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?

#291

Post by ClumsyPilot » Thu, Feb 17, 2022, 11:59 AM 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.

"Nobody really wants to live in an apartment. People really want to live in their own little hut - as we have done for centuries."

I keep seeing this tryism repeated, but it seems to be a myth - apartment prices aren't very differr than house prices.

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

#292

Post by OJFord » Thu, Feb 17, 2022, 12:00 PM UTC

nemo44x wrote: post #72

dragonwriter wrote: post #45

Earlier quoted context omitted.

> it's much more common for newer homes to have more bathrooms than older builds of similar size which obviously erodes living space. Newer homes also seem to be kitchen heavy, and have larger closets (and also bedrooms), all of which reduces shared (and, but for the bedroom part, total) living space with the same square footage.

Big kitchens with islands and casual dining space add so much value to a home today. People absolutely love making the kitchen a centerpiece room. It can be used for so many things. I think in older homes the thought at the time was that the kitchen was a utility room meant for cooking, food storage and dishes. And that the living room was the center of it all.

My ideal/dream/lottery home would be laid out as though I had a decent sized staff, utilitarian rooms out of sight, clear division between things. I won't turn down the staff if you're offering, but note that's not what I'm saying - I'd just like each room to be efficient/appropriate for how I'm spending my time when I'm there. A functional kitchen that's easy to clean but can be left in a mess while I send the food up in the dumbwaiter, and myself through the baize, to a more 'form over function' dining room. (Functional as a dining room of course.. I just mean that's decorated for comfort etc. rather than being a work area.)

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

#293

Post by rowanajmarshall » Thu, Feb 17, 2022, 12:26 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.

> You can never be the 'true owner' of any land in England. All land is technically owned by the Crown.

Functionally speaking, is that any different to any other comparable country?

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

#294

Post by giantg2 » Thu, Feb 17, 2022, 12:31 PM UTC

pydry wrote: post #279

giantg2 wrote: post #117

Earlier quoted context omitted.

"I dont magic myself a raise because income tax goes up. It works the same for landlords. If supply and demand remains unchanged, prices remain unchanged." What you're missing is that the market floor get universally pushed up. There's no competition from cheaper places because they all increased their rent to cover the new coat so they can still make their same margin. The demand is still there because people still…

>What you're missing is that the market floor get universally pushed up. There's no competition from cheaper places because they all increased their rent to cover the new coat so they can still make their same margin. You're saying that it doesnt matter if supply and demand remains unchanged, rent goes up coz every landlord independently decided that it does?

Not that they decided it does, but generally that they all had to in order to stay profitable. Part of this is due to the othwr commenter's suggested goal that the rise in rates be significant enough to demotivate rich people.

Here is some research on commercial properties, which would in theory be more competitive than residential. It shows that 80-90% of any tax increase is covered by an increase in rent. https://mitcre.mit.edu/news/blog/can-landlords-really-pass-h...

And of course many landlord resources say to just build it in.

"The best way to protect yourself from taking a hit is to plan ahead. Plan for a tax increase every single year and adjust your rents accordingly. Build the tax increase into your rent and allow for future rent increases. A planned annual rent increase will allow you to stay ahead of tax increases instead of being caught off guard and behind."

https://commonsenselandlording.com/property-taxes-rental-pro...

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

#295

Post by giantg2 » Thu, Feb 17, 2022, 12:35 PM UTC

lurgburg wrote: post #219

majormajor wrote: post #189

Earlier quoted context omitted.

The last few cities I've lived in have seen 10+ straight years of rent increases (with a brief drop then rapid spike again from COVID) so... they do already do this?

Writing in the context of preceding comment. Landlords increase prices as much as they're able, they don't decline to increase when they could to maintain some fixed margin. I'm not saying they're generally unable to rise prices in general, but that they have no special additional capacity to raise prices in response to land taxes.

"but that they have no special additional capacity to raise prices in response to land taxes."

How so? If all landlords now have a significant new cost, why would they not raise rent to cover it?

This seems to say they cover 80-90% of tax increases through rent increases. And commercial properties should be more competitive.

https://mitcre.mit.edu/news/blog/can-landlords-really-pass-h...

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

#296

Post by kwhitefoot » Thu, Feb 17, 2022, 12:39 PM UTC

jiggawatts wrote: post #232

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…

A detail I liked in the Blade Runner 2049 movie was the office of the Wallace Corporation CEO -- every surface was covered in wood. Right after seeing that movie I visited an old house where everything is wood. Huge wood cabinets, wood floors, wood ceiling, etc... I suddenly realised that I can't afford wood furniture any more! The IKEA stuff I buy these days is made of "manufactured" materials that are "wood-like",…

Why would anyone want solid pine? Furniture has been made of veneered wood for a very long time. It has been popular since the late 17th century, long before IKEA.

IKEA do have some solid pine (furu). Here is one https://www.ikea.com/no/no/p/rast-kommode-med-3-skuffer-furu...

It didn't take long to find it in their catalogue.

Anyway, IKEA is not the only company selling furniture.

You are correct that most solid woods are expensive (not pine usually though) but that is at least in part simply due to high demand for such furniture and the lack of supply of the raw materials.

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

#297

Post by kwhitefoot » Thu, Feb 17, 2022, 12:41 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…

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

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

#298

Post by giantg2 » Thu, Feb 17, 2022, 12:45 PM UTC

lurgburg wrote: post #222

giantg2 wrote: post #167

Earlier quoted context omitted.

Because of competition. They can't all conspire together to price fix (or if they do they could be arrested).

Writing in context of preceding comment, which seemed to be predicated on them having a special capacity to raise prices in response to land taxes. I did wonder briefly if a land tax might decrease competition => higher prices, but then I recalled that the supply of land is fixed.

If it's s limited resource which people require (shelters), the price (rent) will be quite elastic. There will still be competition if the taxes go up. Competition is what prevents the price from rising unnecessary. The floor for all the competitors went up because taxes went up and they all want to stay profitable. They aren't going to take loss, so they raise rent to cover it. Buying won't look very attractive either because the tax increase raises those costs, and if it's as significant as they other poster wanted (to affect rich people) then it will likely exceed the $10k SALT deduction limit.

This SALT deduction is part of how they penalize landlords already, which is just passed on in the rent payments. This is part of the reason renting is more expensive than buying (comparing just monthly payments), in addition to management fees, profit, and repair/renovation reserves.

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

#299

Post by giantg2 » Thu, Feb 17, 2022, 12:54 PM UTC

ClumsyPilot wrote: post #177

giantg2 wrote: post #169

Earlier quoted context omitted.

And how do you set that if excluding the type of property that's on it?

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

So I could build a mansion or a small house and pay the same, just because I'm paying for the zoning. And of course zoning could change and much of it can also have dual use. This complicates the calculation and can lead to surprises.

It seems current actual land usage through property tax better accounts for the way the land is being used, is more stable, less arbitrary, and implicitly complies with the existing zoning.

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

#300

Post by giantg2 » Thu, Feb 17, 2022, 1:01 PM UTC

bumby wrote: post #178

giantg2 wrote: post #175

Earlier quoted context omitted.

Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). T…

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 state funding with 5% local.