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Far and away the biggest cost for housing in the West is land. It's almost 2/3rds now. We could all live in pre-fab boxes and barely shave 10% off. See Josh

Far and away the biggest cost for housing in the West is land. It's almost 2/3rds now. We could all live in pre-fab boxes and barely shave 10% off. See Josh Ryan Collins https://youtu.be/RX-AzKgUEWk https://youtu.be/RX-AzKgUEWk https://www.ft.com/content/ffa66898-fe7b-11e6-96f8-3700c5664d30 https://www.ft.com/content/ffa66898-fe7b-11e6-96f8-3700c5664... My tldr on all this - since 1970 humanity has doubled in size - something comparabke only a couple of times in history (17C, 19C etc). A d the massive growth economically had wide ranging effects. One big one is there is a change in governmental models (autocracy to parliament, parliament to democracy) The most obvious other effect is that land prices go up as cities grow. And 80%+ of increase in house prices is increase in underlying land. This is of course massively unequal and negatively affects incentives for business and production. So to change society direction create a long term (land) wealth tax (say 75 basis points a year) and plough that into education, entrepreneurship support and industrial banks greeen energy subsidies etc.

kiba 6y ago
Land Wealth Tax? Don't you mean Land Value Tax? A LVT taxes the land underneath while not taxing the building on top of it. This is opposed to our current situation in which people are deincentivized from building because it'll increase taxes.
- lifeisstillgood 6y ago
  Yes that's right - but the point remains :-) I think taking 150 years to squeeze the "value" out via taxes feels about right - it should not be a huge rush but should be something that is inevitable and at the generational level
  - zepto 6y ago
    The problem with that is that it incentivizes work, which is the primary source of carbon emissions and global warming.
jjeaff 6y ago
The bigger cost is land, yes, but let's not become confused into thinking high land prices are due to natural scarcity. Land is expensive due to artificial scarcity created wholly by regulation. Usually propped up by the older generations that already have their pieces of land. Sure, dense urban areas have some scarcity, though almost all could build up. But as I look around me in this southern california suburb, surrounded by 2,500 sq foot homes on 1/4 acre built 25 years ago that go for $800k, I can see endless empty land in all directions. But you can't get a permit to build on any of it, because any requests to permit it are met with an army of residents near retirement that have lived at the edge of their means their entire life and so their only retirement plan is to sell their overpriced home and move to Texas.
- Ericson2314 6y ago
  Well-located land is inherently scarce because the social graph isn't planer. (Credit my co-worker for the observation)
- skybrian 6y ago
  Just because it's empty doesn't mean it's safe to build on. Here's a map showing fire risk for California: https://ia.cpuc.ca.gov/firemap/ https://ia.cpuc.ca.gov/firemap/ Maybe people opposing sprawl for other reasons is a fortunate coincidence?
  - thewebcount 6y ago
    And it's not just fires. They're trying to turn every hillside in the area around LA into sellable land. There's mudslides, earthquakes, etc. to deal with, too!
  - jjeaff 6y ago
    It's no longer that risky if you keep defensible space around the residences and reasonable fire precautions when building the homes.
- Retric 6y ago
  Land is generally expensive because infrastructure is expensive. Building plumbing systems, subways, highways, schools, etc gets directly reflected in land prices. That compounds when the cost to build even more transportation infrastructure skyrocket. Trying to build larger buildings without that infrastructure just results in pointless gridlock. The Bay Area compounds that by capping property price increases which heavily distorts incentives and the overall market. But, don’t assume simply building more housing would actually make a significant difference long term without massive investments in infrastructure. At best it simply changes which land is valuable.
pjmorris 6y ago
I think that far and away the biggest cost for housing in the West is money. Yes, interest rates are at all time lows. But that means loan amounts have skyrocketed in comparison to incomes. That has impacts across the economy.
intrasight 6y ago
Not the case in my area. A lot in a great new development can be had for $150K. Same lot with a nice house is $800K. I think one reason why the land is so cheap is because of all the rules about building on that lot. Often, for instance, you don't get to choose your own builder - and you definitely can build modular.
gwbas1c 6y ago
The West has very dense development. Most of the US isn't like that. Where I live, land has to be 1/3rd the value of the home. Want a bigger house? You have to have a bigger plot or the bank won't lend the money because the value ratio is off.
pyuser583 6y ago
I lived in the Bay Area for a bit ... it’s insanely overpopulated. But that has nothing to do with birth rates and everything to do with migration- mostly from other low birth rate areas. As we become more modern, we become more urbanized. I’m confident the Bay Area would be very similar even if population levels hadn’t changed since the early 70s.
ulucs 6y ago
If you build slightly up (let's say 20 units) then the share of land would drop to less than 1/30th of development cost.

kiba 6y ago

Land Wealth Tax? Don't you mean Land Value Tax? A LVT taxes the land underneath while not taxing the building on top of it. This is opposed to our current situation in which people are deincentivized from building because it'll increase taxes.

lifeisstillgood 6y ago
Yes that's right - but the point remains :-) I think taking 150 years to squeeze the "value" out via taxes feels about right - it should not be a huge rush but should be something that is inevitable and at the generational level
- zepto 6y ago
  The problem with that is that it incentivizes work, which is the primary source of carbon emissions and global warming.

jjeaff 6y ago

The bigger cost is land, yes, but let's not become confused into thinking high land prices are due to natural scarcity. Land is expensive due to artificial scarcity created wholly by regulation. Usually propped up by the older generations that already have their pieces of land. Sure, dense urban areas have some scarcity, though almost all could build up. But as I look around me in this southern california suburb, surrounded by 2,500 sq foot homes on 1/4 acre built 25 years ago that go for $800k, I can see endless empty land in all directions. But you can't get a permit to build on any of it, because any requests to permit it are met with an army of residents near retirement that have lived at the edge of their means their entire life and so their only retirement plan is to sell their overpriced home and move to Texas.

Ericson2314 6y ago
Well-located land is inherently scarce because the social graph isn't planer. (Credit my co-worker for the observation)
skybrian 6y ago
Just because it's empty doesn't mean it's safe to build on. Here's a map showing fire risk for California: https://ia.cpuc.ca.gov/firemap/ https://ia.cpuc.ca.gov/firemap/ Maybe people opposing sprawl for other reasons is a fortunate coincidence?
- thewebcount 6y ago
  And it's not just fires. They're trying to turn every hillside in the area around LA into sellable land. There's mudslides, earthquakes, etc. to deal with, too!
- jjeaff 6y ago
  It's no longer that risky if you keep defensible space around the residences and reasonable fire precautions when building the homes.
Retric 6y ago
Land is generally expensive because infrastructure is expensive. Building plumbing systems, subways, highways, schools, etc gets directly reflected in land prices. That compounds when the cost to build even more transportation infrastructure skyrocket. Trying to build larger buildings without that infrastructure just results in pointless gridlock. The Bay Area compounds that by capping property price increases which heavily distorts incentives and the overall market. But, don’t assume simply building more housing would actually make a significant difference long term without massive investments in infrastructure. At best it simply changes which land is valuable.

pjmorris 6y ago

I think that far and away the biggest cost for housing in the West is money. Yes, interest rates are at all time lows. But that means loan amounts have skyrocketed in comparison to incomes. That has impacts across the economy.

intrasight 6y ago

Not the case in my area. A lot in a great new development can be had for $150K. Same lot with a nice house is $800K. I think one reason why the land is so cheap is because of all the rules about building on that lot. Often, for instance, you don't get to choose your own builder - and you definitely can build modular.

gwbas1c 6y ago

The West has very dense development. Most of the US isn't like that. Where I live, land has to be 1/3rd the value of the home. Want a bigger house? You have to have a bigger plot or the bank won't lend the money because the value ratio is off.

pyuser583 6y ago

I lived in the Bay Area for a bit ... it’s insanely overpopulated. But that has nothing to do with birth rates and everything to do with migration- mostly from other low birth rate areas. As we become more modern, we become more urbanized. I’m confident the Bay Area would be very similar even if population levels hadn’t changed since the early 70s.

ulucs 6y ago

If you build slightly up (let's say 20 units) then the share of land would drop to less than 1/30th of development cost.