Homes “Under $500K” Is Disappearing in Thurston County

Land, codes, and costs are squeezing entry-level homes—and why townhomes + infill could help

If you’ve tried house hunting in Thurston County lately, you’ve felt it: prices keep climbing, and “starter home” is starting to feel like a throwback term.

At a recent local economic forum, longtime builder Rob Rice put it plainly: it’s now nearly impossible to build a new single-family home here for under $500,000. That’s not from a lack of interest or demand—it’s the cost stack.

🧮 Why new homes cost so much

Rice outlined the big drivers pushing new-construction prices up:

• Land costs: fewer buildable lots + higher acquisition prices.

• Infrastructure: utilities, stormwater, roads, and impact fees add up fast.

• Energy code requirements: valuable for long-term efficiency, but they raise upfront build costs.

• Fuel + materials: taxes, transport, and commodity volatility ripple through every bid.

Higher-end projects can often absorb those increases. Entry-level builds? Not so much. And that’s where first-time buyers get squeezed out.

👀 Who’s feeling it most

• First-time buyers seeing fewer options below the $500K mark.

• Move-up buyers staying put longer, tightening resale inventory.

• Local workers priced into longer commutes or out of the county entirely.

🧩 What could help (near-term)

Rice points to townhomes and infill as practical ways to bring costs down without sacrificing quality:

• Townhomes use less land per front door, spreading land + infrastructure costs across more homes.

• Infill leverages existing streets and utilities, reducing the need for expensive new infrastructure.

• Together, they create more attainable price points while adding gentle density in the places people already live and work.

🛠 Policy + community levers to watch

These aren’t magic wands—but they move the needle:

• Zoning updates that allow small-scale infill (duplexes, townhomes, cottage courts) near services and transit.

• Predictable permitting timelines that reduce risk and carrying costs for smaller projects.

• Fee structures that scale with home size and infrastructure impact.

• Incentives for energy-efficient designs that lower lifetime costs without impossible upfront costs.

🧭 What this means if you’re buying (or planning to)

• Broaden the search: consider townhomes, small-lot homes, and new infill communities.

• Watch incentives: some builders offer rate buydowns or closing-cost help—ask.

• Run total cost of ownership: energy-efficient homes can offset higher sticker prices over time.

• Act early on pre-sales: you’ll often find better pricing before a community is fully built out.

The bottom line

Thurston County isn’t alone—the cost to deliver new housing has fundamentally shifted. But smarter land use, incremental density, and infill projects can open doors for buyers who’ve been shut out of the traditional single-family path. Expect the next wave of “starter homes” to look less like sprawling lots—and more like well-designed townhomes close to everyday life.

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I’m Aaron Thomas, a local realtor—follow for more South Sound updates like this. Every Friday we publish a free newsletter covering Olympia, Tacoma, and everything in between.