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This is a terrible analysis. As long as houses are still selling for above the cost of materials and construction, there is not enough housing supply. There ar

This is a terrible analysis. As long as houses are still selling for above the cost of materials and construction, there is not enough housing supply. There aren’t enough tech workers to buy 500,000 $1m homes. So keep building homes until the prices drop to $200k and then maybe there is enough supply. Anytime people have to “compete” for housing, there isn’t enough.

jjav 4y ago
> So keep building homes until the prices drop to $200k It is difficult to build a house for less than 200K these days in any dense urban area, so expecting prices to drop to that level is fairly unrealistic unless you're way out in the boonies. > Anytime people have to “compete” for housing, there isn’t enough. Builders don't build houses for fun, they do it as a for-profit business. If there is not enough demand for housing in a given area to drive prices up to a sufficient profit, they just won't build anything there. Builders have no motivation to keep building until prices drop. They want to build wherever prices remain high enough to make a decent profit.
bombcar 4y ago
Based on housing prices in rural areas (where land is effectively free, $10k or less for a buildable plot with power and sewage access) the cost to build a detached single-family home is somewhere around 350k. Could you build something cheaper? Almost certainly, but the people who can afford to buy a new home don't want something that is bare-minimum contractor-grade. In the past this was naturally handled by older housing being "handed down" to people as starter homes, etc; but that cycle has been disrupted in many areas.
- davidw 4y ago
  > that cycle has been disrupted in many areas That cycle is what urban economists call 'filtering'. It's like used cars that lose value over time. The disruption is a severe housing shortage so that even older housing starts getting more expensive and sometimes quite rapidly.

jjav 4y ago

> So keep building homes until the prices drop to $200k It is difficult to build a house for less than 200K these days in any dense urban area, so expecting prices to drop to that level is fairly unrealistic unless you're way out in the boonies. > Anytime people have to “compete” for housing, there isn’t enough. Builders don't build houses for fun, they do it as a for-profit business. If there is not enough demand for housing in a given area to drive prices up to a sufficient profit, they just won't build anything there. Builders have no motivation to keep building until prices drop. They want to build wherever prices remain high enough to make a decent profit.

bombcar 4y ago

Based on housing prices in rural areas (where land is effectively free, $10k or less for a buildable plot with power and sewage access) the cost to build a detached single-family home is somewhere around 350k. Could you build something cheaper? Almost certainly, but the people who can afford to buy a new home don't want something that is bare-minimum contractor-grade. In the past this was naturally handled by older housing being "handed down" to people as starter homes, etc; but that cycle has been disrupted in many areas.

davidw 4y ago
> that cycle has been disrupted in many areas That cycle is what urban economists call 'filtering'. It's like used cars that lose value over time. The disruption is a severe housing shortage so that even older housing starts getting more expensive and sometimes quite rapidly.