4 ms·

So the ratio of median home prices to median family income has moved from about 3 to about 4.5 over the last 50 years. This is because the many manufactured th

by cjg 8y ago

So the ratio of median home prices to median family income has moved from about 3 to about 4.5 over the last 50 years. This is because the many manufactured things have dropped in price over that period of time. This has meant that families have more money available to spend on things that are not manufactured. Land is the epitome of something that cannot be manufactured, so goes up in value. Here's an article on Baumol's cost disease which explains this: https://www.vox.com/new-money/2017/5/4/15547364/baumol-cost-disease-explained https://www.vox.com/new-money/2017/5/4/15547364/baumol-cost-...

meritt 8y ago
> Land is the epitome of something that cannot be manufactured, so goes up in value. Lot sizes have gotten significantly smaller over the past 50 years. The difference is probably closer to 3 vs 20 if you include the amount of land purchased. There's $800,000 homes in my neighborhood on 4,000 sqft lots.
- rubidium 8y ago
  Have any data on this? I'm skeptical.
  - meritt 8y ago
    Zillow has published some work on it -- https://www.zillow.com/blog/bigger-homes-smaller-lots-184558/ https://www.zillow.com/blog/bigger-homes-smaller-lots-184558... but it doesn't go back very far. -10% since 2000.
  - ams6110 8y ago
    I agree. Where I live there are two types of homes being built: Dense condo developments, or huge houses on large lots (1 acre+). Nobody is building the 1950s/1960s subdivision style 3-bedroom ranch on a quarter acre lot, and I don't really see many larger homes on small lots. Anecdotal to be sure, however.
  - deleted 8y ago
    [deleted]
rayiner 8y ago
Also median homes have nearly doubled in size.
- bluthru 8y ago
  Yes but there are a lot of variables to consider there. Most homes today are just drywall, OSB, and carpet when in the past they were lath and plaster, wood planks, and wood flooring. On the other hand people today also pay for AC, more plumbing, and better insulation. Homes built within the past ~40 years also don't last as long as they used to.
dmichulke 8y ago
How about cell phones and computers? Robots? The Internet? Surely their cost decreased but that didn't mean people spend less, no they spend MORE today on those things than 50 years before.
conanbatt 8y ago
Ownership of land is not labor intensive, its not Baumol's cost disease. The U.S. has had two decades of intense real estate price manipulation, first with credit pre-2008 and then with low interest rates post 2008. And then there is a global situation with china pushing up global demand.
Symmetry 8y ago
There was a study I saw a few years ago on a large number of lots in the New York suburbs that tried to tease out how much of the cost of a house was the value of the land and how much was regulatory. They looked at the prices of lots with dilapidated houses that needed to be rebuilt but which could be rebuilt as of right by the new owner. And they compared them to the price of empty lots where you would need to get regulatory approval to build a house where none had existed before. They found that lots that come with the right to build cost several times what other empty lots cost.

by cjg 8y ago

meritt 8y ago

> Land is the epitome of something that cannot be manufactured, so goes up in value. Lot sizes have gotten significantly smaller over the past 50 years. The difference is probably closer to 3 vs 20 if you include the amount of land purchased. There's $800,000 homes in my neighborhood on 4,000 sqft lots.

rubidium 8y ago
Have any data on this? I'm skeptical.
- meritt 8y ago
  Zillow has published some work on it -- https://www.zillow.com/blog/bigger-homes-smaller-lots-184558/ https://www.zillow.com/blog/bigger-homes-smaller-lots-184558... but it doesn't go back very far. -10% since 2000.
- ams6110 8y ago
  I agree. Where I live there are two types of homes being built: Dense condo developments, or huge houses on large lots (1 acre+). Nobody is building the 1950s/1960s subdivision style 3-bedroom ranch on a quarter acre lot, and I don't really see many larger homes on small lots. Anecdotal to be sure, however.
- deleted 8y ago
  [deleted]

rayiner 8y ago

Also median homes have nearly doubled in size.

bluthru 8y ago
Yes but there are a lot of variables to consider there. Most homes today are just drywall, OSB, and carpet when in the past they were lath and plaster, wood planks, and wood flooring. On the other hand people today also pay for AC, more plumbing, and better insulation. Homes built within the past ~40 years also don't last as long as they used to.

dmichulke 8y ago

How about cell phones and computers? Robots? The Internet? Surely their cost decreased but that didn't mean people spend less, no they spend MORE today on those things than 50 years before.

conanbatt 8y ago

Ownership of land is not labor intensive, its not Baumol's cost disease. The U.S. has had two decades of intense real estate price manipulation, first with credit pre-2008 and then with low interest rates post 2008. And then there is a global situation with china pushing up global demand.

Symmetry 8y ago

There was a study I saw a few years ago on a large number of lots in the New York suburbs that tried to tease out how much of the cost of a house was the value of the land and how much was regulatory. They looked at the prices of lots with dilapidated houses that needed to be rebuilt but which could be rebuilt as of right by the new owner. And they compared them to the price of empty lots where you would need to get regulatory approval to build a house where none had existed before. They found that lots that come with the right to build cost several times what other empty lots cost.