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> Specifically, it points out that nobody in 2020 is building 500 square foot homes, or shitty black-and-white televisions, so you don't actually have the choic

by xyzzyz 7y ago

> Specifically, it points out that nobody in 2020 is building 500 square foot homes, or shitty black-and-white televisions, so you don't actually have the choice to buy one. You can build one yourself: even if you don’t drive a single nail, you can get cheap plans over the internet, then coordinate contractors that will build it for you. This will be much cheaper than you think, in fact it will be so cheap that you’ll realize that at only slightly larger expense, you can have significantly larger house. Since people today are much wealthier than in the past, it’s much easier to foot this additional expense, which is the real reason why nobody builds small houses anymore. Think about it this way: house construction costs about $100-150 per finished square foot. Since lots of cost doesn’t really scale linearly with footage (e.g. site preparation, plans are typically fixed costs), a cost of marginal square foot is probably under $100. This means that additional 500 square feet, that is, additional two bedrooms, ends up being only $250/mo in extra mortgage payment. Since households make much real income than 40 years ago, and since interest rates are much lower than 40 years ago, people usually just decide to get these two extra bedrooms.

vkou 7y ago
Wet streets don't cause rain. The reason that people are building large houses is not because they are richer. It's because the fixed costs of a house have gone up, and the marginal cost of making the house bigger are a smaller share of that pie. Yes, you get more square footage for your money. Nobody's disputing that. What you can't get, is a 1980s house at a 1980s * wage growth price. You simply can't. No such thing exists on the market. Building a 1980s house in 2020 is going to cost far more than it would have in 1980s * wage growth. When it comes to houses, the analogy is that we're living in a world where the only new cars that get built are 24-seat mini-buses that cost a small fortune. And then people come in and argue that actually, cars are cheaper than they have every been, because, sure, the minibus is three times the cost of a 5-seat sedan from the 80s, but the per-seat cost is lower than it was in 1980s, so personal vehicles have become more affordable! I don't care about the per-seat cost. The average person doesn't care about the per-seat cost. They care about the total cost of ownership.

by xyzzyz 7y ago

vkou 7y ago

Wet streets don't cause rain. The reason that people are building large houses is not because they are richer. It's because the fixed costs of a house have gone up, and the marginal cost of making the house bigger are a smaller share of that pie. Yes, you get more square footage for your money. Nobody's disputing that. What you can't get, is a 1980s house at a 1980s * wage growth price. You simply can't. No such thing exists on the market. Building a 1980s house in 2020 is going to cost far more than it would have in 1980s * wage growth. When it comes to houses, the analogy is that we're living in a world where the only new cars that get built are 24-seat mini-buses that cost a small fortune. And then people come in and argue that actually, cars are cheaper than they have every been, because, sure, the minibus is three times the cost of a 5-seat sedan from the 80s, but the per-seat cost is lower than it was in 1980s, so personal vehicles have become more affordable! I don't care about the per-seat cost. The average person doesn't care about the per-seat cost. They care about the total cost of ownership.