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I think this is true, but only part of the equation. I think you certainly could build a house at average-suburban-prices without cutting corners, but your prof

I think this is true, but only part of the equation. I think you certainly could build a house at average-suburban-prices without cutting corners, but your profit margins would be lower or you'd have to compromise somewhere else. For example, the market has optimized around square footage, $/sqft is the most important metric for many consumers, ergo a smaller but better built house won't sell (or, at least, won't sell for a price that justifies the extra expense). Nobody ever got rich by leaving money on the table. The disadvantage of living in a seller's market is that it's also a builder's market; when homes sell as fast as they're being built regardless of quality, there's little pressure on builders to improve quality.

deleted 6y ago
[deleted]
lotsofpulp 6y ago
The only solution to that is to raise the minimum standards by making building codes more strict. But that raises the cost of the housing, and then you have people claiming the government is restricting housing development and pricing people out. It's all a very delicate balance that gets thrown way off especially due to the securitization of the asset for 30+ years at artificially low future taxpayer subsidized interest rates. A lot of the calculations about value of fixtures and finishes in a house in a high demand area get de-valued by buyers because the land value (and the land value's increase) is worth so much more than the structure that sits on it, that as a buyer, you can't afford to value things like proper fit and finish and materials unless you're looking at very high value homes, otherwise another buyer will come in and take it.
StillBored 6y ago
All things being equal the price per sqft actually tends to go down with the larger houses, because of simple geometry and the expensive parts (kitchens & bathrooms) remain fairly constant. AKA a three bedroom two bath 2000sqft house isn't much more expensive to build than a three bedroom two bath 1300 square foot house. Particularly if the designer manages to get most of the plumbing/etc on a common wall. This fact seems to continue through its lifetime if you compare houses in many neighborhoods, the house prices are fairly similar, while the $/sqft will vary wildly.

deleted 6y ago

[deleted]

lotsofpulp 6y ago

The only solution to that is to raise the minimum standards by making building codes more strict. But that raises the cost of the housing, and then you have people claiming the government is restricting housing development and pricing people out. It's all a very delicate balance that gets thrown way off especially due to the securitization of the asset for 30+ years at artificially low future taxpayer subsidized interest rates. A lot of the calculations about value of fixtures and finishes in a house in a high demand area get de-valued by buyers because the land value (and the land value's increase) is worth so much more than the structure that sits on it, that as a buyer, you can't afford to value things like proper fit and finish and materials unless you're looking at very high value homes, otherwise another buyer will come in and take it.

StillBored 6y ago

All things being equal the price per sqft actually tends to go down with the larger houses, because of simple geometry and the expensive parts (kitchens & bathrooms) remain fairly constant. AKA a three bedroom two bath 2000sqft house isn't much more expensive to build than a three bedroom two bath 1300 square foot house. Particularly if the designer manages to get most of the plumbing/etc on a common wall. This fact seems to continue through its lifetime if you compare houses in many neighborhoods, the house prices are fairly similar, while the $/sqft will vary wildly.