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?

#321

Post by cplusplusfellow » Thu, Feb 17, 2022, 4:31 PM UTC

88840-8855 wrote: post #56

I agree with the tone in the comments here - and the article. It is the land prices that drive prices. My income here in Germany is alright, according to statistics I am in the top 20% with my monthly income. Unfortunately, I will not be able to buy a decent apartment in the city to start a family if my gf/wife is not also in the top 20%, we get some support from parents and agree to pay off the debt for the next 35…

You're basically describing a policy whereby no new homes would be developed. Who builds new houses for the extra people we acquire every year?

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

#322

Post by bick_nyers » Thu, Feb 17, 2022, 4:46 PM UTC

joe_the_user wrote: post #213

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.

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 . Lots of people want to build 900 sqft homes. It's just that with land costing 100s of ks and utility hookups etc at 100k, it make no sense to build a 900 sqft house. Basically, areas with high house prices have created a situation building a little house o…

100% agree. Beyond that too, it is very difficult (relative to FHA or even Conventional mortgage) to get approved for a construction loan, and in a lot of cases you have to close on your loan twice, the extra fees and higher interest rates eating into your potential savings. There's also no way you're going to get that loan without a general contractor overseeing the entire operation, who will take 20% off the top alone, which don't get me wrong, is fair if you need it. If you want to do anything DIY to save cash and hire inspectors to catch your mistakes + professionals to do risky/difficult stuff (electric, plumbing, HVAC), you can't do it with the bank's money.

Also, it is pretty common for county codes to require each home to be a minimum 1000 sqft (at least in FL and MI). Even if we don't want to allow tiny homes of sub-500 sqft to gasp potentially lower the value of my home by giving someone else a place to live, the 700-900 sqft range is still very nice for a lot of people.

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

#323

Post by bumby » Thu, Feb 17, 2022, 4:47 PM UTC

giantg2 wrote: post #300

bumby wrote: post #178

Earlier quoted context omitted.

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.

I think it would be a mix in my view. Most of that should be income taxes at the state level, but still allow for some smaller percentage income tax to be collected at the local level. This should provide a higher base level of per student funding across the state, but still allow local municipalities to collect a smaller amount of funds that wouldn't have state restrictions on them. Maybe something like 95% fed and…

It sounds plausible if we could get around the PR issue of any raise in state income taxes being viewed as an evil. (I do think this would cause the need for higher state taxes, considering how many state and local municipalities struggle to fund education programs through general funds).

It reminds me a bit of the universal healthcare push. It seems very hard to convince people that, yes, their income tax levels may go up, but their overall costs will go down.

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

#324

Post by bumby » Thu, Feb 17, 2022, 4:50 PM UTC

giantg2 wrote: post #116

bumby wrote: post #70

Earlier quoted context omitted.

Sure, I was going to mention the tradeoff with the inefficiency but left it out for brevity. I will say, though, that the same inefficiency in those geographic areas exist when building multistoried buildings. A ranch is much easier to cool in west texas/new mexico/arizona than a multistory building where the bedrooms and living areas need to be cooled. I've notice the construction style also mitigates this somewhat.…

There are a lot of articles that go through the issues in detail. The main points they list are that in that climate heating is less of a concern and so inefficient resistant heating is common. Then the grid itself didn't winterize, which lead to some plants not staying up and the others not being able to cover the spike in demand with a reduction in generation capacity.

That's kinda what I'm getting at. The root cause of the failure was not winterizing the plants and infrastructure, not really about residential construction design.

The resistance heating failed due to the grid design, not the other way around. Having more electrical demand would have not been much of an issue, I presume, had the grid been more resilient. Conversely, less resistance heating would not have magically made the grid more resilient.

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

#325

Post by mistrial9 » Thu, Feb 17, 2022, 4:51 PM UTC

AlanSE wrote: post #223

mistrial9 wrote: post #153

Earlier quoted context omitted.

my un-schooled guess is simple - the rest of the industrialized world has benefited from profit markups in real dollars of today - that fun book or skateboard was priced in modern terms.. while lumber is a commodity from the previous century or three.. their dollars and costs were low to start with, and were pressed down by commodity markets. I once asked a recent undergrad in Economics graduate, at a party, why one…

Bread doesn't seem like the best example here, because the finished product is not dense, can't be smushed, and has to get shipped to the store. Transport plus the shelf space (and rotation) can explain most of the price. If you look at pure flour, rice, beans, pasta, and stuff like that, there are lots of cases where it drops from prepared-foods price down to something closer to its commodity value. Looking up rice,…

as a consumer, I will walk to the corner store here in the California city, and I will check the price of a loaf of ordinary bread, and the price of a pound of ordinary meat, again today or tomorrow. Not "the cheapest rice by the ten pound bag" .. or "chicken parts whole in a ten pound bag" I believe my point stands.. yes, there are layers in the consumer markets.. times one hundred for a fast food meal, too.

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

#326

Post by plasticchris » Thu, Feb 17, 2022, 5:19 PM UTC

kube-system wrote: post #188

plasticchris wrote: post #123

Earlier quoted context omitted.

Have you checked on the prices for prefab homes? Even in the Midwest 40k won’t even get you the cheapest ones unless you go with something like a used mobile home.

Yes, I checked before I posted the comment, and I found many around the 62,000 range with delivery ($40k+22k is cited in the parent).

Ah, they said 40k with labor. Even so, 62k would be difficult to find in my experience. Where are you looking? I’m curious where the price is so low.

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

#327

Post by giantg2 » Thu, Feb 17, 2022, 5:35 PM UTC

mrep wrote: post #267

ClumsyPilot wrote: post #177

Earlier quoted context omitted.

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

Without reforming zoning, it is largely useless. Sure it might cause some improvements in places underutilizing their land but I think most places are using their land for the highest value thing it is zoned for. If I have a SFH zoned for SFH in the heart of manhattan next to skyscrapers, the value of the land isn't based on the skyscrapers, it is based on what you can put on it and you can prove that by selling it f…

"underutilizing their land but I think most places are using their land for the highest value thing it is zoned for."

In urban or higher density suburban areas, I think you're mostly right. But in lower density areas, a lot of the land is multi purpose or has few restrictions. So technically, you could build apartments or homes on land that is used as agriculture. However, there might not be demand for it in that area. Essentially, the tax-by-zoning works well in the situations where zoning is restrictive and demand is high. But in low density areas where the actual use is not well defined with a single zoning use, the value would be potentially arbitrary or inaccurate (making property tax a better measure of value).

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

#328

Post by mauvehaus » Thu, Feb 17, 2022, 6:43 PM UTC

JKCalhoun wrote: post #319

mauvehaus wrote: post #305

Earlier quoted context omitted.

The risk of doing that is that you might start with a straight 2x12 and end with three crooked 2x4's. Wood can have a fair amount of internal stress in it, and cutting it can release it in ways that cause your boards to warp, twist, or bend.

I did the above to create a nice workbench with few knots. It helped of course that the lumber I ripped was glued up to make the butcher-block-style top, the uprights and cross braces also doubled, tripled up.

The Anarchist's Workbench?

(Freely available to download for anybody who's curious)

https://lostartpress.com/collections/books/products/the-anar...

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

#329

Post by com2kid » Thu, Feb 17, 2022, 6:58 PM UTC

neilwilson wrote: post #253

ClumsyPilot wrote: post #179

Earlier quoted context omitted.

"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…

Nobody really wants to live in an apartment. People really want to live in their own little hut - as we have done for centuries. "in Uk you can't even be a true owner " You can never be the 'true owner' of any land in England. All land is technically owned by the Crown. You can only ever hold an interest in land in England - a freehold being the best you can get, and even those are littered with covenants these days.

If my previous town home had 1 more bedroom I would have stayed there and not moved.

The shared green space / yard is much larger than the one I have in the house I bought. Having an HOA take care of all maintenance and yard work is amazing.

At their best, condos and townhomes can be better than single family houses, but sadly most development isn't "at its best".

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

#330

Post by rm445 » Thu, Feb 17, 2022, 7:07 PM UTC

driverdan wrote: post #308

kwhitefoot wrote: post #297

Earlier quoted context omitted.

900 square feet is pretty close the the average size of a family home in the UK.

How many new houses are built to that size though? The UK has a lot of very old housing stock.

Quite a few, though it may have crept up slightly - one link I found said the Uk average new builds size 2002-2012 was more like 1030 sq ft.

UK new build houses (as a type - of course there's lots of variety) are a strange breed. Small and crammed into tiny lots though cleverly designed to make the most of a small space. Energy-efficient but shoddily constructed. The cheapest premium-looking materials (i.e. brick). Generally nice enough to live in but a bit depressing.