Carol Van Gorp worries about the future of affordable housing in Columbia. As chief executive officer of the Columbia Board of Realtors, Van Gorp thinks approval of Proposition 6 on the Nov. 8 ballot will price some people out of the housing market.
Proposition 6 asks voters to authorize the Columbia City Council to increase development charges by 400 percent, from 10 cents per square foot to 50 cents per square foot, over the next five years. The increase would happen gradually, producing an estimated $19 million for major street projects.
If the proposition passes, Van Gorp said developers will certainly pass the increased cost on to home buyers. She said the higher charge would have a significant impact on the affordability of new homes.
Others disagree. Chris Hayday of the Osage Chapter of the Sierra Club encouraged voters to put the numbers in context. He offered the example of a 2,000-square-foot home that might sell for $200,000. The development charge now would be $200. After five years of incremental increases, that charge would be $1,000. That’s a difference of $800, or 0.4 percent of the home’s total price.
“A thousand or $1,500 may seem like a high amount, but not when you’re talking about houses that cost hundreds of thousands of dollars,” Hayday said. “Banks aren’t even going to blink at that change when giving out a loan.”
But Annie Pope, executive officer of the Columbia Home Builders Association, said the public often underestimates how much fees will actually increase. She said development charges are generally double what people estimate.
“When you tell someone you bought a 2,000-square-foot home, you’re only talking about what we call the ‘habitable space,’” Pope said. “But if you’ve got an unfinished basement, a deck, or a two-car garage, then all of that is included under development fees.”
Members of the Board of Realtors could reach no consensus on whether to support or oppose Proposition 6, saying there were strong arguments on both sides. Pope said the Home Builders Association opposes the higher development charge.
“Builders don’t build homes to give them away,” Pope said. “Costs are always all passed on to the home buyers.”
Pope said a study by the National Association of Home Builders showed that every $1,000 increase in the price of a home knocks 1 percent of potential buyers out of the market.
Proponents of the measure argue that affordability isn’t much of an issue in the debate because the vast majority of Columbians can’t afford the types of homes being built here.
“If you look at the homes that are being built, you can see that they are very expensive,” said Ben Londeree, co-chairman of the Smart Growth Coalition and a member of Timely and Responsible Road Infrastructure Financing. “The kinds of folks that we’re talking about that need the affordable housing can’t afford these homes anyway.”
Londeree added that while Smart Growth favors Proposition 6, the group would also like to see the city consider reducing or waiving development charges on lower-priced homes to encourage affordable construction.
Rhonda Carlson of C&C Construction said new homes aren’t all outside the affordable range.
“Some of the stuff that we’re doing south of Columbia is more expensive, but the projects we have north of town are typical starter homes,” Carlson said.
Van Gorp said the average price for a newly built home in Columbia is $196,471, while the average sale price of existing homes is $158,074.
“I checked the listings, and right now there is only one home for sale in Columbia that is under $100,000,” Van Gorp said.
Carlson said housing prices have already increased greatly in the past year because the cost for materials and fuel is rising, along with interest rates.
“Anything else you do to raise these prices is just going to cost the home buyer even more,” Carlson said. “I’m a builder, and I’m a Realtor, so I know that you’re not going to take any less money out of your pocket. You’re just going to raise your price accordingly.”