10 Things You Need to Know About Building a Home on an Island in Northwest Washington

Some of the most desirable cities and small towns in Washington State belong to islands within Puget Sound. In 2022, Bainbridge Island, Oak Harbor, and Mercer Island all made SafeWise’s list of the ten safest cities in Washington State. The weather can be milder too. Many of Washington’s islands – such as Orcas Island, the San Juan Islands, Camano Island, and Whidbey Island – are either completely or partially rain shadowed by the Olympic Mountains. This is a welcome refuge for residents of Seattle – which ranked sixth on a list of major US cities with the most rain days per year. Given this, it should come as no surprise that assessed values and sales prices of homes on the islands have risen rapidly in recent years. For example, the median sale price of a home on Whidbey Island this February was more than 20.1% compared to the median sale price at the same time last year. According to Redfin’s Market Insights, Mercer Island home prices “were up 48.5% compared to last year – selling for a median price of $2.5M.” Some Washington residents have opted to build instead of buying with home prices climbing. This post outlines ten things you need to know about building a home on an island in Northwest Washington. We also answer a few frequently asked questions about building custom homes in Puget Sound. Top Ten Things You Need to Know Before Building a New Home on an Island in the Puget Sound.

#1 There’s a Building Boom and Labor Shortage in Western Washington

First, property owners who might build a new house on one of the islands in Western Washington should know that the region is currently going through a building boom and labor shortage. Both circumstances could extend your project’s timeline as developers and builders compete for construction crews and materials. Paul Roberts explains in his December 2021 article “To build or not to build: Construction rebound has been fast on Eastside, slow in Seattle” for The Seattle Times. Roberts writes that “a long-standing labor shortage, made worse by COVID, is delaying some projects and threatening future growth.”

Builders, developers, and property owners feel the effects of this shortage even more acutely because of the building boom. According to Roberts, “tech firms like Meta and Amazon” have fueled the building boom as they “prop up demand for offices and housing.” Worse yet, Roberts notes that “builders are also paying more for everything from wood and steel to kitchen appliances and HVAC systems, in large part because of pandemic-related bottlenecks affecting the global supply chain.” To learn more about the pandemic’s impact on the cost of building materials, head over to our post, “Why Are the Costs of Building Materials Still Fluctuating?” Keep in mind that the average construction cost per square foot in your area for your own house will vary from those in the Seattle area, across King County, and on the other islands.

#2 Storms Could Impact Your Home Construction Project

During certain months, storms could delay building projects by closing parts of the highway or ferry system needed for transporting building materials and workers. Steve Kiggins elaborates in his article “Who makes the call to cancel, delay ferry routes when seas turn rough?” for FOX13 Seattle. Kiggins writes that “strong winds pushing high seas over a ferry’s bow and onto the car deck…only happen a handful of times a year.” Ferry rides in Puget Sound are generally very safe, but “the routes farther north can sometimes get downright dangerous.” When expecting inclement weather, crews will load ferries differently than they usually do before canceling rides. Sometimes, they even take alternate routes to avoid storms.

Of course, Washington’s ferries are occasionally closed for other reasons too. Late last year, some of the state’s ferries were operating at reduced capacity due to staff shortages. When building a new home in Puget Sound, property owners should remember that many islands in Northwest Washington are accessible only by ferry, private boat, or small plane. Some islands – like Bainbridge Island – are accessible via a bridge or highway. These routes, however, are usually much longer and more circuitous than the direct ferry route from the mainland to the island.

#3 You Might Need a New Well or Septic System

Many island communities in Northwest Washington are zoned Rural, Rural Agriculture, Rural Forest, or Rural Residential. Some neighborhoods on the islands do not have access to city water, power, or sewage systems. According to the Kitsap County Public Health District, "there are over 58,000 septic systems in Kitsap County." Kitsap County is home to Bainbridge Island and Blake Island – both of which are in the Puget Sound region of Washington State. The Public Health District resource notes that "almost all residential properties outside our cities are served by a septic system located on the property – often called an ''on-site'' septic system." Given these numbers, island property owners might need to drill a well or install a septic system before building their new homes.

If an existing home on your property already has a septic system, the Washington State Department of Health notes that you can "find out what type of system you have…by using the online RME Property Search." Those with properties in "Clallam, Clark, Island, Jefferson, King, Kitsap, Pierce, Skagit, Skamania, or Thurston counties" can all get information about their septic systems through the online search bank. If your property is located in another county "or if you can find information online about your system," the WSDH recommends that you "contact your local health department."

Installing a New Septic System on Your Site

For properties lacking an existing septic system, we recommend following Merri Ann Simonson'sSimonson's advice in her article "Almost everything you want to know about septic systems" for The Journal of the San Juan Islands. The real estate agent recommends first "hiring a licensed on-site designer who will complete a site and soil analysis and submit a design to the County for their approval and permit." This analysis is also called a " feasibility study."

Once the site is approved by the county, it must be “installed by an excavation firm licensed for installation.” When installing a new septic system, homeowners should expect to pay between “$30,000-$45,000, with the typical being $30,000-$35,000.”

#4 Certain Areas Are Archaeologically Sensitive or Otherwise Protected

According to the Washington Department of Fish and Wildlife resource, “Ecosystems in Washington,” the state “has a tremendous diversity of ecosystems, including prairies, wetlands, estuaries, rainforests, shrubsteppe, marine waters, and grasslands.” Washington State also boasts “two ecosystem types found nowhere else on the planet: the Olympic rainforest and the scablands of the Columbia Plateau.” Clearly, Washington is home to incredibly diverse plant and animal life habitats – some species of which are threatened or endangered. The state prioritizes the protection of delicate ecosystems, including historically, ecologically, or archaeologically sensitive ones

The post “Buying Vacant Land on Whidbey Island” from Windermere Real Estate Whidbey Island explains that “there are height, buffers and set-back regulations for zoning, shoreline, and critical areas which can impact where you can build.” According to Windermere, “there are large set-back requirements for structures, wells, and septic systems around critical areas.” Restrictions vary based on location. For example, Bainbridge Island protects certain types of trees. Clearing these trees requires homeowners to obtain special permits from the city. Work with a local builder to avoid encroaching on conservation land or other sensitive areas and ensure proper land use.

#5 Permitting Can Take a Long Time – But the Process is Speeding Up

Though not nearly as opaque and complex as San Francisco’s building permits process, the permitting process in Northwest Washington can take a while. Depending on the property, you might need a Site Development Permit or SDAP in addition to your regular building permit. Getting approved for an SDAP could extend your timeline by a few months. Thankfully, Island County’s permitting process was recently overhauled – significantly reducing processing times. In her February 2022 article, Kira Erickson explains, “At long last, Island County building permits hastened” for Everett’s Herald Net. Erickson writes that “a year ago, it was not unusual for a building permit request to take six to eight months to be fulfilled.” According to Erickson, “Whidbey residents, builders, and members of the Island County Board of Commissioners have long bemoaned the slow-moving process.”

Today, homeowners and builders applying for permits “may be pleasantly surprised at how little time they’ll have to wait.” Quoting Mary Engle – Island County’s planning director – Erickson notes that “‘the current average turnaround time to receive a fully issued building permit is four to six weeks” because of Engle’s changes. When asked by Erickson, Engle reportedly “cited quicker permit turnaround and workflow improvements in the building permit division as her top goals when the commissioners offered her the role.” Engle’s work as planning director has made waves in Island County – impressing builders and property owners alike. Keep in mind that building permit fees vary. Check with your local building department for more information.

#6 Home Values Are Rapidly Rising

Residents planning to build a new custom home in Puget Sound should also consider that home values are rapidly rising. This could make building a new home not only a sound investment for the future. It could also make building a new homeless more expensive than buying a similar existing home.

In the article “Assessed value of homes continues to rise sharply” for Whidbey News-Times, Jessie Stensland writes that home values increase most significantly across Island County. Quoting Chief Appraiser Chad Falke, Stensland writes that “the average value in the county increased by about 9.83 percent for the 2021 notices, which are based on sales in 2020 and the first month of 2021.”

Median Island County Sale Prices Nearly Doubled Over the Last Five Years

According to Stensland, “that’s the largest year-over-year value increase in at least the last five years.” Referencing the Northwest Multiple Listing Service, Stensland writes that the “median sale price of homes in Island County increased by 14 percent, $370,000 to $422,000, from 2019 to 2020.” Thus far, in 2022, the numbers are even more shocking. According to Redfin’s Market Insights for Island County, “Whidbey Island home prices were up 20.1%” in February 2022 compared to February 2021. The median selling price was $530k last month, and the average home sold after being listed on the market for just six days, around 2% above the list price. In February 2017, the median sale price of a single-family home on Whidbey Island was just $309k.

This February, home prices were up 34.7% from last year on Camano Island, with a median selling price of $650k. In February 2017, the median sale price was just $380k. Given these already high – and still rising – sales prices as well as intense competition amongst other prospective home buyers, the building might be more affordable and more enjoyable than buying.

#7 Some Islands Are in Flood and Extreme Storm Risk Zones

As with any waterfront property, homes built on the islands in Western Washington may be subject to storm surges that cause flooding and high winds that cause power outages. Storms can also cause erosion, damage to septic systems, contamination of private wells, and injury to residents from flying debris.

In our post “7 Tips for Building a New Home Along the California Coast,” we noted that “the sun, the sand, and the sea can all impact the safety, security and longevity of a single-family home built by the ocean.” Furthermore, “weathering from high winds, salty air, sunny skies, and crashing waves can wear away at your home’s exterior.” Both saltwater and air are corrosive – especially when whipped around by high winds. Humidity can also cause mildew and mold to develop indoors – impacting your family’s health and damaging belongings.

According to Redfin, about 1,700 homes – representing 14% of all properties – are at risk of flooding on Camano Island within the next thirty years. Mercer Island, Bainbridge Island, and Whidbey Island are also at very high storm risks, with a score of 69/100 to 82/100. Homeowners should remember that few island towns are at greater storm or flood risk than Seattle.

Redfin’s Market Insights page notes that “flood risk in Seattle is increasing faster than the national average,” The city is at an extreme storm risk of 85/100. Tacoma’s flood and storm risks are similar to Seattle’s. The city’s flood risk is also increasing faster than the national average. Of the towns we looked into, only Oak Harbor had a much higher storm risk at 95/100.

Best Building Materials for Island Homes

Because of this risk, homes built on islands in the Puget Sound must feature windows, doors, siding, and roofing materials that protect against damage during these types of disasters. FEMA’s “Recommended Residential Construction for Coastal Areas” guidelines can help homeowners and their design-build firms choose the best materials for their new homes.

Picking the perfect materials, determining the correct roof pitch, and choosing the best layout can go a long way toward protecting your home from flood and storm damage. For example, the National Association of Home Builders recommends structural sheathing for exterior walls, secondary moisture barriers for flashing, impact-resistant glazing for windows, and flood-resistant building materials below the DFE or Design Flood Elevation.

#8 You Can Still Use Solar Panels

Contrary to popular belief, solar panels are pretty popular in the western half of Washington State. According to the Solar Energy Industries Association, “Washington is a growing community solar market with more than 30 community solar projects already in the state.” In fact, “there are more than 70 schools across Washington that have already gone solar,” producing enough solar energy to “power 105 homes.” Though solar panels work best on sunny days, they still work well when clouds are overhead. Another resource from the SEIA notes that “rain actually helps to keep your panels operating efficiently by washing away any dust or dirt.” Solar panels are particularly viable on islands shielded by the Olympic Rain Shadow – which stretches from Sequim in the Southwest to Anacortes in the Northeast.

The post “Solar Savings” from Windermere Real Estate Whidbey Island explains – pointing to the island just west of Camano. According to Windermere, “Whidbey Island gets half the rain of Seattle and about 30 additional days of sun…[making it] one of the sunniest Washington areas west of the Cascades.” Benefits of “going solar” for Whidbey Island homeowners include:

• Net metering.

• A generous federal tax credit.

• Local sales tax exemptions.

• Increased property value.

Washington State Tax Exemptions for Solar Panels and Storage

Under Bill E2SSB 5116, the sales tax exemption is currently in effect until 2029 – though this deadline might be extended. A special notice from the Washington State Department of Revenue in June 2019 details provisions of the bill. According to the Washington State Department of Revenue, the state now provides “a 100% sales and use tax exemption on purchases of machinery and equipment used directly in a solar energy system.” In order to qualify, the system must be “capable of generating at least 1 kW, but no more than 100 kW, AC of electricity,” and all machinery and equipment must be purchased “between July 1, 2019 and Dec. 31, 2029.”

#9 ADUs, DADUs and Other Accessory Buildings Are Allowed on Most Properties

ADUs and DADUs have been legal in some regions of Washington State since 2009. However, recent changes made by Governor Inslee and the House Local Government Committee intended to take pressure off the state’s housing crisis and encourage the construction of ADUs and DADUs in Seattle and beyond. Governor Inslee recently proposed a bill that would eliminate single-family zoning. According to Virginia Thomas in her January 2022 article “Zoned Out: Single family-exclusive zoning may become thing of the past” for the Spokane Journal, this bill would allow homeowners to build “up to four units on each lot in large and medium-sized cities.”

As of March 2022, only one attached accessory dwelling unit and one detached additional dwelling unit is allowed per single-family dwelling unit in Island County, Washington. All ADUs and DADUs must be permitted, and there is a limit to how many permits for guest cottages the county can issue each year. As long as water, power, and sewage systems allow, most islands in Puget Sound allow for one additional detached and one additional attached unit per residential lot. Check land-use laws in your area for more information before submitting construction plans for your dream home – plus ADU – to the city planning department.

#10 Sales Tax on the Islands is Typically Lower Than in Seattle

Neither sales tax nor property tax is highest in Washington when compared with other states around the country. Better yet, there is no state income tax in Washington! However, certain cities in Washington State do have incredibly high local sales tax rates. The state ranked fourth on a list of the top five states with the highest total sales tax compiled by TurboTax in 2021. According to Jared Walczak and Jeremiah Nguyen in their article “Sales Tax Rates in Major Cities, Midyear 2021” for the Tax Foundation, “Tacoma, Washington imposes the highest combined state and local sales tax rate, at 10.30 percent.” Seattle is tied with Fremont, Los Angeles, Oakland, and Chicago for second place at 10.25%. These high sales tax rates can make buying building materials and transporting them even more expensive than they already are in our pandemic-era world.

Thankfully, the combined sales tax rate on most islands in Puget Sound is lower than that of Seattle and Tacoma. For example, the 2022 combined sales tax rate – including local, county, and state tax rates – is 9.1% for Bainbridge Island, 8.7% for Camano Island, and between 8.3% and 8.5% for the San Juan Islands. Homeowners should remember that Washington State and many local governments also offer property tax relief programs for seniors.

According to the Island County Assessor’s Department, which serves communities across Whidbey and Camano Islands, senior citizens and people with disabilities could “qualify for property tax exemption.” For seniors who qualify, “property taxes will be reduced and [they] will become exempt from all excess levies and Part 2 of the state school levy.” Furthermore, each qualifying senior’s land and home value will be “frozen in the year first qualified.” The home in question must be a primary residence – occupied by the owner for more than six months out of each year. There are also maximum income requirements.

Building a New Custom Home on an Island in the Puget Sound with Element

If you are planning to build a new custom home on an island in Puget Sound, consider working with the team at Element Homes. Our team now services more than ten cities across Washington State, originally from California. These include Seattle, Bellevue, Sammamish, Redmond, Kirkland, Shoreline, Issaquah, Renton, Medina, Bothell, Edmonds, and Mercer Island. Coming from the Golden State, our design-build firm understands how to navigate complex permitting processes and how to build homes that stand up to harsh weather. Get in touch to learn more!

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