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Construction costs and land costs are not independent. A big part of the construction cost is the cost of labor. You can't do construction work remotely, so you

by imgabe 5y ago

Construction costs and land costs are not independent. A big part of the construction cost is the cost of labor. You can't do construction work remotely, so you need to hire workers who live relatively near the construction site. Which means they have to pay the high housing costs so you need to pay them more. It's a feedback loop where the more expensive housing is, the more expensive it will be to build housing.

Waterluvian 5y ago
On a macro scale this is likely true. Unless you ship in cheap workers for a season. On a micro scale, where I live, it’s not. A $2M home in Toronto is maybe $400k where I live, an hour down the road. And I know a lot of local workers who commute to Toronto every day to work on sites. (They do 7-3 to avoid traffic and the neighbours hate their nail gun wake ups)
- imgabe 5y ago
  It's still relatively true. A $400k home is only cheap in comparison to a $2M home. That's quite a lot compared to the average laborer's wages. Maybe if those homes were $200k, the homes in the pricier area would be only $1M (not exactly obviously). $400k to live with an hour commute is not that great a deal IMO.
  - Waterluvian 5y ago
    My point is that the people who build the houses do not live within the same order of magnitude market. And yeah, commuting is nonsense. I’ll never ever do it.
    - imgabe 5y ago
      Right, but the costs in their market are still going to be affected by the high prices in the market where they work. It’s not feasible for them to live far enough away to escape the influence. Houses an hour from Toronto are still going to be more expensive because they’re an hour from Toronto and people can work there at higher paying jobs (but not enough to afford the $2M house in the city) and it’s worth it with the commute. The high prices in the city are going to drive up prices everywhere within commuting distance.

by imgabe 5y ago

Waterluvian 5y ago

On a macro scale this is likely true. Unless you ship in cheap workers for a season. On a micro scale, where I live, it’s not. A $2M home in Toronto is maybe $400k where I live, an hour down the road. And I know a lot of local workers who commute to Toronto every day to work on sites. (They do 7-3 to avoid traffic and the neighbours hate their nail gun wake ups)

imgabe 5y ago
It's still relatively true. A $400k home is only cheap in comparison to a $2M home. That's quite a lot compared to the average laborer's wages. Maybe if those homes were $200k, the homes in the pricier area would be only $1M (not exactly obviously). $400k to live with an hour commute is not that great a deal IMO.
- Waterluvian 5y ago
  My point is that the people who build the houses do not live within the same order of magnitude market. And yeah, commuting is nonsense. I’ll never ever do it.
  - imgabe 5y ago
    Right, but the costs in their market are still going to be affected by the high prices in the market where they work. It’s not feasible for them to live far enough away to escape the influence. Houses an hour from Toronto are still going to be more expensive because they’re an hour from Toronto and people can work there at higher paying jobs (but not enough to afford the $2M house in the city) and it’s worth it with the commute. The high prices in the city are going to drive up prices everywhere within commuting distance.