A single family home in the new Horizon at Semiahmoo development has been sold while still under construction. The development — one of several under construction in the area — will include approximately 540 single- and multifamily units. (Kai Uyehara / Salish Current photo © 2023)
Development is booming in Blaine, with more than a thousand homes slated in the next several years. The city has a housing shortage, and increased development may bring affordable housing eventually — or just more high-priced units. Buyers are coming cross-country to purchase the new homes, and that demand could squeeze locals and low-income residents out of the buyer’s market.
Blaine has a near 0% vacancy rate, as does much of Whatcom County overall, said Blaine city council member Richard May. “There’s just not enough places for everyone to go, so we definitely need a lot more stuff to get built,” he said.
In a document released this month, the Washington State Department of Commerce projected that Whatcom County would need 34,377 more housing units by 2044. The county has 101,867 units as of 2021, according to U.S. census data.
In his 2023 State of the State address, Gov. Jay Inslee said one million housing units would be needed statewide within 17 years to get back on track.
Numerous developments will bring single- and multifamily units to Blaine over the next several years, but providing housing and making housing affordable for local residents are not always the same thing.
Development and demand
Development began with a burst only after the city installed necessary infrastructure between 2019 and 2020, said Blaine Community Development Services Director Stacie Pratschner.
Once that groundwork was laid, the flurry of development began, said Brady Mayson, developer of the Woodberry gated community at Semiahmoo. Acquiring land and titles and bringing development to the market takes four or five years.
In East Blaine along H Street Road, the Grandis Pond, Ridge at Harbor Hills and East Harbor Hills developments will provide 1,442 single and multifamily homes from now into the coming decade. More than a dozen homes are occupied in the Ridge, which will be completed in 2025. Grandis Pond will site more than 1,000 homes within two decades, and East Harbor Hills, which may include affordable housing in the future, could see completion by 2030.
Lincoln Mews will bring 53 townhomes to East Blaine by 2026, Georgia Street and Mitchell Avenue will complete two triplexes near Peace Portal Drive in three months, and Semiahmoo Highlands will begin construction on the first 65 of 480 units by the year’s end.
At Horizon at Semiahmoo, two of 10 completed homes are now occupied while developers construct over 540 single- and multifamily units. Twenty-three of 40 single-family homes are being finished in Sea Smoke and a 63-unit single-family subdivision is being planned at Inverness; both in Semiahmoo. Other high-end developments include Woodberry, where 29 single-family homes are finished or under construction, selling for $700,000 to 800,000, and Muirfield, where six of 10 million-dollar homes will be completed by the end of this year.
The luxury Muirfield homes haven’t even been listed, but half are already sold, said developer Denise Macris, since buyers are eager to move to the area.
“Even with a lot of new developments in Blaine, we will still be short of housing, so my confidence in selling the homes is extremely high,” Mayson said of the Woodberry units.
“The paint isn’t even dry and people are moved into the new buildings,” May said. “People seem to be moving here faster than the building is occurring.”
Who’s coming?
Out-of-state buyers are coming from California, Oregon, Colorado and Tennessee, Mayson said. Many have family connections in Bellingham, Ferndale and Canada.
Buyers are also coming from Seattle where workers are taking advantage of remote work opportunities and moving to comparatively less expensive areas, May said.
“Housing costs are driven by demand and demand is not cooling,” Macris said. “We have seen interest rates rise but it has not cooled the housing industry as was expected.”
Mayson said that although sales might be slowing momentarily, he has seen tremendous traffic and interest in the Woodberry homes.
“A lot of people keep moving into this area that are retiring and they’re bringing a wealth of money from wherever they came from and that keeps prices higher here,” said Dan Heverling, the city’s finance director. Many such retirees bring enough money to afford cash payments and skirt interest fees, he noted, coming from areas such as California where incomes and property values are higher: “It squeezes out the people that are from here.”
Low-income locals may be elbowed out of the buyer’s market, but May believes it’s not the intention of housing providers who are just selling for the highest price possible.
Heverling isn’t worried that lower income locals will get pushed out, because he believes there will be government emphasis on making some affordable housing.
Not a priority?
But, the incentive for developers to build affordable housing may be little to none.
When demand is high and construction is expensive, developers and builders spend their time on higher-end construction to pay the bills, leaving affordable housing demand to wait.
Increasing interest rates on construction loans makes it more expensive to borrow money to build a home, Heverling said. In Blaine, those expenses are compounded by expensive land prices.
“For builders and developers, affordable housing is a puzzle that’s very tough to solve because the land values are so high,” Mayson said, adding that materials like lumber and concrete have proven very expensive, though building costs are receding with inflation in recent months.
“We’re building a higher-end product and we’re focusing on our demographic, which is older, retired people,” Mayson said.
The new housing units “sometimes get sold for more than the asking — within hours sometimes,” May said. “And if people keep snapping them up the second they’re done building, there’s no reason to charge anything less.”
Real estate value always goes up in the end, Mayson said, making it the greatest wealth builder in America — but it doesn’t make houses more affordable now, much less in the future.
And building new affordable housing isn’t exactly on the table.
Although the East Blaine Tax Increment Financing project analysis identifies a project in East Harbor Hills to build 150 affordable or manufactured homes worth $150,000 each over four years starting in 2025, Pratschner said, “currently, I am not aware of any developments in Blaine that are building financially accessible housing.”
The City of Blaine will begin a housing study soon to quantify the need for affordable housing in their community, Harmon said.
A lack of affordable housing has been not only rough on low-income residents but also on local businesses are struggling to maintain workers.
When businesses offer low-paying jobs, workers must have a place nearby that they can afford, May said. Businesses including The Rustic Fork have cited a lack of workers as part their reason for closing, while other companies say they’ve chosen not to locate to Blaine because they know workers won’t be able to afford housing there.
May believes it’s possible that the new development could support workforce housing in the future, but when big developments try to propose more modest, manufactured homes in place of luxury ones, NIMBY (not in my back yard) crowds complain. “You get one big push of ‘we sure need affordable housing,’ and this other push of ‘but not next to me’.”
Multipronged approach
There are varying recovery theories for reconciling the boom in market-rate housing construction and the affordable housing deficit.
“Each expert I’ve talked to seems to disagree with every other expert I’ve talked to,” May said. “It’s almost always going to have to be a multipronged approach.”
Pratschner said the City is informed by current literature regarding the supply and demand theory that building additional housing will address housing affordability problems.
The idea is that allowing developers to build more and more housing will eventually catch up to the 0% vacancy problem, and the housing glut will result in lower prices, thus addressing the affordable housing need, May said.
Builders are faced with challenges to such building with rising permit and stormwater fees, longer permitting timelines, more-stringent building and energy codes, labor shortages, supply issues and carrying fees due to interest rates, among others, Macris said. And because building is a business, this makes builders focus on less-risky, higher-end markets, creating a shortage of starter and affordable units. Macris believes the barriers towards building must be eased up.
But May is not so sure, believing developers would “have to actually be able to catch up and kind of slit their own throat on the supply and demand by going ahead and building more than was needed” to achieve a plethora of houses and lower prices and “they’d still have to choose to lower the price. I’m not convinced that even if there were two or 300 spare houses that the housing market would go ahead and charge less to unload them.”
Builders don’t typically overbuild, Mayson said, and nationally, builders are starting to pump the brakes as interest rates rise.
“This is where I think that without the iron fist of the government coming in and interfering with the free market, we’re probably not going to get what we actually want here,” May said.
May believes the city needs more permanently affordable land immune to supply and demand in the form of land trusts. But project housing doesn’t maintain enough support and quality over time, he said, and there are a lot of government-provided housing models that aren’t executed affordably.
“There’s systemic problems in housing costs that can’t just be fixed by the government coming in and paying the full price in this dystopian pricing system we have,” May said. “And it takes a lot of money to do land trusts, but it’s just a drop in the bucket. So I think all these (solutions) have to happen at once and maybe … it’ll add up to enough impact.”
“More businesses will show up as more people move into the area, or those people might want to start a business,” Heverling said. More move-ins brings growth in government, schools, taxes and talent.
Herverling said he see Blaine as “growing in a responsible way that makes it to where all people can kind of move up together here, not just retirees that are coming in that have a lot of money.”
— Reported by Kai Uyehara