> It doesn't even seem like anyone has interest in building $200,000 houses anymore
From a bit of online searching, I imagine it's between 0.75 and 1.25 man hours per square foot of house to build in labor costs (that number may differ depending on size of team/expertise, I imagine).[1][2] Depending on average pay rate for building involved, which varies widely based on area and cost of living, you might be looking at $50k to $100k in labor costs. That's before land cost, materials, permitting, power/sewer hookups, etc.
> but they will sell you a poorly made condo for $400,000 and $600/mo HOA fees.
In some places the lot cost is $200k, or more. It's hard to build a $200k house when your margin is negative before you've started building.
And in places where the lot cost is more like $100k, do you want to build a $300k house with low margin, or do you want to build a $400k-$600k house or condo with much higher margin? The problem perpetuates itself, as high density and high housing costs lead to high land cost, which leads to maximizing profit for area strategies that say to build higher end houses.
One of the solutions to this is to be willing to live in higher density housing, such as a condo. This lets building still target high margin while providing somewhat cheaper housing. Or build up, into more multi-story complexes. But people want homes with yards, which is why this is a discussion about how nobody can find a $200k house (you can, just not in the more populated areas), and not a discussion about "how to achieve housing cheaply".
1: https://www.contractortalk.com/f16/avg-man-hours-build-1800s...
2: https://diy.stackexchange.com/questions/77299/how-many-man-h...