How much do construction costs matter to the price of housing? • Hacker News Board

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

#171

Post by ClumsyPilot » Thu, Feb 17, 2022, 1:29 AM UTC

dockd wrote: post #132

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…

Did the 1914 house have electricity? With "acetylene lighting plant" being extra, I think not. Did the 1914 house have more than one toilet? Cost per square foot doesn't cover what goes into the square foot, and fixtures cost a lot more than an empty room.

Does it cost 5x to add electrical wiring into a house? I would happily take a 1915 house and upgrade it.

I love in a 'premium' newbuild block in a 1st world country, and the construction quality is so atrocious it would be condemned in some 2nd world countries!

The builders forgot to connect the extractor fan to any ducting, it just sits inside the ceiling and makes noise, the piping of the sprinkler system in not secured to any structure and is wobbling and threatwning a flood, the guy that made a hole in the ceiling for the sprinkler missed and we have a hole in the ceiling and a sprinkler somewhere inside. Last week a hot water mains has burst creating a flood of scalding water and 13 floors had to be evacuated. We had a nice steaming waterfall down the side of the building 40 meters down. The electric meters are installed in breach of code. It's a 23 story building and elevators never work, etc.

The building was completed 4 years ago, apartments sold at a premium to 'investors' based in tax heavens - not a single resident here owns the flat. Mine is based in Cayman islands.

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

#172

Post by [deleted] » Thu, Feb 17, 2022, 1:30 AM UTC

Scoundreller wrote: post #30

TheChaplain wrote: post #2

Prices on housing will not go down as long as people have access to money IMHO, and plenty are willing to pay up if it means 30-45 min less commute to work.

If non-gov investors had to provide the mortgages instead of the fed, that access to money would dry up.

[deleted]

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

#173

Post by ClumsyPilot » Thu, Feb 17, 2022, 1:31 AM UTC

jzwinck wrote: post #78

whoisburbansky wrote: post #71

Earlier quoted context omitted.

It's odd, don't you think, that an "artisan" of some kind, with a "specialist" product, would only make about 10% more per annum, adjusted for inflation, than a generalist churning out a staple food by hand?

Modern bakers are competing in a market dominated by extremely cheap mass production. The economy of scale has moved out of the local bakery and into the regional bread factory. People are willing to pay double or triple for artisanal bread compared with mass produced bread. But are they willing to pay 10-20x? If not, and the extreme cost efficiency of modern food factories inexorably lowers prices, the market cleari…

Propose an alternative comparison for a simple job that does not require a degree and has existed for a hundred years, and tell us - are the results are different?

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

#174

Post by aaron695 » Thu, Feb 17, 2022, 1:31 AM UTC

VikingCoder wrote: post #20

Going off on a tangent here: There's a sci-fi novel I want to write some time... You know how some countries have mandatory military service? Well, what if all of the "Essential" jobs, all had mandatory service? I want to do my own cherry-picking, selecting the "Essential" jobs, and especially those that are toilsome but that you can do with not a lot of training, and then do the math to see how many hours each able-…

No post body was provided.

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

#175

Post by giantg2 » Thu, Feb 17, 2022, 1:32 AM UTC

bumby wrote: post #150

giantg2 wrote: post #112

Earlier quoted context omitted.

I would love to see no tax on primary home property at all. Just for commercial/investment properties. Unfortunately, a lot of that would be passed on to renters unless income taxes were assessed differently. But that would also mean drastically changing school funding, which could be a good opportunity but would likely turn this into every more of an impossible shitshow.

I think one argument is this incentivizes in the wrong way regarding home buying. It seems similar to the mortgage interest rate deduction argument: it incentivizes larger homes, it's regressive because it benefits those with more wealth in property than those with less, increases the likelihood of defaults due to people being incentivized towards more expensive homes, and potentially distorts housing prices, related…

Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). This should reduce the burden on people who are on a fixed income while keeping houses a similar size. Maybe even smaller since the tax is taken off the top rather than perpetually taken off the back end - people tend to notice a smaller paycheck more.

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

#176

Post by R0b0t1 » Thu, Feb 17, 2022, 1:33 AM UTC

rootusrootus wrote: post #149

R0b0t1 wrote: post #135

Earlier quoted context omitted.

Just interjecting "but building codes!" doesn't make a lot of sense. If the codes are so strict that we can't actually build houses they are failing at their purpose. I dunno if you've dug deeply into most building codes but they're almost always overly specific in pointless ways and in ways totally unrelated to safety. Getting an engineer to sign off on a design should be enough, especially for a freestanding (tiny)…

OTOH, hiring an engineer to actually put their name on your home construction will almost certainly cost significantly more than the city inspection cost.

Every location (in the US) I'm aware of requires houses to be signed off on by an engineer before construction. You always have to pay for it. The issue is engineers are usually obligated to enforce code, and a lot of them try to be stamp mills -- they only want to look over and assure designs that are very similar so they don't have to think about it.

There's an unfortunate number of locations in the US where you must use wood frame for your house, or you must route your power in exactly this way, etc, even if it'd be equally safe or cheaper to do something else.

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

#177

Post by ClumsyPilot » Thu, Feb 17, 2022, 1:35 AM UTC

giantg2 wrote: post #169

lurgburg wrote: post #158

Earlier quoted context omitted.

LVT is generally conceptualised as proportional to the value of the land, not it's area.

And how do you set that if excluding the type of property that's on it?

I fail to see the relevance, land is zoned for farming or reaidential, that sets it value

You could reform zoning, but its not a requirement

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

#178

Post by bumby » Thu, Feb 17, 2022, 1:38 AM UTC

giantg2 wrote: post #175

bumby wrote: post #150

Earlier quoted context omitted.

I think one argument is this incentivizes in the wrong way regarding home buying. It seems similar to the mortgage interest rate deduction argument: it incentivizes larger homes, it's regressive because it benefits those with more wealth in property than those with less, increases the likelihood of defaults due to people being incentivized towards more expensive homes, and potentially distorts housing prices, related…

Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). T…

This is an interesting perspective, thanks for clarifying. I think it would also be interesting if it leads to a more equitable method of funding schools.

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

#179

Post by ClumsyPilot » Thu, Feb 17, 2022, 1:46 AM UTC

com2kid wrote: post #19

giantg2 wrote: post #8

It's all about consumer preference. It seems this article largely misses this. People want to live in specific locations, or have to in order to find work. This drives land values up as demand increases. Policies can make this worse, but the problem will still manifest itself to some degree. (Potentially as affluent people, especially in suburban areas, buying up more land to create setbacks, or simply buying because…

> For a personal example, my wife complains that an 1800 sqft house is too small. A modern blueprint 1800sqft house, yeah, for sure. But somehow a 1960s split level at 1800sqft is spacious. We are throwing square footage away on multiple large bathrooms, 2 living rooms, 2 dining rooms, and then wonder why the rooms we actually occupy are so small. The recent trend towards 4 story narrow houses doesn't help. A literal…

"The recent trend towards 4 story narrow houses doesn't help. A literal 1/3rd of the house is taken up by stairs"

If you want vertical efficiency, we have apartments for that. You get a single staircase and 20 single-story homes instead of 20 staircases in 20 homes.

Its funny that US/UK/ anglosphere seems to have never figured out apartments, in Uk you can't even be a true owner - first you pay leasehold, then you pay ground rent, then you pay service charge (for which they are not obligated to provide any service), so you paid 3 times for the same thing!

And then when yoy find out that your block was built in breach of fire regulations, it's not the material supplier, not the developer and not the building landlord that get the bill, its the leaseholder that does not even own the house that has to pay for 'waking watch' (pateolls by firemen) and any repairs!

People who bought Shared Ownership apartments (you own 25%, other 75% is owned by investors) are responsible for 100% of the cost of fixing the building because between developer, supplier, fire inspector and landlord someone has commited fraud.

UK likes to think fo itself as free country, but I have never seen laws as tyranical and feudal as housing laws here. It's like they were writted for medieval lords to opress their peasanta and never changed.

If you want to know more about this, google 'cladding scandal, UK'

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

#180

Post by rascul » Thu, Feb 17, 2022, 1:53 AM UTC

R0b0t1 wrote: post #176

rootusrootus wrote: post #149

Earlier quoted context omitted.

OTOH, hiring an engineer to actually put their name on your home construction will almost certainly cost significantly more than the city inspection cost.

Every location (in the US) I'm aware of requires houses to be signed off on by an engineer before construction. You always have to pay for it. The issue is engineers are usually obligated to enforce code, and a lot of them try to be stamp mills -- they only want to look over and assure designs that are very similar so they don't have to think about it. There's an unfortunate number of locations in the US where you mu…

> Every location (in the US) I'm aware of requires houses to be signed off on by an engineer before construction.

This varies widely by state. In some states, it matters if you're in a municipality or if you're rural.

Where I am, in this county, I do not require a permit or inspections or anything to build a house for myself unless I'm inside a municipality. The government doesn't care until it's time to pay taxes. I may need some sort of inspection to hook up to the electric grid though, or to get water turned on. In (edit: some) other states, you can barely build a small dog house behind your house in the country without permits, inspections, engineers, surveys, and all kinds of other stuff.