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Do you have any numbers showing labor driving the price of housing in cities like San Francisco? It seems like almost certainly the #1 cost is the price of the

by oivey 3y ago

Do you have any numbers showing labor driving the price of housing in cities like San Francisco? It seems like almost certainly the #1 cost is the price of the land by a wide margin.

AnthonyMouse 3y ago
You can build an arbitrarily tall building on a piece of land, allowing the price of the land to be split between arbitrarily many housing units. Suppose that land is extremely expensive. A single acre of land is ten million dollars. How much is a housing unit? An acre is 43560 sq ft, so a building that allocates half the size of the lot to housing units could have at least 10 housing units of 2000 sq ft per floor and a 50 story building would have at least 500 units making the land cost per unit $20,000. You can't get a 2000 sq ft condo in San Francisco for anywhere near $20,000. The difference is attributable to zoning and construction costs. But it's worse than that, because if building tall buildings wasn't inhibited then the land wouldn't cost as much because the inability to make space-efficient use of the land drives up its scarcity.
- MichaelZuo 3y ago
  An acre in the mediocre parts of Palo Alto is ten million, an acre near anywhere it makes sense to put a 50+ storey building in SF is much closer to 100 million. Plus at most only about 2/3 of the floor plate is saleable square footage. So $300,000 of land cost per 2000 sq ft condo. Realtor fees, taxes, surcharges, local improvement fees, etc., and everything else legally mandated is another $250k on top. Builder overhead, insurance, interest on the bank loan, a margin for delays, etc., is at least another $200k. So even if construction cost was zero and the zoning process flawlessly smooth, the builder would need to charge at least $750k per unit to break even. Even if land cost was zero as well, it would still be at least $450k per unit to break even.
  - AnthonyMouse 3y ago
    > in SF is much closer to 100 million. The cost of land in SF is less than $10 million/acre: https://www.statista.com/statistics/1376626/land-price-in-selected-cities-in-the-us/ https://www.statista.com/statistics/1376626/land-price-in-se... > an acre near anywhere it makes sense to put a 50+ storey building What is "makes sense"? Are condo units available in Palo Alto for anywhere near $20,000? It makes sense anywhere that the cost of land is high. > Plus at most only about 2/3 of the floor plate is saleable square footage. So actually more than the 1/2 used in the numbers above. > Realtor fees, taxes, surcharges, local improvement fees, etc., and everything else legally mandated is another $250k on top. Builder overhead, insurance, interest on the bank loan, a margin for delays, etc., is at least another $200k. Half of these aren't part of the list price and the other half are just other words for "zoning and construction costs". > Even if land cost was zero as well, it would still be at least $450k per unit to break even. You now seem to be arguing that the land isn't the primary cost.
    - MichaelZuo 3y ago
      Are you confusing me with someone else? I never said land was the ‘primary cost’? If your confused about the terminology, $300,000 is a smaller number than $450k. “Saleable square footage” means net of elevator shafts, hallways, etc….
      - AnthonyMouse 3y ago
        > Are you confusing me with someone else? I never said land was the ‘primary cost’? The premise of the post you replied to is that land isn't the primary cost. For a building that puts 500 units on an acre, the cost attributable to land is only $20,000/unit even when the land is $10 million/acre. You replied trying to add in construction costs and regulatory requirements, which was the point -- that's where most of the cost is, because regulations make construction bureaucratic and labor-intensive, where they don't prohibit it outright. > “Saleable square footage” means net of elevator shafts, hallways, etc…. Which is why I only allocated half of the footprint of the lot to livable area to begin with. If you could allocate the entire acre of footprint to living space, one acre of land could have more than 20 units of 2000 sq ft per floor and a 50 story building would have 1000+ units instead of 500+.
- no_exit 3y ago
  [flagged]

by oivey 3y ago

Do you have any numbers showing labor driving the price of housing in cities like San Francisco? It seems like almost certainly the #1 cost is the price of the land by a wide margin.

AnthonyMouse 3y ago

You can build an arbitrarily tall building on a piece of land, allowing the price of the land to be split between arbitrarily many housing units. Suppose that land is extremely expensive. A single acre of land is ten million dollars. How much is a housing unit? An acre is 43560 sq ft, so a building that allocates half the size of the lot to housing units could have at least 10 housing units of 2000 sq ft per floor and a 50 story building would have at least 500 units making the land cost per unit $20,000. You can't get a 2000 sq ft condo in San Francisco for anywhere near $20,000. The difference is attributable to zoning and construction costs. But it's worse than that, because if building tall buildings wasn't inhibited then the land wouldn't cost as much because the inability to make space-efficient use of the land drives up its scarcity.

MichaelZuo 3y ago
An acre in the mediocre parts of Palo Alto is ten million, an acre near anywhere it makes sense to put a 50+ storey building in SF is much closer to 100 million. Plus at most only about 2/3 of the floor plate is saleable square footage. So $300,000 of land cost per 2000 sq ft condo. Realtor fees, taxes, surcharges, local improvement fees, etc., and everything else legally mandated is another $250k on top. Builder overhead, insurance, interest on the bank loan, a margin for delays, etc., is at least another $200k. So even if construction cost was zero and the zoning process flawlessly smooth, the builder would need to charge at least $750k per unit to break even. Even if land cost was zero as well, it would still be at least $450k per unit to break even.
- AnthonyMouse 3y ago
  > in SF is much closer to 100 million. The cost of land in SF is less than $10 million/acre: https://www.statista.com/statistics/1376626/land-price-in-selected-cities-in-the-us/ https://www.statista.com/statistics/1376626/land-price-in-se... > an acre near anywhere it makes sense to put a 50+ storey building What is "makes sense"? Are condo units available in Palo Alto for anywhere near $20,000? It makes sense anywhere that the cost of land is high. > Plus at most only about 2/3 of the floor plate is saleable square footage. So actually more than the 1/2 used in the numbers above. > Realtor fees, taxes, surcharges, local improvement fees, etc., and everything else legally mandated is another $250k on top. Builder overhead, insurance, interest on the bank loan, a margin for delays, etc., is at least another $200k. Half of these aren't part of the list price and the other half are just other words for "zoning and construction costs". > Even if land cost was zero as well, it would still be at least $450k per unit to break even. You now seem to be arguing that the land isn't the primary cost.
  - MichaelZuo 3y ago
    Are you confusing me with someone else? I never said land was the ‘primary cost’? If your confused about the terminology, $300,000 is a smaller number than $450k. “Saleable square footage” means net of elevator shafts, hallways, etc….
    - AnthonyMouse 3y ago
      > Are you confusing me with someone else? I never said land was the ‘primary cost’? The premise of the post you replied to is that land isn't the primary cost. For a building that puts 500 units on an acre, the cost attributable to land is only $20,000/unit even when the land is $10 million/acre. You replied trying to add in construction costs and regulatory requirements, which was the point -- that's where most of the cost is, because regulations make construction bureaucratic and labor-intensive, where they don't prohibit it outright. > “Saleable square footage” means net of elevator shafts, hallways, etc…. Which is why I only allocated half of the footprint of the lot to livable area to begin with. If you could allocate the entire acre of footprint to living space, one acre of land could have more than 20 units of 2000 sq ft per floor and a 50 story building would have 1000+ units instead of 500+.
no_exit 3y ago
[flagged]