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A house that costs $20k

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Re: A house that costs $20k

#81

Post by viperscape »

bsbechtel wrote: post #39
ACow_Adonis wrote: post #27

It's kind of hard for me to tell whether the house is nicer than mine when there's so little detail in the article on the actual house. Look, i'm more than supportive of innovative design and doing things cheaply, but for an article that was heavy on "the house is so cheap", and "its built kinda more like a airplane", and "it uses all this innovative stuff", there's a startling dearth of information. Sqm, plans, insu…

Agreed. I don't see anything particularly innovative or unique about this house. Manufactured homes cost roughly the same, and are roughly the same size and quality. There's not a whole lot of info really detailing what is so different or great about this home.

Manufactured homes in the US are typically high quality now because of the national safety standards it must meet for each state, in addition to holding up to things like high winds, heavy rains, tremors.

Re: A house that costs $20k

#82

Post by mseebach »

rwmj wrote: post #79
mseebach wrote: post #50

Earlier quoted context omitted.

The link does not support your assertion that there is planning permission on those plots. After the hand-waving about profits, there are nearly identical quotes from developers explaining that the bottlenecks are planning permission, skilled workers and building materials.

Try this source: http://www.local.gov.uk/media-releases/-/journal_content/56/...

Still no:

"The vast majority of the 475,647 homes quoted by the LGA are either on sites where work has already started, or where there is not a fully ‘implementable’ permission and where it is not legal for builders to commence construction"

http://www.theguardian.com/society/2016/jan/07/number-of-unb...

"To get to 475,000 unbuilt homes, the LGA have looked at every development scheme that has permission, and decided that, until the scheme is completed, the whole development should be classed as unimplemented – even if most of the houses are mid-construction, or even if they have been finished.

If you count houses that have been built as unbuilt, you are obviously going to end up seriously exaggerating from reality. I am writing this article from a flat that was finished 18 months ago; but another part of the development is still being built. According to these figures, I live in an unbuilt home."

http://www.citymetric.com/politics/according-lga-my-flat-doe...

Also, it's pretty bad form to ghost-edit your comment after it's been commented on.

Re: A house that costs $20k

#83

Post by tempestn »

okc wrote: post #77
tempestn wrote: post #35

Earlier quoted context omitted.

I actually think you are right that the real challenge is spreading fiscal responsibility. However, it doesn't follow that everyone should own a home, or that rent is somehow evil. If you rent, you pay rent. If you own, you pay interest on a loan[1] and maintenance costs. There is also a forced savings component in the form of mortgage principle payments. There are also less tangible benefits to both renting and owni…

When someone buys a house to let, they are making property prices more expensive for everyone. I do however agree with you, in essence. But I find it genuinly shocking you that you see a low cost portfolio as the road to ownership. Perhaps this is a uniquely American philosophy? The point of contention in this debate, probably boils down to if you see access to housing as a social issue or an investment opportunity.

I'm Canadian, not American, but perhaps? I honestly (literally) don't understand what shocks you exactly. Save money -> invest money to grow savings -> time passes -> eventually you have enough to buy a home, if you want.

I'm guessing you're saying that homes are so expensive, most people could not reasonably afford one even with disciplined saving and investing. But at least as a long term state, that seems logically impossible. The reason being, if homes were that expensive, no one would buy them to rent out either; because, either they would have to charge rent sufficiently low that people could afford it, in which case they wouldn't make any return on their investment given the high cost of the house, or they would charge high enough rent to make a decent return, in which case no one could pay it.

Since the supposed problem is with home ownership rather than with finding decent places to rent (aside from special cases like San Francisco,) that doesn't seem to be the case though.

Now, special cases may certainly exist in some markets that causes housing to be scarce, but that will tend to make both prices and rents high. I agree that that situation (limited access to housing) IS an important social issue. But it is distinct from the ability to purchase a house, which doesn't seem necessary or wise for everyone to be able to do without first saving.

Edit: Perhaps you were just saying that given low interest rates, one would not expect to earn much on a conservative portfolio. If so, I agree; any appreciation would be a bonus, but the main thing is the savings side.

Re: A house that costs $20k

#84

Post by marincounty »

ACow_Adonis wrote: post #27

It's kind of hard for me to tell whether the house is nicer than mine when there's so little detail in the article on the actual house. Look, i'm more than supportive of innovative design and doing things cheaply, but for an article that was heavy on "the house is so cheap", and "its built kinda more like a airplane", and "it uses all this innovative stuff", there's a startling dearth of information. Sqm, plans, insu…

They left out current building codes. I have a general contractor's licence. To build anything involves so many rules/codes it's rediculious.

Every year the building department in your town/city usually includes the latest codes, and prohibits so many things. It all sounds great until you are paying someone to build something. The various building code manuals take up at least two feet of space on my shelf.

Where I live, I couldn't build a cabin with wood stove. It would need a electric plug every 6'. I couldn't even use logs to build it without approved man made insulation. And forget the wood stove. They are illegial.

Re: A house that costs $20k

#85

Post by tempestn »

makomk wrote: post #72
gozur88 wrote: post #41

Earlier quoted context omitted.

>Rent does not build wealth. Rent is the act of transferring wealth from the poor to the rich. That's not a general rule. It really depends on rents, interest rates, and the cost to purchase housing. In a functioning market rents bring in just a tiny bit more than the monthly mortgage payment, including taxes and fees. There have been times in my area where you came out ahead renting, and times when you came out ahea…

> In a functioning market rents bring in just a tiny bit more than the monthly mortgage payment, including taxes and fees. Which means rent is still transferring money from the poor to the rich. If you have a mortgage, you're hopefully building up equity that can be released when you retire to somewhere smaller or in a cheaper location (which you can do, since you don't need to live near jobs and any kids will have m…

I don't know if I agree with your parent that rent should generally cover mortgage payments, but it should at least cover mortgage interest and other expenses, plus a rate of return on top of that. You need to take into account the opportunity cost of ownership. In addition to the interest, insurance, maintenance expenses, and risk, there is an opportunity cost to the money tied up in home equity. In a functioning market, if two people start with the same amount of capital, one decides to purchase a home and the other decides to rent a comparable home and invest the difference in assets of comparable risk, they will expect to come out the same. There is a small net payment from the renter to the owner, but that is because the owner is being compensated for having their capital tied up in the home. (Or looked at another way, the renter is paying for the benefit of not having to have their own capital tied up in the home.)

It doesn't appear that way in practice, because in practice 1) the home owner generally started with more money, which is how they bought a home in the first place, and 2) ownership forces people to save money. A renter with the same income could save a comparable amount of money to an owner, but on average they don't because there isn't a mortgage payment forcing them to do so. So on average home owners tend to be wealthier than renters. But there's nothing special about ownership vs rent (besides forced savings) that causes that to be so.

Rent is not a wealth transfer from poor to rich; it is payment for a service.

Now, if house prices are depressed, like with any asset, it is possible that ownership will temporarily be a good deal. (And vice-versa.) In a situation where the market has taken a plunge, one might be able to buy in at a level where they could be cashflow positive from rent, even including un-rented periods, to an extent that over-compensates for the funds they have tied up in the house. However, in that situation, people will rationally buy investment properties, increasing demand, and returning prices to a more rational level. (Likewise if houses are overpriced, eventually people will stop buying them because they don't expect any return on the investment, which will cause prices to drop.)

Re: A house that costs $20k

#86

Post by petecox »

adrianN wrote: post #15

I would be scared to buy a house that uses non-standard construction methods. Not because I don't trust the plans, but because even with cookie cutter houses, the construction people mess up a lot of things and you really have to pay an additional person to check the construction. Trying to get construction companies to build a house using novel techniques and do it without major errors is, I imagine, quite an undert…

Well it sucks to be an early adopter but the students are currently on 20Kv20.

Hopefully after 20 iterations the designs are getting better each time, incorporating real world feedback from the people who built the previous ones.

Perhaps these 'novel techniques' over time might be adopted by industry.

Re: A house that costs $20k

#87

Post by bsbechtel »

viperscape wrote: post #81
bsbechtel wrote: post #39

Earlier quoted context omitted.

Agreed. I don't see anything particularly innovative or unique about this house. Manufactured homes cost roughly the same, and are roughly the same size and quality. There's not a whole lot of info really detailing what is so different or great about this home.

Manufactured homes in the US are typically high quality now because of the national safety standards it must meet for each state, in addition to holding up to things like high winds, heavy rains, tremors.

I didn't say it wasn't high quality, just that it's not necessarily innovative or new.

Re: A house that costs $20k

#88

Post by ghaff »

SwellJoe wrote: post #24
techsupporter wrote: post #13

Earlier quoted context omitted.

If you're interested in knowing why, it's because mortgages are sold as securities these days (and have been since before the Big Collapse). If your mortgage is significantly not like the other mortgages, it can't be bundled and sold into the pool of other securitized mortgages. That means your lender has to carry the note itself and the overwhelming majority of lenders--banks and brokers--don't do that. The other pr…

Thanks for the explanation, and it mirrors the explanation I got from the loan officer at my credit union. On this point: "What you're looking for is a "portfolio loan," where the financial institution keeps your loan on its own books. Some credit unions do this (mine does) in situations like yours. The interest will be commensurate with the credit union's guess of how easy your property will be to resell (both in th…

Basically, as parent said, they're concerned that doing something oddball with the land will actually decrease its value or at least have some unknown effect on its value that they have no experience to evaluate.

Add to that, post-2008, most banks/credit unions are just going to err on the side of just not making the loan rather than making one which has some unquantifiable risk associated with it.

That said, it's all a bit arbitrary. I live in a relatively normal house on some very nice property but the house has enough quirks (it's very old) that I fully expect that whoever buys it some day will just build a new house.

Re: A house that costs $20k

#89

Post by toomanybeersies »

marincounty wrote: post #84
ACow_Adonis wrote: post #27

It's kind of hard for me to tell whether the house is nicer than mine when there's so little detail in the article on the actual house. Look, i'm more than supportive of innovative design and doing things cheaply, but for an article that was heavy on "the house is so cheap", and "its built kinda more like a airplane", and "it uses all this innovative stuff", there's a startling dearth of information. Sqm, plans, insu…

They left out current building codes. I have a general contractor's licence. To build anything involves so many rules/codes it's rediculious. Every year the building department in your town/city usually includes the latest codes, and prohibits so many things. It all sounds great until you are paying someone to build something. The various building code manuals take up at least two feet of space on my shelf. Where I l…

You really have to wonder how necessary some of these codes are.

Houses already last 60 or 70 years, which is plenty, by the time they're at a point where they need rebuilding they're hopelessly outdated.

I was helping my father with building a house over Christmas, some of the regulations are ridiculous, we had to build a massive retaining wall with 200 mm posts going 1.5 m down, just because the earth it was retaining could theoretically have a car drive down it at some point.

You have to seal the concrete ledge that bricks sit on with bitumen. It used to be that you had to seal it 50% of the width, but they've just changed it so that it has to be the full width of the ledge. How much difference does it really make?

You can no longer use nails for fastening down corrugated iron roofs, you have to use special screws. People have been nailing corrugated iron roofs down for literally hundreds of years without issue.

Re: A house that costs $20k

#90

Post by petecox »

jernfrost wrote: post #28

Probably nice for the US, but in much of the rest of the world, it is the price of land which dominate the price. Any system that aims to reduce house prices really need to deal with limited supply of land to build on. Even on Iceland which has vast amounts of space and tiny population, house prices are high because the areas where people want to live is in high demand. Now if you could just build your house at any a…

I see this as an opportunity for existing land owners to replace a house.

Every summer, somewhere in Australia, we have whole rural communities razed by bushfire. Rebuilding is costly and time consuming and there's a threat that fire may return within decades.

Constructing something that is quick and cheap and with low insurance premiums in case of natural disaster may benefit communities where the expected lifespan of a dwelling may only be 40 years.

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