Builder: Energy code driving housing costs

Published 1:30 am Friday, June 5, 2026

PORT ANGELES — State housing, energy and growth-management policies are increasing the cost of construction and affecting the broader economy, builder Greg McCarry told Port Angeles Business Association members.

McCarry, president of Westerra Homes and a member of Clallam County’s Housing Solutions Committee, said the state’s energy code requirements, along with building codes, permitting requirements and land-use regulations, have added significantly to the price of new housing over the past two decades, and those factors have made it more difficult for local builders to compete with large national companies.

McCarry said permitting timelines have grown far longer since he entered the industry in the 1980s, when structural engineering wasn’t required.

“I could go to the county with three or four building permits and go sit in the lobby and wait for it,” he said Tuesday at Jazzy Joshua’s.

He added Clallam County’s current process as “pretty good” at about 30 days. However, he noted that obtaining the structural engineering now required by the state adds roughly 90 days before a permit application can be submitted.

“If you’re a builder doing 12 homes a year, you have to carry that inventory — it’s a big financing cost,” he said.

Separately, the state’s Climate Commitment Act set greenhouse gas targets of 45 percent below 1990 levels by 2030, 70 percent by 2040 and 95 percent by 2050 — benchmarks McCarry cited to indicate steeper building requirements are coming.

McCarry said he doesn’t see how builders can meet future energy-reduction targets without installing solar panels on every home, and he estimated that would add $30,000 to $40,000 to the cost of a house.

State regulations that push builders toward electric alternatives to natural gas have forced them to design homes around constantly shifting standards — a situation that remains unresolved as the fate of natural gas in the state hangs on a court decision.

Clallam County, Port Angeles and Sequim have held to the 2018 state energy code — which still allows natural gas — rather than adopt newer code cycles that would restrict or eliminate it.

Voters approved Initiative 2066 in November 2024 to protect natural gas access, but a King County Superior Court judge struck it down as unconstitutional; the state Supreme Court heard arguments in April and has yet to rule.

A ban on natural gas would force the roughly 1 million Washington households that rely on it as their primary heat source to replace furnaces, water heaters and ranges at an estimated cost of $30,000 each, McCarry said.

He criticized the composition of the state Building Code Council, which advises the Legislature on building code issues, saying it includes only one representative from the building industry and that its remaining members are political appointees with little connection to construction.

“Their priority has been energy and sustainability over housing,” McCarry said.

McCarry said the Legislature has attempted to address affordability by promoting density — allowing accessory dwelling units and one to four units per parcel in urban growth areas — but he argued those measures don’t address the underlying cost drivers.

Regulations, fees, energy codes, permitting delays and a land supply squeezed by the state Growth Management Act’s restrictions on where cities can expand have all driven up prices, he said, with the most significant factors in recent years being the accumulating weight of energy code requirements and permitting delays.

Publicly funded housing projects face additional mandates, McCarry said, including prevailing wage requirements — he cited a rate of $86 an hour for framers, compared to the $40 an hour he pays. He said one publicly funded project is being built at $500,000 per unit for homes less than 600 square feet — the same amount it costs him to build a 1,400-square-foot single-family home.

The regulatory environment has allowed national builders to undercut local competitors, McCarry said. Lennar Homes, which builds about 60,000 homes a year nationwide, purchased 40 acres in Sequim, won approval for a 205-lot subdivision and sold its first 40 homes within roughly a year of going to market, he said. The company, which is based in Florida, has since purchased additional land on Carlsborg Road and is reportedly looking at property in Port Angeles, he added.

Lennar is selling homes for about $100,000 less than McCarry said he can, in part because the company is vertically integrated — it buys lumber in bulk, develops its own land and operates its own real estate and escrow companies — and brings in out-of-area crews. Lennar is offering buyers a 3.5 percent mortgage rate through its financing company, roughly half the prevailing local lending rate, McCarry said.

The company cuts costs through different construction standards: three-tab shingles instead of architectural grade; exterior walls framed 24 inches on center rather than 18; six windows in a 1,500-square-foot house compared to McCarry’s 15; trim only on street-facing windows; and one coat of paint instead of two, McCarry said.

“I have exited the spec market entirely because of that,” he said.

Among the solutions, McCarry called for a permanent pause on energy code cycle changes, streamlined permitting and a legislative reordering of priorities that puts housing affordability on at least equal footing with energy goals.

He said he doubts there is currently enough public awareness of the issue to generate political will for change, but he predicted the current trajectory is unsustainable.

“The water is building behind the dam,” he said, “and at some point, the dam’s going to break.”

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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.