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I don't think it's true. Value of materials depreciate, but good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago

by akomtu 5y ago

I don't think it's true. Value of materials depreciate, but good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago. Labor and new materials go up in value, and new regulations add costs too. There are exceptions, like those you've described, but those are exceptions.

chongli 5y ago
That’s a mixture of inflation (in the price of building materials) and cost disease [1] (for the labour). A lot of other things have gotten way cheaper (computers, TVs, etc) because of advances in technology whereas houses have not. It still takes roughly the same amount of labour for framers, drywallers, painters, and roofers to build a house today as it did 20 years ago but the cost of living for all those workers has gone up so you need to pay more for the same amount of work. This is not labour going up in value, it’s labour going up in price. On the other hand, an old poorly maintained house is worth a lot less in real value terms than a brand new house on the same lot. This is why houses are a depreciating asset. That may be hard to see, though, because the land may be going up in value a lot more than the house may be declining. And of course, just like a car, if you maintain a house and keep it in good shape you can preserve more of its value. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
nextaccountic 5y ago
> good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago Inflation-adjusted?
bluGill 5y ago
When the land value is high enough relative to the structure, the costs to tear down and build are a footnote. It makes sense to tear down and get exactly what you want.
jjav 5y ago
> Value of materials depreciate A house has a lot of raw material, most/all of which is getting more expensive. Even if labor were free (if you do all yourself) and the land is in a location that has not appreciated at all in a decade, building a new identical house still takes a lot more money than 10 years ago, just on materials alone.

by akomtu 5y ago

chongli 5y ago

That’s a mixture of inflation (in the price of building materials) and cost disease [1] (for the labour). A lot of other things have gotten way cheaper (computers, TVs, etc) because of advances in technology whereas houses have not. It still takes roughly the same amount of labour for framers, drywallers, painters, and roofers to build a house today as it did 20 years ago but the cost of living for all those workers has gone up so you need to pay more for the same amount of work. This is not labour going up in value, it’s labour going up in price. On the other hand, an old poorly maintained house is worth a lot less in real value terms than a brand new house on the same lot. This is why houses are a depreciating asset. That may be hard to see, though, because the land may be going up in value a lot more than the house may be declining. And of course, just like a car, if you maintain a house and keep it in good shape you can preserve more of its value. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...

nextaccountic 5y ago

> good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago Inflation-adjusted?

bluGill 5y ago

When the land value is high enough relative to the structure, the costs to tear down and build are a footnote. It makes sense to tear down and get exactly what you want.

jjav 5y ago

> Value of materials depreciate A house has a lot of raw material, most/all of which is getting more expensive. Even if labor were free (if you do all yourself) and the land is in a location that has not appreciated at all in a decade, building a new identical house still takes a lot more money than 10 years ago, just on materials alone.