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?

#201

Post by mauvehaus » Thu, Feb 17, 2022, 2:41 AM UTC

irrational wrote: post #161

zizee wrote: post #148

Earlier quoted context omitted.

Interesting. This might be explained by the switch from old growth to new growth^. Older trees would be larger, and have more core to work with (I think knots are mostly from the outer layers of the tree). ^ this is pure speculation

The core (heartwood) is the worst part of the tree. Now the trees are harvested so young that the entire things are junk heartwood.

The sapwood is an approximately constant radial dimension over the life of the tree once it gets big enough to form heartwood. Sufficiently old trees are more heartwood by percentage than sapwood.

For hardwoods, it's typically the heartwood that's more desirable. Walnut and cherry both have pretty strongly contrasting sapwood that does not match the customer's expectation for the color of those woods, for instance.

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

#202

Post by ClumsyPilot » Thu, Feb 17, 2022, 2:44 AM UTC

sokoloff wrote: post #99

dzhiurgis wrote: post #94

Earlier quoted context omitted.

Did standard improve 5x tho? Probably by like 2-3x I'd guess. Or standard maybe even decreased in some ways, but we're actually paying for complexity. Also - building larger typically reduces price/sqm.

In 1925, only half of homes in the US had electric lighting. None had air conditioning. Many would have had only steam boilers (which can function without electric pumps) fired by hand-shoveled coal. Most would have had no insulation. In 1940, half of homes had no indoor flush toilets and no hot running water. If you built a house today without electricity, with only cold water service, and an outhouse, I think you’d…

"In 1925, only half of homes in the US had electric lighting."

Surely if our goal was to compare prices of TVs over the past 20 years, and if we found that prices of TVs haven't changed, you cannot then claim 'well, old TVs were 720p and modern TVs are 4K, so actually the price of TVs dropped 4 times!'

Today we have all kinds of things that increase productivity: electric power tools, prebuilt parts, laser levels and measuring tools, CAD software, flooring that interlocks, expanding foam that's easilly applied from a spray can, drywall and dozens of things I never even heard of.

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

#203

Post by mauvehaus » Thu, Feb 17, 2022, 2:48 AM UTC

zizee wrote: post #148

brimble wrote: post #134

Earlier quoted context omitted.

My dad, born in toward the end of WWII, has complained for at least the last three decades that it keeps getting harder every year to find usable boards at lumber yards. Tons of them warped, damaged, way too many knots or other problems, and so on, and that's when you are shopping a couple tiers up from the worst stock. I don't know why that is, but that seems to be the trend he's seen over his life. Makes sense, if…

Interesting. This might be explained by the switch from old growth to new growth^. Older trees would be larger, and have more core to work with (I think knots are mostly from the outer layers of the tree). ^ this is pure speculation

It's a little more complex than that. You get branches (which manifest as knots in boards) where there's sunlight that can reach the leaves on the ends of those branches.

Trees grown among other trees have to grow up to reach sunlight. The innermost part of the lower trunk might have knots from branches when the tree was young, but once they reach harvestable size, there's a fair amount of clear lumber down low.

Trees grown in the open don't have the pressure to grow upwards, and end up with branches down low throughout their lives (from the center all the way through to the bark). As a result, there's very little clear lumber in them.

Disclaimer, I'm a furnituremaker, not a forester. The above is somewhat better than pure speculation, but likely misses some important bits.

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

#204

Post by ClumsyPilot » Thu, Feb 17, 2022, 2:50 AM UTC

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…

"Changing preferences are the best way to address this, yet is likely the most difficult to sucessfully influence. Houses being built today are mostly larger homes"

Surely people who are currently homeless would rather rent a small house than none at all? I haven't met one demanding '1800sqft or i'd rather live on the street!'

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

#205

Post by ClumsyPilot » Thu, Feb 17, 2022, 2:58 AM UTC

jjav wrote: post #142

pydry wrote: post #114

Earlier quoted context omitted.

>As for rent, the property owners just pass the cost on to the tenants by increasing rent Rents would either remain unchanged or go down. I dont magic myself a raise because income tax goes up. It works the same for landlords. If supply and demand remains unchanged, prices remain unchanged. The only change I could forsee to affect either is previously empty properties being put up for rent in order to cover tax payme…

> >As for rent, the property owners just pass the cost on to the tenants by increasing rent > Rents would either remain unchanged or go down. The rent must cover all the costs of the property (+ some profit). If any cost goes up, the rent will go up by at least that much. Anything else is wishful thinking. If the costs go up so much that it's no longer possible to rent because nobody can afford it, that still won't m…

"If the costs go up so much that it's no longer possible to rent because nobody can afford it, that still won't make the rent go down because the owner isn't going to start taking a loss on it for fun. Instead, they'll sell the property and now it is off the rental market for good."

What do you mean it's off the rental market? The house doesn't dissapear. Either the next owner rents the house out, so nothing has changed, or they live in the house which means that someone who previously had to rent is now a homeowner. Either nothing changed or it's an improvement.

What is this weired attitude anyway, laws and markets change all the time and sometimes I have to eat a loss, are landlord some kind of divine nobility that never does?

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

#206

Post by Spooky23 » Thu, Feb 17, 2022, 2:58 AM UTC

kube-system wrote: post #83

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.

The Sears kit wasn’t unique in that regard and they were built pretty good for the time. Non kit houses were often balloon framed or featured other serious code issues.

I live in a northeast city, and the average house in a ten block radius was built between 1920-1940. They seem to weather just fine and gradual retrofits to things like electric panels eventually take place. You can’t compare that meaningfully to a mobile home, which is more like a car with a 20 year lifespan. Frankly, I think the building codes are out of control in some respects and add needless cost.

The standard of construction of a middle class home built in 1925 is better the 2022 on the basis of materials alone.

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

#207

Post by JKCalhoun » Thu, Feb 17, 2022, 3:01 AM UTC

throwaway19423 wrote: post #129

brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I live in Canada, where we are swimming in lumber (in theory). I just don't understand why it is so expensive. I know the processing and treatment is very sophisticated but there is so much automation throughout the whole chain. My only explanation is that lumber is a globally traded commodity .. price isn't determined by just Canadian demand for lumber but the global demand. It makes me wonder .. if the US shutdown…

I would not be surprised if Canadian lumber was going to China. I believe a lot of Alaskan lumber, if not the majority of it, was China bound (this may have been close to two decades ago though when I had heard that).

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

#208

Post by ClumsyPilot » Thu, Feb 17, 2022, 3:02 AM UTC

majormajor wrote: post #191

ehnto wrote: post #77

Earlier quoted context omitted.

> ignoring the fact the the market would collapse I think that is the point. The market doesn't make sense already for people who actually use the homes because of the investors. If there were property policies that targeted investors and forced their money elsewhere, prices would drop dramatically, making housing affordable again.

If it was just investors why would rent be as close to mortgage payment amounts as it is? The vacancy rate is low. Demand is high. Demand is high even among people with more money than me so there are a lot of places that both sell for more than I can afford, and rent for more than I can afford. People are competing for the more desirable neighborhoods, whether renting from an investor or buying outright, that's what…

"If it was just investors why would rent be as close to mortgage payment amounts as it is?"

I am not clear how this is meant to prove anything, an influx of investors increases prices and rent, both. perhaps it's better to call them speculators, because they don't invest in the economy to create new properties, just inflate prices on existing ones.

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

#209

Post by JKCalhoun » Thu, Feb 17, 2022, 3:04 AM UTC

mauvehaus wrote: post #199

irrational wrote: post #159

Earlier quoted context omitted.

My understanding is that the trees no longer exist. We cut down ancient hardwood forests that took hundreds and thousands of years to grow. All of that is gone now except in a few places like national parks and monuments. In its place are tree farms that are harvested after growing for a few years. Instead of cutting down trees that are 4 feet across with beautiful straight grain knot free lumber, we get crap heartwo…

This. You buy a 4"x4" post (nominal. Actually 3.5"x3.5") at your local home improvement store and it has wane on all four corners and the pith running down the middle. Translation: it's made from the smallest possible tree you could plausibly saw a 4x4 out of. And the pith (the center of the trunk) running through the middle guarantees that the post will split along the radial plane as it dries. If you go to a better…

Heard you should get the largest lumber you can get and rip it down. Like get 2 x 12's and rip down to 2 x 4's.

Makes sense that the larger cross-sectional lumber needs to come from a larger cross-sectional tree with few defects. The crap-wood they can turn into 2x4, 2x3....

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

#210

Post by R0b0t1 » Thu, Feb 17, 2022, 3:05 AM UTC

rascul wrote: post #180

R0b0t1 wrote: post #176

Earlier quoted context omitted.

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…

Ah yeah, you're right, I confused myself.