5 ms·

But people still want and yell for “affordable housing”. Can’t have your cake and eat it too

by nxm 4y ago

arcticbull 4y ago
Affordable housing is just a zoning issue. The cost of construction is a tiny fraction of the cost of a new house in major metros. The cake you can't have and eat at the same time is: "I want affordable housing" and "I want my house to be a good investment."
- loandbehold 4y ago
  That's not even remotely true. Cost of construction is typically 60 to 80% of the cost. In high cost of living areas land is more expensive but so are construction costs.
  - CydeWeys 4y ago
    There's no way. Most of the value of housing in expensive areas is the land itself, not the cost of the building.
    - SideQuark 4y ago
      Most houses aren't built where land is so expensive, so that's nearly irrelevant to the overall cost of housing in the US
    - loandbehold 4y ago
      You are wrong. For instance in Southern California the cost to build new house is around $350 per sqft. Building 2000 sqft house is around $700K. House like that may sell for around 1 million. So that would be 70% construction and 30% land.
      - notch656c 4y ago
        How does that happen? For 700k I could hire 2 skilled persons and 5 undocumented immigrants to work an entire year. How long does it take to raise a house?
        rtkwe 4y ago
        It's not just labor in that cost there's materials to consider too.
        notch656c 4y ago
        Valid point. I looked up average materials cost for a 2000 sq ft house and it was estimated at $120k. Materials costs vary much less across the country than land and labor. For 580k I could hire 2 skilled men and 3 undocumented immigrants for a year. Something isn't right.
        rtkwe 4y ago
        There's a lot wrong but a lot of it is in your assumptions. For starters there's more than 2 skilled trades that go into a house for starters. Then by hiring them yourself either you or one of those people are going to be playing project manager to make sure they don't run out of materials which is a job in and of itself if you're not familiar with it.
        notch656c 4y ago
        Hey you can play fuck fuck games all day about how 5 person years of labor, almost half of that highly skilled (I'm accounting ~150k+ all in compensation) is not enough for a cookie cutter 2000 sq ft house. I'm calling bullshit; if it really is taking that much for a McClone basic bitch house then someone is taking the piss somewhere.
        loandbehold 4y ago
        It's not just manual labor. You need an architect, structural engineer. Getting all permits, environmental analysis. A lot of expensive "knowledge workers" involved. Then there are materials, rental of construction equipment, insurance. Developers who build large number of row houses at the same time can get costs down through economies of scale.
      - bsouthern 4y ago
        Plus the developers need to be able to make a profit after accounting for operational expenses, closing costs, etc. If there's no financial incentive, nobody is going to build houses. This myth of zoning being the only factor is maddening. It's almost like the California folks think their housing market is the only one. Plenty of jurisdictions have loose zoning laws and we still see skyrocketing property values. There's interest rates and inflation to consider. The cold hard truth is: when a bunch of people all want to live in the same areas, housing is going to be expensive. There's no way around it.
      - monocasa 4y ago
        I was getting quotes in that range in Denver until recently, but now I've been getting quotes for around half that. I think they were trying to keep prices up after the supply chain issues have slowly been fixed and pocket the difference, but the market is slowly becoming more sane. I expect it to drop to below $200k here once they finish rebuilding the thousand or so homes one of our recent wildfires took out.
      - JKCalhoun 4y ago
        > House like that may sell for around 1 million. Sure it wouldn't go for closer to $1.5M?
  - swagasaurus-rex 4y ago
    Could it be that goods and services cost more in high cost of living areas? Could it be that the price of land has second-order effects?
  - arcticbull 4y ago
    I said "in major metros" - as I shared in a peer comment in SF (the highest construction costs in the world) it's about 40% and in San Mateo it's like 15-30% depending on finish. Outside of major metros, zoning makes houses much bigger, twice as big on average as the 70s.
- seanmcdirmid 4y ago
  > Affordable housing is just a zoning issue. The cost of construction is a tiny fraction of the cost of a new house in major metros. No it is not. Construction costs (material, labor) are sky high even if property costs are as well. Building high-end housing has always been more profitable than otherwise, low-end housing is simply high-end housing 20 or 30 years in the future.
  - HarryHirsch 4y ago
    low-end housing is simply high-end housing 20 or 30 years in the future That was maybe true in the past, but todays exurban sheetrock palaces are impossible to be turned into low-income/entry-level housing. It starts with the zoning requirements - are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue. The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
    - baremetal 4y ago
      The new 1200sf entry level house is 2000sf. I've built quite a few of them. It is my understanding that builders are responding to the demand from home buyers, and people that can afford a (starter) home want 2000sf at minimum. Also the costs of a house dont scale linearly[1]. A small home costs almost as much as a 2000sf home. [1]https://www.togal.ai/blog/the-average-cost-to-build-a-house-in-2022 https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
    - seanmcdirmid 4y ago
      > are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue. Even in cities with little zoning requirements (like Houston, and heck, even Tokyo), you still see McMansions being built rather than low income housing. Low income housing is still old housing from the 80s/70s, and the problem you are referring to (that housing built today is not very convertible) is one for a sadder future. > The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed. Having shopped for homes in the last few years, there were plenty of 1200 SQFT options in the places I looked at, they were just $700-$800k rather than $900k-$1.1m. Condos are the more realistic options in that case (I saw one I liked for $700k with a reasonable HOA, my wife wasn't having it, however). She preferred a 900 SQF SFH over that, for reasons I couldn't figure out. All were still considered luxury however since they were almost brand new. Note that yes, I live in an expensive area, but usually when we talk about affordable housing, we are talking about places where people want to live (vs. say Detroit).
- CydeWeys 4y ago
  And building code too. There are plenty of cost-efficient designs built in Europe that can't be built here because we effectively require e.g. doubly-loaded corridors through stairwell requirements. The Europeans can put up more housing units on a smaller plot of land than we can, and for a cheaper price, because of these requirements.
goodSteveramos 4y ago
Immigrant labor does not carry their own housing on their backs. It competes in the housing market for homes built by past generations of the native born.
- galdosdi 4y ago
  Very true. That said, to be fair, the average poor undocumented immigrant demands far less space (simply because that's what they can get under the circumstances). Living multiple unrelated people to a room is not unusual, ie, even more cramped than college students, NYC 20 something year olds, etc.
  - harvey9 4y ago
    If I am an unprincipled landlord then it may be in my best interest to change from renting to families to renting to sharers. Four working adults may be able to pay more in total than two parents supporting two children can.
    - goodSteveramos 4y ago
      Exactly. This is how immigration has totally screwed family formation and depressed birth rates for Americans. Young couples cant afford to buy or rent a home in their own city and have to either delay marriage to live with their parents or abandon their families and lifelong friends to move somewhere with lower cost of living. All so employers can go 40 years with giving workers a raise.
      - mindslight 4y ago
        I had to read these comments twice, because I had assumed the "families" were the immigrants and the "four working adults" were yuppies, both in line with my own experience. It's not immigration that has screwed over family formation - it's the housing racket itself, backed up by oppressive monetary policy that sucks real wealth into the financial industry. Making home ownership into a (guaranteed) investment combined with the individualist ideal of everyone needing their own house has done the equivalent of making everyone start off life with significant debt, and the time to pay it off becomes ever longer.
thereddaikon 4y ago
Affordable housing has little to do with the cost of building the house.
- SideQuark 4y ago
  So the cost of a house doesn't factor into affordable housing? Care to explain?
  - NegativeLatency 4y ago
    I suspect they're talking about how single family zoning results in only having more expensive places to live. Even if you build a "cheap" single family house that's still going to be more expensive than some equally cheaply built townhomes, or apartments because of stuff like parking requirements and minimum setbacks.
- HEmanZ 4y ago
  In Manhattan or San Francisco? Probably not. But in most of the gigantic, sprawling USA, I suspect affordable housing absolutely has everything to do with cost of building a house.
  - ericmay 4y ago
    If I had to guess it's not so much the actual cost of building the house as it is the profit margin of those who are building homes. Why build a $200,000 "starter home" when you can build a $478,000 home with gigantic margin on "luxury" trim like cheap granite countertops and "hardwood" floors for roughly the same cost? And then once you get the ugly design down you can just copy and paste it with few adjustments and save even more money. Unfortunately we have bad incentives aligned here versus stated goals. Manhattan and San Francisco are like Japan and Argentina in economics. They're just not the same market as most places. In Manhattan in particular the value really is the land.
    - deleted 4y ago
      [deleted]

But people still want and yell for “affordable housing”. Can’t have your cake and eat it too

by nxm 4y ago

But people still want and yell for “affordable housing”. Can’t have your cake and eat it too

Affordable housing is just a zoning issue. The cost of construction is a tiny fraction of the cost of a new house in major metros. The cake you can't have and eat at the same time is: "I want affordable housing" and "I want my house to be a good investment."

loandbehold 4y ago
That's not even remotely true. Cost of construction is typically 60 to 80% of the cost. In high cost of living areas land is more expensive but so are construction costs.
- CydeWeys 4y ago
  There's no way. Most of the value of housing in expensive areas is the land itself, not the cost of the building.
  - SideQuark 4y ago
    Most houses aren't built where land is so expensive, so that's nearly irrelevant to the overall cost of housing in the US
  - loandbehold 4y ago
    You are wrong. For instance in Southern California the cost to build new house is around $350 per sqft. Building 2000 sqft house is around $700K. House like that may sell for around 1 million. So that would be 70% construction and 30% land.
    - notch656c 4y ago
      How does that happen? For 700k I could hire 2 skilled persons and 5 undocumented immigrants to work an entire year. How long does it take to raise a house?
      - rtkwe 4y ago
        It's not just labor in that cost there's materials to consider too.
        notch656c 4y ago
        Valid point. I looked up average materials cost for a 2000 sq ft house and it was estimated at $120k. Materials costs vary much less across the country than land and labor. For 580k I could hire 2 skilled men and 3 undocumented immigrants for a year. Something isn't right.
        rtkwe 4y ago
        There's a lot wrong but a lot of it is in your assumptions. For starters there's more than 2 skilled trades that go into a house for starters. Then by hiring them yourself either you or one of those people are going to be playing project manager to make sure they don't run out of materials which is a job in and of itself if you're not familiar with it.
        notch656c 4y ago
        Hey you can play fuck fuck games all day about how 5 person years of labor, almost half of that highly skilled (I'm accounting ~150k+ all in compensation) is not enough for a cookie cutter 2000 sq ft house. I'm calling bullshit; if it really is taking that much for a McClone basic bitch house then someone is taking the piss somewhere.
      - loandbehold 4y ago
        It's not just manual labor. You need an architect, structural engineer. Getting all permits, environmental analysis. A lot of expensive "knowledge workers" involved. Then there are materials, rental of construction equipment, insurance. Developers who build large number of row houses at the same time can get costs down through economies of scale.
    - bsouthern 4y ago
      Plus the developers need to be able to make a profit after accounting for operational expenses, closing costs, etc. If there's no financial incentive, nobody is going to build houses. This myth of zoning being the only factor is maddening. It's almost like the California folks think their housing market is the only one. Plenty of jurisdictions have loose zoning laws and we still see skyrocketing property values. There's interest rates and inflation to consider. The cold hard truth is: when a bunch of people all want to live in the same areas, housing is going to be expensive. There's no way around it.
    - monocasa 4y ago
      I was getting quotes in that range in Denver until recently, but now I've been getting quotes for around half that. I think they were trying to keep prices up after the supply chain issues have slowly been fixed and pocket the difference, but the market is slowly becoming more sane. I expect it to drop to below $200k here once they finish rebuilding the thousand or so homes one of our recent wildfires took out.
    - JKCalhoun 4y ago
      > House like that may sell for around 1 million. Sure it wouldn't go for closer to $1.5M?
- swagasaurus-rex 4y ago
  Could it be that goods and services cost more in high cost of living areas? Could it be that the price of land has second-order effects?
- arcticbull 4y ago
  I said "in major metros" - as I shared in a peer comment in SF (the highest construction costs in the world) it's about 40% and in San Mateo it's like 15-30% depending on finish. Outside of major metros, zoning makes houses much bigger, twice as big on average as the 70s.
seanmcdirmid 4y ago
> Affordable housing is just a zoning issue. The cost of construction is a tiny fraction of the cost of a new house in major metros. No it is not. Construction costs (material, labor) are sky high even if property costs are as well. Building high-end housing has always been more profitable than otherwise, low-end housing is simply high-end housing 20 or 30 years in the future.
- HarryHirsch 4y ago
  low-end housing is simply high-end housing 20 or 30 years in the future That was maybe true in the past, but todays exurban sheetrock palaces are impossible to be turned into low-income/entry-level housing. It starts with the zoning requirements - are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue. The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
  - baremetal 4y ago
    The new 1200sf entry level house is 2000sf. I've built quite a few of them. It is my understanding that builders are responding to the demand from home buyers, and people that can afford a (starter) home want 2000sf at minimum. Also the costs of a house dont scale linearly[1]. A small home costs almost as much as a 2000sf home. [1]https://www.togal.ai/blog/the-average-cost-to-build-a-house-in-2022 https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
  - seanmcdirmid 4y ago
    > are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue. Even in cities with little zoning requirements (like Houston, and heck, even Tokyo), you still see McMansions being built rather than low income housing. Low income housing is still old housing from the 80s/70s, and the problem you are referring to (that housing built today is not very convertible) is one for a sadder future. > The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed. Having shopped for homes in the last few years, there were plenty of 1200 SQFT options in the places I looked at, they were just $700-$800k rather than $900k-$1.1m. Condos are the more realistic options in that case (I saw one I liked for $700k with a reasonable HOA, my wife wasn't having it, however). She preferred a 900 SQF SFH over that, for reasons I couldn't figure out. All were still considered luxury however since they were almost brand new. Note that yes, I live in an expensive area, but usually when we talk about affordable housing, we are talking about places where people want to live (vs. say Detroit).
CydeWeys 4y ago
And building code too. There are plenty of cost-efficient designs built in Europe that can't be built here because we effectively require e.g. doubly-loaded corridors through stairwell requirements. The Europeans can put up more housing units on a smaller plot of land than we can, and for a cheaper price, because of these requirements.

goodSteveramos 4y ago

Immigrant labor does not carry their own housing on their backs. It competes in the housing market for homes built by past generations of the native born.

galdosdi 4y ago
Very true. That said, to be fair, the average poor undocumented immigrant demands far less space (simply because that's what they can get under the circumstances). Living multiple unrelated people to a room is not unusual, ie, even more cramped than college students, NYC 20 something year olds, etc.
- harvey9 4y ago
  If I am an unprincipled landlord then it may be in my best interest to change from renting to families to renting to sharers. Four working adults may be able to pay more in total than two parents supporting two children can.
  - goodSteveramos 4y ago
    Exactly. This is how immigration has totally screwed family formation and depressed birth rates for Americans. Young couples cant afford to buy or rent a home in their own city and have to either delay marriage to live with their parents or abandon their families and lifelong friends to move somewhere with lower cost of living. All so employers can go 40 years with giving workers a raise.
    - mindslight 4y ago
      I had to read these comments twice, because I had assumed the "families" were the immigrants and the "four working adults" were yuppies, both in line with my own experience. It's not immigration that has screwed over family formation - it's the housing racket itself, backed up by oppressive monetary policy that sucks real wealth into the financial industry. Making home ownership into a (guaranteed) investment combined with the individualist ideal of everyone needing their own house has done the equivalent of making everyone start off life with significant debt, and the time to pay it off becomes ever longer.

thereddaikon 4y ago

Affordable housing has little to do with the cost of building the house.

SideQuark 4y ago
So the cost of a house doesn't factor into affordable housing? Care to explain?
- NegativeLatency 4y ago
  I suspect they're talking about how single family zoning results in only having more expensive places to live. Even if you build a "cheap" single family house that's still going to be more expensive than some equally cheaply built townhomes, or apartments because of stuff like parking requirements and minimum setbacks.
HEmanZ 4y ago
In Manhattan or San Francisco? Probably not. But in most of the gigantic, sprawling USA, I suspect affordable housing absolutely has everything to do with cost of building a house.
- ericmay 4y ago
  If I had to guess it's not so much the actual cost of building the house as it is the profit margin of those who are building homes. Why build a $200,000 "starter home" when you can build a $478,000 home with gigantic margin on "luxury" trim like cheap granite countertops and "hardwood" floors for roughly the same cost? And then once you get the ugly design down you can just copy and paste it with few adjustments and save even more money. Unfortunately we have bad incentives aligned here versus stated goals. Manhattan and San Francisco are like Japan and Argentina in economics. They're just not the same market as most places. In Manhattan in particular the value really is the land.
  - deleted 4y ago
    [deleted]