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How much do construction costs matter to the price of housing?

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Re: How much do construction costs matter to the price of housing?

#81

Post by arcticbull »

nicoburns wrote: post #35
jefftk wrote: post #14

Earlier quoted context omitted.

In London, if someone purchased all the properties on a block could they level the block and build something 15 stories tall? No: it has lots of regulations that restrict construction. (Not saying that allowing this is necessarily good or bad, but it's definitely something London has)

No, and for good reason: if everything is high-rises then housing becomes too dense. The problem isn't lack of housing density. The problem is too many people wanting to live in a small area. We need to reduce demand (by spreading over a wider area - more cities and rural areas too) rather than increase supply.

I dont think there's any justification for this position, really. Density in Macau is 20,000 people per square kilometer. Parts of the NY/NJ metro area like Guttenberg are 22,000. San Francisco is 6,600. Hong Kong is 6,300. London is 5,700. There is a ton of room to increase density before we start reducing demand.

Re: How much do construction costs matter to the price of housing?

#82

Post by missedthecue »

chrisseaton wrote: post #55
s1artibartfast wrote: post #50

Some interesting historical context on construction costs: 100 years ago the cost of construction was about $45/sqft when adjusted for inflation and today it is closer to $220/sqft, approximately 5x the cost. Blue collar wedges are pretty similar across time, but the cost of house construction (ignoring land) is dramatically higher. The 1914 sears Model 147 house was 900sqft and cost $872 for materials, estimated at…

Baker is a strange salary to look at. Back then bakers were everywhere churning out a staple food by hand. Today a baker is likely to be an artisan of some kind, with a specialist product.

yes that occupation has changed considerably in the last 100 years. A "baker" today is usually the person who opens Krispy Kreme in the morning. 1914 was a decade and half before sliced bread was even invented!

These days, bread is made very efficiently in massive plants (which is why it costs only $0.93 a loaf at my grocer)

Re: How much do construction costs matter to the price of housing?

#83

Post by kube-system »

s1artibartfast wrote: post #50

Some interesting historical context on construction costs: 100 years ago the cost of construction was about $45/sqft when adjusted for inflation and today it is closer to $220/sqft, approximately 5x the cost. Blue collar wedges are pretty similar across time, but the cost of house construction (ignoring land) is dramatically higher. The 1914 sears Model 147 house was 900sqft and cost $872 for materials, estimated at…

The standard of construction has also changed since 1914. Not only do few people want to build a 900sqft freestanding home, if they did it today with that Sears kit, it would break nearly every building code in the book.

A more equal comparison would be to a prefab or mobile home, which you can get for that inflation adjusted price.

Re: How much do construction costs matter to the price of housing?

#84

Post by loeg »

rabuse wrote: post #4

Almost nothing, especially with the cheap materials used in current modern construction (unless requiring some hurricane code; ex. South Florida). It's all due to zoning limitations, and homeowners voting in their own interests to keep the supply down, and values to rise.

The rebuild cost, as estimated by my insurance company, is more than half the total value of my house. And I live in Seattle, where land is relatively expensive. Construction cost is not "almost nothing" by any means.

Re: How much do construction costs matter to the price of housing?

#85

Post by joebob42 »

orev wrote: post #25

The price (of anything) is determined by one thing alone: how much someone is willing to pay for it. That’s it. The cost of building is not relevant in any way to that. Nicer materials, better design, etc. can make people willing to pay more, but if it’s too much they won’t pay. The only one who the cost of materials matters to is the builder. If it costs them more to build than they can sell it for (within whatever…

Well, except that the cost affects how much people are willing to pay, because if people are not willing to pay more then the cost then there won't be enough supply -> it will cost more -> people will either pay more or go without.

Re: How much do construction costs matter to the price of housing?

#86

Post by Dracophoenix »

chmod600 wrote: post #49
Mountain_Skies wrote: post #5

Thought for conversation: if you are able to work remote but still live in or near a major employment center, are you at least somewhat morally responsible for pricing out those who cannot work remote?

Morality is too blunt of a tool for this kind of question. Right now we are way over-moralizing many issues and it's not helpful to a discussion. Morality is useful to avoid rationalizing things that we know are wrong. For example, killing is wrong -- we don't want individuals making complex rationalizations about how the end justifies the means. But something as complex as the place a person chooses to live? No, tha…

>For example, killing is wrong -- we don't want individuals making complex rationalizations about how the end justifies the means.

Humanity justifies it in self-defense and war. A long time ago, civilizations justified human sacrifices. It doesn't take a complex rationalization. Only a convincing one.

While the platitude of "killing is wrong" is repeated by everyone, if you dig deep enough, people will still provide carveouts for themselves and their country or religion. Whether killing is good or bad is assessed by people objectively in terms of motives and consequences, and, on a subjective level, manner and "proportion". There wouldn't be a distinction between homicide and murder if humanity as a whole practiced what it preached.

>But something as complex as the place a person chooses to live? No, that's a morally-neutral choice. It may not be optimal for the benefit of society, but that's not what morality is about.

I agree entirely. However this seems like a massive departure from what I've had to argue against in this forum. Plenty have claimed the opposite, that morality is all about society and any correlated externality IS obliged to be solved by government or the people through a half-baked redistribution scheme.

Re: How much do construction costs matter to the price of housing?

#87

Post by giantg2 »

lastofthemojito wrote: post #60
giantg2 wrote: post #13

Earlier quoted context omitted.

Not sure why you are being down voted. This seems like a legitimate question that I would like to see the opposite side of. For example, if I was permanently remote, I would like to move to a cheaper area. I can't because my wife doesn't want to leave the current county (because "It's the best county in the world"). Although I'm also not in a heavily populated area, more so on the edge of being rural.

> I can't because my wife doesn't want to leave the current county (because "It's the best county in the world") For some reason that comment really piqued my curiosity. Obviously lots of us might choose different areas for various reasons (schools, weather, scenery, politics, recreational opportunities, cultural sites, etc). But to make a declaration of world's best must mean a lot of confidence in the greatness of…

"Still, I'm curious what about your home county makes your wife so enthusiastic about it compared to well, everywhere else?"

I asked her that during the discussion. She wasn't able to give any explanation. My guess is that it's because she's never lived anywhere else. I've lived multiple places. They each have their good and bad characteristics.

Re: How much do construction costs matter to the price of housing?

#88

Post by scsilver »

throwaway0a5e wrote: post #73
com2kid wrote: post #24

Earlier quoted context omitted.

> Almost nothing, especially with the cheap materials used in current modern construction New construction requires higher quality electrical panels with fancier breakers, more GFCI outlets, and much, much, better insulation. Builders have always used the cheapest materials they could get away with, and the cheapest labor they can hire. That has always been the case. The old houses still around are the exception to t…

>The old houses still around are the exception to the rule, not the norm. You need to get outside the beltway or at least go to some of the "bad" neighborhoods within it. The only place your statement is close to true is very wealthy areas that are constantly being redeveloped. Other than the occasional prime lot or desirable commercial site new construction fills in around the old or adds on to it. Big lots get subd…

Alot of new development is that architecture from the 80's and 90's is not tailord to modern life, was adapted to the car revolutions of the late mid century, and is agressive towards pedestrians. All the new construction in my area is tearing down old warehouse, office buildings and parking lots, to be replaced with wide sidewalks, brick paved streets with clear crossings, and high rise young adult "luxury" apartments with amenities. It's making the neighborhood nice and connecting all the bike routes and walk routes.

Being right outside the city core helps justify the price of redevelopment. However, I think the larger buildings are getting facelifts rather than rebuilds.

Re: How much do construction costs matter to the price of housing?

#89

Post by giantg2 »

Mountain_Skies wrote: post #59
giantg2 wrote: post #13

Earlier quoted context omitted.

Not sure why you are being down voted. This seems like a legitimate question that I would like to see the opposite side of. For example, if I was permanently remote, I would like to move to a cheaper area. I can't because my wife doesn't want to leave the current county (because "It's the best county in the world"). Although I'm also not in a heavily populated area, more so on the edge of being rural.

Perhaps if I used the word 'ethically' rather than 'morally' there would have been less of an emotional reaction to the question.

I do agree it could be worded better. I kind of doubt a single word would change the tone that significantly (given that many people don't know the difference).

Re: How much do construction costs matter to the price of housing?

#90

Post by scsilver »

Mountain_Skies wrote: post #5

Thought for conversation: if you are able to work remote but still live in or near a major employment center, are you at least somewhat morally responsible for pricing out those who cannot work remote?

Those employment centers are where resources are. The alternative is setting up resort towns with shipped in and strained labor serving the leisure and remote work class. See the mountain towns. Living remotely outside of towns starts to get isolating and inefficient unless you are getting all your resources from around your house and living off the land. Forget modern amenities.
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