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

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

#121

Post by clpm4j »

arcticbull wrote: post #81
nicoburns wrote: post #35

Earlier quoted context omitted.

No, and for good reason: if everything is high-rises then housing becomes too dense. The problem isn't lack of housing density. The problem is too many people wanting to live in a small area. We need to reduce demand (by spreading over a wider area - more cities and rural areas too) rather than increase supply.

I dont think there's any justification for this position, really. Density in Macau is 20,000 people per square kilometer. Parts of the NY/NJ metro area like Guttenberg are 22,000. San Francisco is 6,600. Hong Kong is 6,300. London is 5,700. There is a ton of room to increase density before we start reducing demand.

High density is not desirable to affluent families when the alternative could be a 3,000sqft single family home with a sizeable backyard in San Francisco, and these people tend to make the rules.

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

#122

Post by chillacy »

OnionBlender wrote: post #52
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-…

The Expanse briefly mentions this in one of the books. Earth has universal "basic" income but if people want to go to university they have to do 2 years of working less desirable jobs to show they can handle working. I heard that Starship Troopers book had something like what you described but I haven't read it.

Nit: Basic in the expanse is not actually basic income, it's more like basic services: https://twitter.com/jamessacorey/status/902940152007462912

(Tweet from the author)

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

#123

Post by plasticchris »

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.

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.

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

#124

Post by anonAndOn »

kube-system wrote: post #96
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.

There's a lot of ways that the standards have changed, it's not just one dimension. Complexity and feature set are probably the biggest. New construction single-family homes today are more likely to be customized, not kits, have way more features and way better mechanicals. That 1914 house had no kitchen appliances, no laundry appliances, no driveway, no garage, no insulation, no central HVAC, etc.

No kidding. Brick foundation, exterior plumbing, knob and tube wiring with 1 electrical outlet and 1 ceiling light bulb per room, zero insulation, single pane glass windows, dirt driveway... all features of my "charming, historically accurate" previous residence.

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

#125

Post by mikem170 »

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.

This is true, zoning in Japan [0] makes a lot of sense. Instead of single family homes they allow triplexes, even a percentage of space dedicated to a low-impact business (like hair stylist, etc). They have setback rules so that you can't put second/third floor up against your neighbors property line blocking the sun all day. They dedicate nearby spaces for commercial and hi-rise buildings, making it possible to live near where you work. And there is dedicated space for factories and other industrial buildings.

Single-use single family zoning is being eliminated in some areas of the U.S., allowing accessory dwelling units to be built, etc. Even California just passed a low changed R1 to R3 for all cities in the state (pending court cases, I assume).

[0] https://www.youtube.com/watch?v=wfm2xCKOCNk

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

#126

Post by mint2 »

bumby wrote: post #39
mint2 wrote: post #6

Earlier quoted context omitted.

Can we be more precise in language on what “new housing” means. More urban sprawl versus densification both are “new housing” but very different. I’m pro densification but highly against sprawl.

> I’m pro densification but highly against sprawl. My natural inclination is to agree with this statement, but I'd like to hear your rationale. Can you elaborate on your preference? Is it location dependent?

For starters When has sprawl not caused a reliance on cars? Eaten up large tracts of natural land with cookie cutter homes, pavement, and non-native office park type landscaping? Encouraged McMansions over appropriately sized homes with all the extra energy consumption etc those require? That’s just getting started.

It’s not location dependent. Phoenix and Vegas or wherever are doing themselves no favors by building out rather than up.

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

#127

Post by brimble »

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.

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 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. The ones around the walls must have been something like 8"x14" or bigger, and tens of feet long. Nearly-flawless pieces of lumber. I assume the wood used in the wall framing (some pieces likely three stories long—it was a balloon-construction house) was similarly astoundingly-good by modern standards.

That stuff was, evidently, so cheap from the perspective of people in the 1910s, that they didn't think it worth any amount of effort to sub in worse wood for places where looks didn't matter. These days, some of that would be hard to find at any price, short of salvaging it from old buildings like that. And that's the "crap" they put under the nice wood they used for finishing!

OTOH we do have drywall, which has got to be cheaper in pretty much every way than lathe-and-plaster.

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

#128

Post by throwawaylinux »

rr808 wrote: post #97
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…

Yes its interesting example, but 1914 Sears house didn't have electricity, or hot water (was an extra), no shower, I'm guessing its single glazed and lightly insulated. Certainly I think most modern houses are too luxurious with marble and complicated accessories that aren't really needed.

Are most modern houses really too luxurious where you're from?

What I see is that they have pretty poor build quality when you look closely, and are thrown together as cheaply as possible, and are not designed all that well. Where I am, "marble" would be engineered stone (which I don't have a problem with it's functional and looks okay), but many new kitchens (and bathrooms) aren't well designed for the space they take up and come with flimsy gimmicky fittings and appliances.

Where modern houses go overboard (in my opinion) is optimizing floor area per dollar and making them very large and lowering quality. Although that's also a response to buyer preferences, people like having very big houses and don't care too much about the design, the details, or efficiency.

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

#129

Post by throwaway19423 »

brimble wrote: post #127
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.

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 Canadian wood imports, would that significantly lower prices for Canadian consumers? How low would it go?

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

#130

Post by zizee »

brimble wrote: post #127
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.

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'm really curious to know why, in our hyper-industrialized world of today, is lumber so expensive when compared to yesteryear? Is it cost of land on which it grows? Is it increased demand because of population growth? Increased demand because of new uses? Increased demand because of global markets? Is it because lumbar prices were artificially depressed because the cost of growing new trees was not included (because people were just cutting down what was already there). Maybe it is because land/housing prices have gone up so much, people are just willing to spend more as it is a relative small percentage of the total cost of housing?
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