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?

#281

Post by leoedin » Thu, Feb 17, 2022, 10:56 AM UTC

ClumsyPilot wrote: post #179

com2kid wrote: post #19

Earlier quoted context omitted.

> 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 pa…

Funnily enough Scotland has figured out apartments - both Edinburgh and Glasgow have some really incredible spacious apartments. I wonder if it's a result of the divergent legal systems.

Living in London, I'd happily live in a generous sized apartment (I grew up in one in Scotland - it was fine), but the system here doesn't allow it. The apartments available are almost all very small (with a few very central and highly priced exceptions) and the leasehold system makes owning them and doing work a bureaucratic nightmare. So along with everyone else, I'm buying a house and bidding up the prices of those.

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

#282

Post by CryptoPunk » Thu, Feb 17, 2022, 11:18 AM UTC

ClumsyPilot wrote: post #204

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!'

This is why minimum wage, that prohibits low-wage work, and minimum floor size ordinances, that prohibit micro-suites, are so harmful.

Fortunately the former has been mostly neutralized by the statutory minimum wage being reduced by inflation, but the latter is getting worse, with more such laws being implemented and reducing affordable housing.

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

#283

Post by OJFord » Thu, Feb 17, 2022, 11:29 AM UTC

selestify wrote: post #235

moistly wrote: post #220

Earlier quoted context omitted.

Canadians are so stupid that we have allowed raw logs to be sold to Chinese offshore lumber mill ships, to be sold back to us, instead of insisting that the value-added processes be kept on-shore so that we have good-paying jobs for our own citizens.

> so that we have good-paying jobs for our own citizens. Protectionism isn't always a good idea. Doing so would've made the final lumber output more expensive for Canadian consumers. Automation is coming for the good-paying jobs sooner or later, anyways. The solution wasn't/isn't to ban outsourcing/automation, it's to better distribute the gains from outsourcing/automation across society.

Canadians know that - they have only to look at dairy. Milk is probably fine from a consumer perspective (just not if you want to get into farming it), but whether deliberately or as a side-effect it cripples cheese.

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

#284

Post by fleddr » Thu, Feb 17, 2022, 11:29 AM UTC

ClumsyPilot wrote: post #193

fleddr wrote: post #165

Earlier quoted context omitted.

Practically speaking, the areas you speak of will always have high demand, no matter the type of demand. It's never going to be affordable. Accept it. Second, somebody living in a small super expensive apartment whilst fully working remotely is likely to have a miserable time (COVID situation). If they would have the type of job security guaranteeing they can continue working remotely for a long time, surely many of…

> 'no such thing as morality in markets' Is it okay to sell people? Do you own your children? If you own land, do you also own anyone who lives on that land? At various point in history answers to all of the above were yes. Should we have a market for organs? There is a market for intellectual property, but what is intellectual property - maybe there should be a patent for everything that exists, say a pencil, and th…

I get your point but it's not very practical.

Currently, a home is personal property and thus a market. The ownership of assets is a fundamental building block of a modern capitalist society.

The point of owning a home is to have a house to live in, which you like and can customize to your liking. Another point/benefit is to take control of your living expenses and to be independent from a landlord.

The fact that real estate prices are skyrocketing has nothing to do with the idea of home ownership, it's a side effect of an imbalance in supply and demand. Yes, some investors will abuse this imbalance to build wealth but the true root cause is the imbalance in itself that makes it possible.

It's not rocket science. You cannot keep cramming ever more people in the same area. Supply will never meet demand. No amount of policy or taxation will solve this. The only structural long term solution is to address the demand side. It should not be required for half the population to move into a handful of cities just to have a decent job.

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

#285

Post by OJFord » Thu, Feb 17, 2022, 11:34 AM UTC

djdjfhsje33edh wrote: post #214

ClumsyPilot wrote: post #166

Earlier quoted context omitted.

In UK you can buy a house that was built in the dark ages, before Americas were 'discovered', were declared a listed building and the owners are legally barred from making major changes. They cost like 3x what a newbuild does, this "but building codes" stuff doesnt stand up to scruitiny. You dont have to use wood, we have brick. We've had automation and 100 years of growth in productivity.

> They cost like 3x what a newbuild does, this "but building codes" stuff doesnt stand up to scruitiny. I don't think that's a fair comparison. There is a fixed supply by definition of those old buildings, so their price will be pushed up by demand with little relation to their cost to build since they can't be built anymore. A better comparison would be to look at the cost of new houses in developing places like SE…

There's a lot more than you probably imagine, other than these 3x price ones GP's thinking of - that seems pretty niche, they'd have to be exceptionally well-preserved and dripping in original features.

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

#286

Post by OJFord » Thu, Feb 17, 2022, 11:39 AM UTC

learc83 wrote: post #200

s1artibartfast wrote: post #192

Earlier quoted context omitted.

I agree that they are clearly different houses. That said, I think the difference is overstated. I have lots of friends who live in craftsmen homes. They resell at basically the same price as similar sized houses built 25 years ago (even with single pane windows ect) . If somehow you got one that wasn't upgraded since 1920, you are looking at a few tens of thousands to put in electrical, plumbing, and appliances. Sti…

The average craftsman home built 100 years ago isn’t going for the same price as a 25 year old house. The craftsman homes that have survived for 100 years in good condition are. That’s a very different thing. Old houses also have tons of problems even when upgraded, and they just aren’t anywhere near equivalent to a modern home unless you essentially gut them and rebuild. Insulation isn’t nearly as good. Bathrooms ar…

> The floor plans aren’t nearly as open. This last one in particular is a big cost difference because creating large open spans is expensive.

That especially is just fashion, I'd be really careful with that sort of conversion. Or, if the only 'problem' with a property is that it has too many segregated rooms, and that's depressing the price.. snap it up, fashion's bound to come around. (Unless it's for you to live in and you particularly care of course, live where you want!)

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

#287

Post by onlyrealcuzzo » Thu, Feb 17, 2022, 11:45 AM UTC

s1artibartfast wrote: post #100

kube-system wrote: post #83

Earlier quoted context omitted.

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.

I totally agree that the take away is construction costs are going up over time! This holds true even if you look at price/foot opposed to total cost. Like you said, part of this is differences in what you get, building codes, and amenities. That said, Craftsmen homes are wonderful and in some respects have better build quality than modern homes.

The average craftsman home listed for sale in CA - 80+ years old - seems substantially better than the average newly built D.R. Horton home.

Maybe this is highly biased toward craftsman homes that have been well maintained due to how expensive CA housing is. But why wouldn't D.R. Horton homes also be maintained? They're theoretically equally expensive.

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

#288

Post by OJFord » Thu, Feb 17, 2022, 11:46 AM UTC

ClumsyPilot wrote: post #173

jzwinck wrote: post #78

Earlier quoted context omitted.

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?

Any tradesman job that's existed that long? We could keep it related even - bricklayer, basically exactly the same job (..on a large site cement might be made elsewhere and delivered for you, or on site the mixer might be electric).

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

#289

Post by OJFord » Thu, Feb 17, 2022, 11:49 AM UTC

vkou wrote: post #120

chrisseaton wrote: post #76

Earlier quoted context omitted.

I don't think those large industrial bakeries really have 'bakers'? They have automation engineers, food scientists, mechanics.

No, those people are the specialists that come in and set things up, or design and build the machinery that gets set up. The day-to-day work is done by bakers, and much of it is not automated.

It's a factory job though, their employer 'competes' for them with the other nearby factories, not the nearby independent bakeries.

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

#290

Post by leoedin » Thu, Feb 17, 2022, 11:55 AM UTC

davidw wrote: post #33

actuator wrote: post #7

Earlier quoted context omitted.

London doesn't have this problem if I am not mistaken. But housing is very very expensive still. So much that a 3 bedroom 120sqm apartment can be more than 6 million dollars even outside Central London depending on the area.

Tokyo is actually a place where you see this in practice, from what I read. Prices are fairly stable due to lots of new construction.

As well as a general culture which is very willing to build new buildings, the population of Japan has been pretty stable, even falling a bit, since the early 90s. I wonder if that hasn't had a really impact on the fact they've more-or-less escaped the rampant house price inflation seen in other countries.

Since 1990, Japan's population has risen by 2%, the UK has grown 17%, the US by 32%, Canada by 37%. That growth is bound to put a significant pressure on property prices.