6 ms·

It doesn't even seem like anyone has interest in building $200,000 houses anymore, but they will sell you a poorly made condo for $400,000 and $600/mo HOA fees.

It doesn't even seem like anyone has interest in building $200,000 houses anymore, but they will sell you a poorly made condo for $400,000 and $600/mo HOA fees. I am a single person trying to find a house that is not four or five bedrooms (I only need one or two) and doesn't cost 1/2 mil minimum and it's difficult. This used to be called "the starter house" but it doesn't seem to exist anymore with new construction.

TheLoneAdmin 8y ago
The biggest cost in any metro area is land. There are few empty lots left to build on, and those go for a premium. Not going to give any specific listing publicity, but "$350,000 USD for 0.047 acres empty lot" is common in the residential parts of Atlanta. We recently paid $25M for 8 acres with abandoned warehouses on them, to build condos on. We're still looking at $100k land costs per condo. Go out two counties and a 1.5 hour commute, and land is only $5k/acre. Plenty of $200k starter homes in that area. No one wants to move out there though. Disclaimer - I work in the residential construction business
- zymhan 8y ago
  Why, why didn't I just go into a ton of debt right after college and buy a house in Atlanta...
- tmaly 8y ago
  zoning laws do not help either. If you're in an area that requires a min 2 acre lot while your grandfathered neighbors have house on 1/4 acre, that surely does not help the price.
mayukh 8y ago
Where is this ?
abakker 8y ago
Regulatory burden - building code, permitting, etc make it relatively better and less risky to build bigger, nice homes. It gives you padding if it takes a while to sell, has extra change order, or gets stuck in permit/planning and zoning limbo for a year. If the margins are paper thin, the risk is too large, so the only way to mitigate that risk is to make more expensive homes so that even if things go terribly wrong you can still pay your costs and your employees and make some profit.
- peteey 8y ago
  and impact fees
- Gibbon1 8y ago
  Offhand thought. Building costs in urban area's are stuck in a high cost 'peak'. Everything is expensive which makes construction expensive. My experience renting some warehouse space in SF. One building three units. Used to be occupied by three roofing companies. And some meth heads living in the old offices. One of the roofing companies bought it, kicked out one of the other roofing companies and the methheads and rented to us. Change of ownership and new owner kicked out another roofing company. And rented out to a pot grow. Fast forward 5 years we got kicked out along with the remaining roofers and all three units are now growing pot. So went from three roofing companies circa 1998 to three pot grows circa 2012. My feeling is stuff like this is happening in every urban area in the US. Which means your roofer is either paying very high rents or commuting in from 2-3 hours away. Really easy for me to see that driving costs up by 100%. That's born out by what my insurance agent says. Rebuilding costs in SF are $600-1000 sqft. Get out to Vallejo drops to $300-500 sqft. Other thought as well is that typically you get better margin on luxury goods than basic ones. because it's easier to slip more profit into high cost goods, like granite countertops vs laminate. Prices double, your margin doubles but your expenses only go up 50%. So as long as the luxo market isn't tapped out that will be serviced at the expense of basic goods.
  - abakker 8y ago
    It's a good thought. And contractors are virtually all commuters. There's a lot more driving than in most professions I can think of. In cities with awful traffic, going and buying more screws or plywood might be a day-ending problem. you might wait extra hours for deliveries, too. All in all, frictional losses/expenses building in a city are probably very high in aggregate. The few builders I know sure seems to spend a long time waiting. Meanwhile, when I lived in CT, a round trip to the hardware store usually took about 30 minutes max. I wonder if/when those frictional losses/problems building in dense cities actually balance out with the gains in reduced commutes and greater efficiency of urban life once those buildings are occupied.
driverdan 8y ago
You must be referring to a major city. Sub $200k houses are the norm for most of the USA.
- eeeeeeeeeeeee 8y ago
  Denver Colorado, so, yes, plus our housing increases over the past few years seem to be a bit more insane than other metro areas (looks like it might be slowing this year). I'm really kicking myself for not buying when I moved here. The area I came from was somewhat depressed on the east coast, but I could have easily picked up a neat row home there for ~$100k-$150k. Overall, I'm struggling to justify paying 2x or 2.5x for a home here over just moving somewhere much cheaper and sticking to remote work / consulting where I can find it. There is a lot that I like about city living (being able to walk everywhere), but I'm having a harder time justifying the cost of it now. And the job market is pretty solid around Colorado right now.
- theandrewbailey 8y ago
  +1. I'm closing on a house soon. 1000 square feet for less than $150,000, in the South Hills area of Pittsburgh.
ams6110 8y ago
So many reasons for this, but it boils down to the marginal cost on building a 4-5 BR vs. a 2 BR house is small compared to the profit upside. If you want a 2 BR, you need to look in old neighborhoods or buy a condo.
- eeeeeeeeeeeee 8y ago
  I understand the economic reality, but it’s somewhat depressing how it seems like we think only in these terms now — what will maximize financial returns. The investment part supersedes the original purpose, which is to have a place to live.
52-6F-62 8y ago
I've been wondering as well! The suburbs are filled with 4-5 bedroom McMansions— smaller 2-3 bedroom homes are hardly being built at all (except in the form of a townhouse, maybe). So one can't even just "move to the 'burbs" to save money instead of living right in town. It's all the same price.
- eeeeeeeeeeeee 8y ago
  Yep, even the houses I've looked at in the suburbs here are all enormous. This seems odd to me considering how people are having fewer kids these days anyway. Plus I really hate the look of the "sea of suburbia" with big box houses that have enormous garages that take up 2/3rd of the front of the house, looks ugly. So you basically need to find a mid-sized city with houses from the mid-late 20th century when sizes were more reasonable.
- atombender 8y ago
  I'm so confused about why America is so reactionary when it comes to architecture, and to design in general. I've been browsing Zillow and Redfin lately, trying to plan a few years into the future, and the architectural landscape is just horrific. My ideal is a modern, minimalist, fairly flat-roofed 1- or 2-story (think Rummer [1], Gropius, Eichler, the Eames case study house, Mies van der Rohe's Farnsworth house, etc.). I wouldn't mind oodles of raw concrete and exposed steel. Nothing ostentatious or expensive, mind you; just good design and modern materials. I'm not that hopeful that anything close to this style appears in the areas I'm looking or in the price range. Instead, what you get are column-infested McMansions or hideously old-fashioned shingle monstrosities. The average home in the US seems to look like this [2]. The kitchen is always dark and brown. Random hideous reactionary baubles from Colonial Revival architecture abound. Beveled wood paneling is everywhere. Now and then a rare (very rare) mid-century modern house come up that might be within my price range, but of course it doesn't have modern insulation, electrics, heating, moisture barriers, air flow, etc., so what you've got is a beautiful but cold, damp, technologically outdated and energy-inefficient box. Ultimately, it seems good, modern design in the US is for rich people, which makes me sad. [1] https://www.curbed.com/2018/8/27/17773540/midcentury-home-tour-portland-oregon-robert-rummer https://www.curbed.com/2018/8/27/17773540/midcentury-home-to... [2] https://www.redfin.com/NY/Orchard-Park/30-Knoche-Way-14127/home/112987150 https://www.redfin.com/NY/Orchard-Park/30-Knoche-Way-14127/h...
kbenson 8y ago
> It doesn't even seem like anyone has interest in building $200,000 houses anymore From a bit of online searching, I imagine it's between 0.75 and 1.25 man hours per square foot of house to build in labor costs (that number may differ depending on size of team/expertise, I imagine).[1][2] Depending on average pay rate for building involved, which varies widely based on area and cost of living, you might be looking at $50k to $100k in labor costs. That's before land cost, materials, permitting, power/sewer hookups, etc. > but they will sell you a poorly made condo for $400,000 and $600/mo HOA fees. In some places the lot cost is $200k, or more. It's hard to build a $200k house when your margin is negative before you've started building. And in places where the lot cost is more like $100k, do you want to build a $300k house with low margin, or do you want to build a $400k-$600k house or condo with much higher margin? The problem perpetuates itself, as high density and high housing costs lead to high land cost, which leads to maximizing profit for area strategies that say to build higher end houses. One of the solutions to this is to be willing to live in higher density housing, such as a condo. This lets building still target high margin while providing somewhat cheaper housing. Or build up, into more multi-story complexes. But people want homes with yards, which is why this is a discussion about how nobody can find a $200k house (you can, just not in the more populated areas), and not a discussion about "how to achieve housing cheaply". 1: https://www.contractortalk.com/f16/avg-man-hours-build-1800sf-home-12127/ https://www.contractortalk.com/f16/avg-man-hours-build-1800s... 2: https://diy.stackexchange.com/questions/77299/how-many-man-hours-to-build-a-small-house https://diy.stackexchange.com/questions/77299/how-many-man-h...
MrLeap 8y ago
I decided to take a break from society last year. I'm fortunate enough where I am that it's eminently reasonable to do. I found some Mennonites that build small 14 * 28 foot cabins with two sleeping lofts. It costs about 8k, and that includes delivery to your land. They come with the exterior/roof finished, but the interior is up to you. Your personal asceticism modulates the cost. My shower is actuated by a ball valve. I set the temperature at the inline gas water heater to perfection, so I don't need hot and cold! I was surprised to learn how cheap the insulation, carpet, sheetrock, mud and paint were. Rural land here is about 2k per acre. Many plots already have wells dug, but if not It'll cost about 4-6k to get one drilled, and 500-1000$ for a well pump. Septic tanks are a few grand. A trenching shovel is cheaper, but that option depends on the topology of your land and your heart. I get my electricity from solar. If you do that, you need some panels, an inverter, charge controller and batteries. My system is pretty modest. 10 deep cycle batteries. I've lost track of how many panels we've got. Most of them we soldered the cells together so it kind of all blurs together. The whole of it probably cost about 1700$. It's enough to run our super efficient 12 volt fridge, the pump and a few laptops.. except when we go a week without sun during the winter. Next consulting gig I get, I'll probably get a wind generator as well. When it's oppressively cloudy, I use a small gasoline generator to power all the stuff. It also will kick on a battery charger that'll top the batteries off. This winter I used a propane heater. I've come to realize liquid propane is somewhat money inefficient compared to a wood stove. I'll have the wood stove installed by next winter. I'll probably keep using the propane oven. Leading up to me dropping out of society, I came to resent paying rent.. I resented the thought of office power games having survival consequences for my life. I didn't have to off-grid like I have.. There are power lines. It's just such a great feeling to cut out monthly subscription costs from my life. The serenity it brings is maximum. Mother gaia gives me my water and sol my electrons. I still do consulting work as it comes to me. Blissfully, I no longer feel desperation and anxiety between contracts.
- hector_vasquez 8y ago
  Don't get me wrong, it's great that you found a way to reduce the work stress in your life! But ... I genuinely cannot tell whether the guy posting on Hacker News that he "dropped out of society" is being serious or tongue-in-cheek. If paying society's currency for all the solar panels and the batteries and the gas and the generator and the refrigerator and the laptops and the deeded property and all the other stuff that society created is dropping out of society, I wonder what it is like to be a member of society.
badpun 8y ago
In my country (Poland), the majority of people who are interested in buying a house just buy the lot and contract a company to build the house for them. This way, you get to live in a house that's exactly right for you. Of course, the flip side is that the whole process takes a year or longer - but here most people live in flats, and those who decide (and can afford) to own a house, treat it as a part of settling in the area for a longer period of time.
- ams6110 8y ago
  In the USA, unless you're in a rural area with minimal zoning, there are often minimum square footage requirements on any new construction, either imposed by local zoning or neighborhood convenants. So I could buy a lot in a new development, but I likely do not have complete freedom of choice in what I build on it.
qes 8y ago
I've always considered "new construction" and "starter house" mutually exclusive.
- AstralStorm 8y ago
  In terms of actual costs, newer construction practices are actually cheaper. However, new construction teens to have loan and expensive land attached to it. Plus it is "new" so sellers are obliged to scalp you.

TheLoneAdmin 8y ago

The biggest cost in any metro area is land. There are few empty lots left to build on, and those go for a premium. Not going to give any specific listing publicity, but "$350,000 USD for 0.047 acres empty lot" is common in the residential parts of Atlanta. We recently paid $25M for 8 acres with abandoned warehouses on them, to build condos on. We're still looking at $100k land costs per condo. Go out two counties and a 1.5 hour commute, and land is only $5k/acre. Plenty of $200k starter homes in that area. No one wants to move out there though. Disclaimer - I work in the residential construction business

zymhan 8y ago
Why, why didn't I just go into a ton of debt right after college and buy a house in Atlanta...
tmaly 8y ago
zoning laws do not help either. If you're in an area that requires a min 2 acre lot while your grandfathered neighbors have house on 1/4 acre, that surely does not help the price.

mayukh 8y ago

Where is this ?

abakker 8y ago

Regulatory burden - building code, permitting, etc make it relatively better and less risky to build bigger, nice homes. It gives you padding if it takes a while to sell, has extra change order, or gets stuck in permit/planning and zoning limbo for a year. If the margins are paper thin, the risk is too large, so the only way to mitigate that risk is to make more expensive homes so that even if things go terribly wrong you can still pay your costs and your employees and make some profit.

peteey 8y ago
and impact fees
Gibbon1 8y ago
Offhand thought. Building costs in urban area's are stuck in a high cost 'peak'. Everything is expensive which makes construction expensive. My experience renting some warehouse space in SF. One building three units. Used to be occupied by three roofing companies. And some meth heads living in the old offices. One of the roofing companies bought it, kicked out one of the other roofing companies and the methheads and rented to us. Change of ownership and new owner kicked out another roofing company. And rented out to a pot grow. Fast forward 5 years we got kicked out along with the remaining roofers and all three units are now growing pot. So went from three roofing companies circa 1998 to three pot grows circa 2012. My feeling is stuff like this is happening in every urban area in the US. Which means your roofer is either paying very high rents or commuting in from 2-3 hours away. Really easy for me to see that driving costs up by 100%. That's born out by what my insurance agent says. Rebuilding costs in SF are $600-1000 sqft. Get out to Vallejo drops to $300-500 sqft. Other thought as well is that typically you get better margin on luxury goods than basic ones. because it's easier to slip more profit into high cost goods, like granite countertops vs laminate. Prices double, your margin doubles but your expenses only go up 50%. So as long as the luxo market isn't tapped out that will be serviced at the expense of basic goods.
- abakker 8y ago
  It's a good thought. And contractors are virtually all commuters. There's a lot more driving than in most professions I can think of. In cities with awful traffic, going and buying more screws or plywood might be a day-ending problem. you might wait extra hours for deliveries, too. All in all, frictional losses/expenses building in a city are probably very high in aggregate. The few builders I know sure seems to spend a long time waiting. Meanwhile, when I lived in CT, a round trip to the hardware store usually took about 30 minutes max. I wonder if/when those frictional losses/problems building in dense cities actually balance out with the gains in reduced commutes and greater efficiency of urban life once those buildings are occupied.

driverdan 8y ago

You must be referring to a major city. Sub $200k houses are the norm for most of the USA.

eeeeeeeeeeeee 8y ago
Denver Colorado, so, yes, plus our housing increases over the past few years seem to be a bit more insane than other metro areas (looks like it might be slowing this year). I'm really kicking myself for not buying when I moved here. The area I came from was somewhat depressed on the east coast, but I could have easily picked up a neat row home there for ~$100k-$150k. Overall, I'm struggling to justify paying 2x or 2.5x for a home here over just moving somewhere much cheaper and sticking to remote work / consulting where I can find it. There is a lot that I like about city living (being able to walk everywhere), but I'm having a harder time justifying the cost of it now. And the job market is pretty solid around Colorado right now.
theandrewbailey 8y ago
+1. I'm closing on a house soon. 1000 square feet for less than $150,000, in the South Hills area of Pittsburgh.

ams6110 8y ago

So many reasons for this, but it boils down to the marginal cost on building a 4-5 BR vs. a 2 BR house is small compared to the profit upside. If you want a 2 BR, you need to look in old neighborhoods or buy a condo.

eeeeeeeeeeeee 8y ago
I understand the economic reality, but it’s somewhat depressing how it seems like we think only in these terms now — what will maximize financial returns. The investment part supersedes the original purpose, which is to have a place to live.

52-6F-62 8y ago

I've been wondering as well! The suburbs are filled with 4-5 bedroom McMansions— smaller 2-3 bedroom homes are hardly being built at all (except in the form of a townhouse, maybe). So one can't even just "move to the 'burbs" to save money instead of living right in town. It's all the same price.

eeeeeeeeeeeee 8y ago
Yep, even the houses I've looked at in the suburbs here are all enormous. This seems odd to me considering how people are having fewer kids these days anyway. Plus I really hate the look of the "sea of suburbia" with big box houses that have enormous garages that take up 2/3rd of the front of the house, looks ugly. So you basically need to find a mid-sized city with houses from the mid-late 20th century when sizes were more reasonable.
atombender 8y ago
I'm so confused about why America is so reactionary when it comes to architecture, and to design in general. I've been browsing Zillow and Redfin lately, trying to plan a few years into the future, and the architectural landscape is just horrific. My ideal is a modern, minimalist, fairly flat-roofed 1- or 2-story (think Rummer [1], Gropius, Eichler, the Eames case study house, Mies van der Rohe's Farnsworth house, etc.). I wouldn't mind oodles of raw concrete and exposed steel. Nothing ostentatious or expensive, mind you; just good design and modern materials. I'm not that hopeful that anything close to this style appears in the areas I'm looking or in the price range. Instead, what you get are column-infested McMansions or hideously old-fashioned shingle monstrosities. The average home in the US seems to look like this [2]. The kitchen is always dark and brown. Random hideous reactionary baubles from Colonial Revival architecture abound. Beveled wood paneling is everywhere. Now and then a rare (very rare) mid-century modern house come up that might be within my price range, but of course it doesn't have modern insulation, electrics, heating, moisture barriers, air flow, etc., so what you've got is a beautiful but cold, damp, technologically outdated and energy-inefficient box. Ultimately, it seems good, modern design in the US is for rich people, which makes me sad. [1] https://www.curbed.com/2018/8/27/17773540/midcentury-home-tour-portland-oregon-robert-rummer https://www.curbed.com/2018/8/27/17773540/midcentury-home-to... [2] https://www.redfin.com/NY/Orchard-Park/30-Knoche-Way-14127/home/112987150 https://www.redfin.com/NY/Orchard-Park/30-Knoche-Way-14127/h...

kbenson 8y ago

> It doesn't even seem like anyone has interest in building $200,000 houses anymore From a bit of online searching, I imagine it's between 0.75 and 1.25 man hours per square foot of house to build in labor costs (that number may differ depending on size of team/expertise, I imagine).[1][2] Depending on average pay rate for building involved, which varies widely based on area and cost of living, you might be looking at $50k to $100k in labor costs. That's before land cost, materials, permitting, power/sewer hookups, etc. > but they will sell you a poorly made condo for $400,000 and $600/mo HOA fees. In some places the lot cost is $200k, or more. It's hard to build a $200k house when your margin is negative before you've started building. And in places where the lot cost is more like $100k, do you want to build a $300k house with low margin, or do you want to build a $400k-$600k house or condo with much higher margin? The problem perpetuates itself, as high density and high housing costs lead to high land cost, which leads to maximizing profit for area strategies that say to build higher end houses. One of the solutions to this is to be willing to live in higher density housing, such as a condo. This lets building still target high margin while providing somewhat cheaper housing. Or build up, into more multi-story complexes. But people want homes with yards, which is why this is a discussion about how nobody can find a $200k house (you can, just not in the more populated areas), and not a discussion about "how to achieve housing cheaply". 1: https://www.contractortalk.com/f16/avg-man-hours-build-1800sf-home-12127/ https://www.contractortalk.com/f16/avg-man-hours-build-1800s... 2: https://diy.stackexchange.com/questions/77299/how-many-man-hours-to-build-a-small-house https://diy.stackexchange.com/questions/77299/how-many-man-h...

MrLeap 8y ago

I decided to take a break from society last year. I'm fortunate enough where I am that it's eminently reasonable to do. I found some Mennonites that build small 14 * 28 foot cabins with two sleeping lofts. It costs about 8k, and that includes delivery to your land. They come with the exterior/roof finished, but the interior is up to you. Your personal asceticism modulates the cost. My shower is actuated by a ball valve. I set the temperature at the inline gas water heater to perfection, so I don't need hot and cold! I was surprised to learn how cheap the insulation, carpet, sheetrock, mud and paint were. Rural land here is about 2k per acre. Many plots already have wells dug, but if not It'll cost about 4-6k to get one drilled, and 500-1000$ for a well pump. Septic tanks are a few grand. A trenching shovel is cheaper, but that option depends on the topology of your land and your heart. I get my electricity from solar. If you do that, you need some panels, an inverter, charge controller and batteries. My system is pretty modest. 10 deep cycle batteries. I've lost track of how many panels we've got. Most of them we soldered the cells together so it kind of all blurs together. The whole of it probably cost about 1700$. It's enough to run our super efficient 12 volt fridge, the pump and a few laptops.. except when we go a week without sun during the winter. Next consulting gig I get, I'll probably get a wind generator as well. When it's oppressively cloudy, I use a small gasoline generator to power all the stuff. It also will kick on a battery charger that'll top the batteries off. This winter I used a propane heater. I've come to realize liquid propane is somewhat money inefficient compared to a wood stove. I'll have the wood stove installed by next winter. I'll probably keep using the propane oven. Leading up to me dropping out of society, I came to resent paying rent.. I resented the thought of office power games having survival consequences for my life. I didn't have to off-grid like I have.. There are power lines. It's just such a great feeling to cut out monthly subscription costs from my life. The serenity it brings is maximum. Mother gaia gives me my water and sol my electrons. I still do consulting work as it comes to me. Blissfully, I no longer feel desperation and anxiety between contracts.

hector_vasquez 8y ago
Don't get me wrong, it's great that you found a way to reduce the work stress in your life! But ... I genuinely cannot tell whether the guy posting on Hacker News that he "dropped out of society" is being serious or tongue-in-cheek. If paying society's currency for all the solar panels and the batteries and the gas and the generator and the refrigerator and the laptops and the deeded property and all the other stuff that society created is dropping out of society, I wonder what it is like to be a member of society.

badpun 8y ago

In my country (Poland), the majority of people who are interested in buying a house just buy the lot and contract a company to build the house for them. This way, you get to live in a house that's exactly right for you. Of course, the flip side is that the whole process takes a year or longer - but here most people live in flats, and those who decide (and can afford) to own a house, treat it as a part of settling in the area for a longer period of time.

ams6110 8y ago
In the USA, unless you're in a rural area with minimal zoning, there are often minimum square footage requirements on any new construction, either imposed by local zoning or neighborhood convenants. So I could buy a lot in a new development, but I likely do not have complete freedom of choice in what I build on it.

qes 8y ago

I've always considered "new construction" and "starter house" mutually exclusive.

AstralStorm 8y ago
In terms of actual costs, newer construction practices are actually cheaper. However, new construction teens to have loan and expensive land attached to it. Plus it is "new" so sellers are obliged to scalp you.