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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?

#251

Post by mdturnerphys »

wincy wrote: post #244
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…

This reminded me of the fact that the US Navy maintains a forest of trees that are of appropriate size to keep planks for the USS Constitution, the last remaining wooden US Navy vessel. https://taskandpurpose.com/mandatory-fun/constitution-grove-...

Sweden planted 300,000 oak trees on a particular island in the 1830s, after the Napoleonic wars, to provide lumber for future naval ships. It takes the trees about 150 years to reach a suitable size, so they were well obsolete for their intended purpose before they were ready.

https://www.atlasobscura.com/places/visingso-oak-forest

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

#252

Post by moistly »

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.

The better mills have amazing automation. Penetrating scan of the log and then laser-guided slicing and dicing to maximize wood usage and profitability.

Now if only the lumber were properly dried instead of shipped slopping wet. (Actually, I suspect the kiln-dried lumber is destined for wealthy foreign markets; we locals get the c-grade crap. I have spent literally more than an hour picking through stacks to find enough good lumber to build a shed.)

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

#253

Post by neilwilson »

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…

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.

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

#254

Post by selestify »

bobthepanda wrote: post #236
joe_the_user wrote: post #213

Earlier quoted context omitted.

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…

Also, with min lot sizes a 900 sq ft house doesn't quite pencil out at today's land prices. Most jurisdictions would not let you buy a 900 sq ft plot of land, for example, because the size would be too small.

Why do those jurisdictions create min lot sizes in the first place? Surely there's a reason other than maintaining housing prices.

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

#255

Post by nly »

Terry_Roll wrote: post #247
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…

>It makes me wonder .. if the US shutdown Canadian wood imports, would that significantly lower prices for Canadian consumers? How low would it go? It probably wouldnt go low because you are not recognising global demand and a growing global population, cost of automation for factory (automated built) furniture, bespoke furniture by individual or small teams of carpenters, cost of transporting wood to other countries…

> the furniture isnt that big, its suited to smaller homes

To be fair, pretty much anything built after 1960 is small, and all UK housing is small by American standards.

I also don't think most people in the UK consider OakFurnitureLand a cheap, or even an affordable place to buy furniture. Despite being made of cheap internationally sourced oak, and somewhat mediocre, it's definitely a premium brand. If you were to buy all your furniture there many people would consider you well off.

Spot on with the reality of their finance business though

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

#256

Post by taffronaut »

Terry_Roll wrote: post #247
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…

>It makes me wonder .. if the US shutdown Canadian wood imports, would that significantly lower prices for Canadian consumers? How low would it go? It probably wouldnt go low because you are not recognising global demand and a growing global population, cost of automation for factory (automated built) furniture, bespoke furniture by individual or small teams of carpenters, cost of transporting wood to other countries…

I spent quite a lot of time in https://www.oakfurnitureland.co.uk/ returns outlet picking through stuff. I furnished most of a house from there. The furniture is made in places like Thailand, and woods like mango are used as well as 'oak'. They must make reasonable margins even with the normal prices they charge. I'm sure they also benefit at least on their lower tier of credit plus upsells on insurance etc. I didn't encounter any of that as the outlet was strictly cash.

Even the carcasses use solid wood. Some of the returned furniture had cracks in interior wooden boards where a composite like ply/chip/MDF would not have cracked. I guess solid wood is lighter, part of their brand and they have less diversity of material sourcing. It must pay off, even with slightly higher returns.

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

#257

Post by bobthepanda »

selestify wrote: post #254
bobthepanda wrote: post #236

Earlier quoted context omitted.

Also, with min lot sizes a 900 sq ft house doesn't quite pencil out at today's land prices. Most jurisdictions would not let you buy a 900 sq ft plot of land, for example, because the size would be too small.

Why do those jurisdictions create min lot sizes in the first place? Surely there's a reason other than maintaining housing prices.

putting a floor on house prices is a bit of the point, to prevent "the wrong kind of people" from "destroying the neighborhood character"

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

#258

Post by bobthepanda »

ggm wrote: post #138
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.

There is a cultural aspect as well. I am told Japanese home owners dislike buying secondhand, if they have the option to knockdown and rebuild.

this is partially because of the earthquake codes.

a major earthquake tends to happen once every generation, and building codes tend to get updated after them. If you buy a house not compliant with the current rules it is more likely to kill you; most damage in the 1995 Hanshin earthquake, for example, occurred to buildings predating the 1981 building code.

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

#259

Post by mrep »

giantg2 wrote: post #101
pydry wrote: post #65

Earlier quoted context omitted.

>Otherwise that tax will end up increasing a resident's rent/mortgage It would do nothing to rents or mortgages intrinsically but it would cause property prices to fall and it could add to the tax burden of regular property owners depending on how it were implemented (i.e. if the tax free threshold were set too low). >that still wouldn't be much of a disincentive to the wealthy It would be a massive disincentive to t…

"It would do nothing to rents or mortgages intrinsically" Most people have their property taxes escrowed with their mortgage payments. Taxes can easily account for 25% of one's monthly payments. As for rent, the property owners just pass the cost on to the tenants by increasing rent. So property taxes are related to rent and mortgage payments. Even if not included directly in the mortgage payment, it affects how much…

I wish I was at 25%, mines at 38%!

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

#260

Post by _uy6i »

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.

Compliance with building codes higher quality

I grew up in a small farm house built in the 1700’s - post and beam construction, that will far outlast “code compliant” building methods of today

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