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

constructionphysics.substack.com

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

#331

Post by rightbyte »

tablespoon wrote: post #227
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…

> Quality lumber is incredibly expensive now compared with 1914.... Nearly knot-free, perfectly straight, that stuff would probably be put aside for high-end fine woodworking or even veneer-making, now. It was beautiful stuff and they stuck it under the floors. Could that have been lumber from old growth forests that are now either extinct or protected from logging? IIRC, lumber nowadays is basically farmed using rel…

I don't know if it is true that quality today is worse, but they used way more wood for heating back then. So maybe they picked the nice trees for wood work and lit up the rest.

Trees on plantation are straighter than wild trees.

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

#332

Post by [deleted] »

83 wrote: post #316
daniel-cussen wrote: post #225

Earlier quoted context omitted.

They cost about the same. There's a few differences, like some better tech--also some worse tech, like preferring lasers and CPUs over older cheaper techniques that also work better[1]. There's more regulation too. And wages have swung upward and downward in the intervening time, right now we're barely past the bottom of the cycle[2] of the relationship between leaf-node employee wages and everything else. But the re…

I take it you haven't done any construction with a modern laser level? Have fun hanging level ceiling tile grid with your hose, hauling it around and keeping it filled between sites, making sure those walls are level horizontally AND vertically, and while you could use a hose/string for laying tile it's going to be much quicker and easier with a laser. The only levels where you might have more than a couple buttons a…

[deleted]

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

#333

Post by learc83 »

onlyrealcuzzo wrote: post #287
s1artibartfast wrote: post #100

Earlier quoted context omitted.

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.

The surviving craftsman homes, which weren’t average for the time time due to survivorship bias, are more likely to be built in higher density walkable environments closer to urban cores. Real estate in those areas is more valuable in general.

The average D.R. Horton home is built further out on lower density, less valuable land.

There’s also an element of scarcity here. There’s a subset of people who find older homes appealing specifically because they are older. The supply of older homes can’t increase, but the supply of D.R. Horton homes can and does.

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

#334

Post by davidw »

leoedin wrote: post #290
davidw wrote: post #33

Earlier quoted context omitted.

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…

That's true for Japan as a whole, but Tokyo has grown since 2010.

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

#335

Post by jjav »

ClumsyPilot wrote: post #205
jjav wrote: post #142

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. 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 chan…

> What do you mean it's off the rental market? The house doesn't dissapear.

I mean it's no longer available to renters. If it's no longer affordable to rent out, the alternative is to sell it off to someone who wants to live in it themselves. Of course the house itelf doesn't disappear, but the number of units in the rental market for that town now went down.

That's fine if those who were considering renting that unit are just as happy buying it as a homeowner. But I see many people saying they only want to rent, so for that audience, the rental supply went down.

> 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?

I don't understand this comment. What I'm saying is that if the landlord find that renting out becomes unprofitable, they'll simply get out of that situation by selling it off.

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

#336

Post by JKCalhoun »

mauvehaus wrote: post #328
JKCalhoun wrote: post #319

Earlier quoted context omitted.

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...

Very nice. I wish I had come across that sooner.

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

#337

Post by ClumsyPilot »

jjav wrote: post #335
ClumsyPilot wrote: post #205

Earlier quoted context omitted.

"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 chan…

> What do you mean it's off the rental market? The house doesn't dissapear. I mean it's no longer available to renters. If it's no longer affordable to rent out, the alternative is to sell it off to someone who wants to live in it themselves. Of course the house itelf doesn't disappear, but the number of units in the rental market for that town now went down. That's fine if those who were considering renting that uni…

"I don't understand this comment. What I'm saying is that if the landlord find that renting out becomes unprofitable, they'll simply get out of that situation by selling it off."

So if previously the buyers consisted of 50% landlords, and 50% would-be residents, presumably now there will be fewer landlords buyers and the price will go down. Is the landlord selling at a loss?

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

#338

Post by rmah »

mistrial9 wrote: post #153
throwaway19423 wrote: post #129

Earlier quoted context omitted.

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…

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…

Where is a pound of meat cheaper than a pound of bread?

Either way, no offense, but your economics grad needs to re-take some basic classes. To simplify, input costs only establish a floor on prices. Otherwise, prices are set by dynamic market supply/demand curves.

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

#339

Post by rmah »

ajuc wrote: post #312
throwawaygal7 wrote: post #311

Earlier quoted context omitted.

In the American south, there are a lot of masonry, or concrete homes or even AAC. See florida. In the north masonry homes have a lot of problems with freeze thaw cycles. As far as upgrades , remodeling, overall costs goes stick built homes are superior.

> In the north masonry homes have a lot of problems with freeze thaw cycles That's weird, central Europe has pretty northern climate with cold snowy winters and hot summers and I've never heard about any such problems. I've lived my whole life in such houses. You just need proper insulation (but you need it anyway cause heating is expansive). I think Americans don't much care for good windows for example, at least in…

Single pane windows are not common in the US in anything built in the last 30 years or so (give or take a few decades). Sliding windows are usually 2 or even 3 pane. Movies use single pane candy "glass" windows so characters can be thrown through them.

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

#340

Post by rmah »

Thorrez wrote: post #246
alar44 wrote: post #234

Earlier quoted context omitted.

Because it's a 0 effort renewable resource.

The question is why is the sale price $100. If it's 0 effort, you would think it would be cheaper.

Marx's labor theory of value is wrong.
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