat the rising interest rates. Also, aspiring homeowners should prepare a contingency fund to cover the unexpected pricing increases.
The Future of Vancouver’s Residential Construction Industry
The COVID-19 pandemic brought numerous problems to the world, including various economic complications. Like all other business sectors, the construction industry was forced to adapt. Although pre-construction activities can be arranged and approved remotely, the construction aspect itself requires face-to-face interactions to complete. This made it challenging for almost everyone in the industry. As mentioned earlier, supply chain issues, lack of labor workforce, and low home inventories are problems the industry is yet to solve. Additionally, severe winter storms in February 2021 halted numerous projects. This further pushed back the lined-up projects by many builders.
One of the most noticeable impacts of these issues is the continuous rising in home values. As previously explained by various home builders and architects in the area, homes in Vancouver, Washington, have increased since the pandemic. Homes in the city are currently valued at $550,000, a 42.5% increase compared to the February 2020 pre-pandemic value of $386,000. Experts predict that these values will continue their upward trajectory over the following months reflecting the region’s overall perspective.
Another outcome is the surge in various construction materials. The materials that have been affected the most are iron, steel, and softwood lumber. Iron and steel prices have since increased by at least 15.6%, and softwood lumber increased by at least 73%. This resulted in a further increase in home building prices. The average price of a new single-family home has risen by more than $18,600 due to volatile lumber costs, as per NAHB. Fortunately, after the association’s efforts to combat the problem, the Commerce Department has decided to decrease lumber taxes by more than 35% on imports of Canadian lumber into the U.S. This will hopefully give a bit of relief to the home building industry if it doesn’t stabilize the market.
Vancouver’s housing market is looking forward to the possibility of a balanced supply and demand. New home constructions have been rampant across the city, specifically in the northern part of Vancouver. The city’s low home inventory pushed aspiring homeowners to build new homes instead of purchasing. Various builders jumped on the demand and increased their production of single-family homes. This will result in an equalized housing market over the next year or two and a slowing down of home-price appreciation in the city.