3 ms·

According to this resource (https://www.newhomesource.com/learn/stick-built-vs-modular-home-costs/ https://www.newhomesource.com/learn/stick-built-vs-modular-h.

According to this resource (https://www.newhomesource.com/learn/stick-built-vs-modular-home-costs/ https://www.newhomesource.com/learn/stick-built-vs-modular-h...): - Modular home construction is an $11 billion industry, growing at 8.5% per year - The cost of modular/factory vs. stick built construction is about a 10-20% savings. On a $500k home, that’s going to be less than $25k difference in price. That’s not the problem. Additionally from this source (https://blog.lotnetwork.com/lot-and-land-loans-financing-your-property-purchase/ https://blog.lotnetwork.com/lot-and-land-loans-financing-you...): - Banks, which are tied to the Fed, are loathe to provide lot/construction loans. Ironically, this creates supply shortage and makes it necessary to purchase existing homes or from tract home builders that the author is criticizing. - The size of the cash downpayment can be as much as 50% of the cost of the home. Bottom line: the cost of housing is a systemic problem, and the Fed along with local government zoning boards are at the root of both the financial and regulatory sides of the problem.

mistrial9 4y ago
not a coincidence that the Federal Housing and Urban Development efforts have been, I argue, as close to third world corrupt as it comes, in the USA.
hash872 4y ago
Lot/construction loans is a highly speculative business, especially as lots of builders are blue-collar guys with minimal assets who can simply close shop in a recession. Building homes is constrained by the wider economy and interest rates, and they take a while to build, so in all of the umpteen million housing crashes we've had previously, a large % of homes built will hit in the market in the middle of a crash. The history of housing busts dates back hundreds of years and is older than the United States. Banks are not wild to extend lot or construction loans because, until we achieve AI singularity, there's always another bust coming around the corner- and banks know they'll take it on the chin. Especially to the average home builder, who will simply walk away from their loans in a recession, close their company, declare bankruptcy, etc. etc.
- cmmeur01 4y ago
  When’s the last time a bank has “taken it on the chin”?
  - Panzer04 4y ago
    2008?
dtgriscom 4y ago
> The cost of modular/factory vs. stick built construction is about a 10-20% savings. On a $500k home, that’s going to be less than $25k difference in price. Isn't 10-20% of $500k actually $50k-$100k? (Could buy some really nice appliances...)
- SilasX 4y ago
  I assume the parent was using $500k as the total home price (building + land[1]), so the savings is only off the building cost, which is a fraction of the total price. Should have made that assumption explicit though. I think the OP's core point is sound -- (total) home prices are like 50% over historically reasonable levels, so it's daft to explain it by even 20% overpricing for construction (which, again, applies to only a portion of the total sale price). [1] And the typical home does not cost $500k to build.
snapplebobapple 4y ago
You mentioned in a few words the biggest problem, which is zoning. The vast majority of land is zoned single family, which is actually a money loser for most municipalities in the USA. Crushing the local nimby zoning boards and forcing a much higher percentage of the land to be zoned for higher density would cause a boom of missing middle (and high rise) construction that could mostly solve this problem for very minimal capital outlay by municipalities vs trying to build enough single family zoned stuff to push prices down.

mistrial9 4y ago

not a coincidence that the Federal Housing and Urban Development efforts have been, I argue, as close to third world corrupt as it comes, in the USA.

hash872 4y ago

Lot/construction loans is a highly speculative business, especially as lots of builders are blue-collar guys with minimal assets who can simply close shop in a recession. Building homes is constrained by the wider economy and interest rates, and they take a while to build, so in all of the umpteen million housing crashes we've had previously, a large % of homes built will hit in the market in the middle of a crash. The history of housing busts dates back hundreds of years and is older than the United States. Banks are not wild to extend lot or construction loans because, until we achieve AI singularity, there's always another bust coming around the corner- and banks know they'll take it on the chin. Especially to the average home builder, who will simply walk away from their loans in a recession, close their company, declare bankruptcy, etc. etc.

cmmeur01 4y ago
When’s the last time a bank has “taken it on the chin”?
- Panzer04 4y ago
  2008?

dtgriscom 4y ago

> The cost of modular/factory vs. stick built construction is about a 10-20% savings. On a $500k home, that’s going to be less than $25k difference in price. Isn't 10-20% of $500k actually $50k-$100k? (Could buy some really nice appliances...)

SilasX 4y ago
I assume the parent was using $500k as the total home price (building + land[1]), so the savings is only off the building cost, which is a fraction of the total price. Should have made that assumption explicit though. I think the OP's core point is sound -- (total) home prices are like 50% over historically reasonable levels, so it's daft to explain it by even 20% overpricing for construction (which, again, applies to only a portion of the total sale price). [1] And the typical home does not cost $500k to build.

snapplebobapple 4y ago

You mentioned in a few words the biggest problem, which is zoning. The vast majority of land is zoned single family, which is actually a money loser for most municipalities in the USA. Crushing the local nimby zoning boards and forcing a much higher percentage of the land to be zoned for higher density would cause a boom of missing middle (and high rise) construction that could mostly solve this problem for very minimal capital outlay by municipalities vs trying to build enough single family zoned stuff to push prices down.