5 ms·

What makes houses so expensive? Is it the land or the house itself? I live in a city of 2 million in Europe. With a car, it takes 20 minutes from the center t

by mg 3y ago

What makes houses so expensive? Is it the land or the house itself? I live in a city of 2 million in Europe. With a car, it takes 20 minutes from the center to places where absolutely nobody lives. If it is cheap to build a house - why not do it there? If it is expensive to build a house - could it be optimized, 3d-printed, automated in some way?

Rebelgecko 3y ago
Mostly the former. Plenty of examples of burned out husks selling for over a million
Kalium 3y ago
Decades of policy designed to promote detached single family houses, discourage density, and make it easy to object to construction have combined with tax policy favoring stasis to create a political environment incredibly hostile to housing. This drives up the price of land significantly. Yes, construction can be made cheaper. The current way to do this is by using pre-fabricated modules turned out by a factory. This reduces the cost and time of construction somewhat, but does nothing at all for the price of the land.
- caeril 3y ago
  > promote detached single family houses, discourage density, The cheapest housing in this country comprises primarily single-family homes in very low-density areas. These homes are substantially less expensive than the vast majority of dense urban bugman studio pods. But yes, if you exclude flyover country because you regard farmers, ranchers, loggers, or steelworkers as subhuman (a common urban attitude), then your abject denial of reality makes sense.
  - Kalium 3y ago
    Please bear in mind that in this particular context, we're talking about Los Angeles. There are few farmers, ranchers, and loggers in rural LA.
    - caeril 2y ago
      Yes, but people can move. Remaining in an urban hellhole is a choice. Bitching about the consequences of your choice, and blaming local policies for your own cost issues when you could literally just get out of there, is a whole level of solipsism I can't believe HN takes seriously. Everything in life has tradeoffs. People complaining about a situation of their own making are simply unwilling to tolerate the "ick" of living among people who aren't fellow bugmen. And that's fine, but they need to own that they've chosen their place along the spectrum of tradeoffs and stop bitching about the choice they've made.
Tiktaalik 3y ago
It's the ground they sit on. The land value of my house is 1.4M. The house itself, a near derelict built 100+ years ago is worth 90k. While construction costs have increased, the actual building product is not the real problem here. What flows from this though is the clear solution: Subdivide the valuable land. Take something worth 1.4M and divide it by more than 1. Create a small apartment of several units on my land and you can generate a product that is cheaper than $1.5M. So the core problem right now is that subdividing land and building apartments is largely banned in many places. Accordingly people are only able to buy very expensive plots of land. (Now yes obviously if you subdivide land the value of the underlying land increases as one can generate more revenue from it, so there's some friction to price drops here, but much has been written about how ultimately this does result in a greater amount of cheaper end product in the grand scheme of things)
- lokar 3y ago
  You can see this clearly in the detail of hazard insurance for expensive homes.
bigtex88 3y ago
Currently in the US (and I'm guessing most everywhere with high housing costs) the problem is that we don't build nearly enough housing. So simple supply / demand takes over at that point. There is way more demand than supply. Add in the mortgage interest deduction (this raises prices because people can spend more than they would if they had to pay the tax on the interest); add in idiotic zoning laws / parking requirements in most urban areas of this country (40% of the buildings in Manhattan could not be built under the city's current zoning laws https://www.nytimes.com/interactive/2016/05/19/upshot/forty-percent-of-manhattans-buildings-could-not-be-built-today.html#:~:text=The%20reasons%20are%20varied.,could%20not%20be%20built%20today https://www.nytimes.com/interactive/2016/05/19/upshot/forty-....) and viola, you have super high housing costs. The problems are easy to fix. Places like Tokyo have low housing costs compared to other cities of the same density. It can be accomplished, it's simply a matter of IF we'll do it. Given that homeowners and landowners have a gigantic portion of the assets in our world economy, I'm not hopeful that they'll ever willingly lower the price of assets for the good of society.
- ericmcer 3y ago
  The population of Los Angeles has decreased in the last 5 years though, is the housing supply also decreasing? I don't understand how housing demand goes up as population goes down.
  - pixl97 3y ago
    If 5 people live in a house and 4 move away that has not changed the housing situation any. If 5 single family houses sell and the people move away, then 4 of them become AirBNB/Verbo's then you've lost 4 houses on the market. There is a ton of different factors you don't seem to be considering.
hnburnsy 3y ago
It is not the building cost (materials and labor) it is also things like... - Impact fees (example California wanted to charge a $23,000 traffic impact fee for placing a manufactured home on a lot. [0]) - Permitting and development timelines - Regulatory requirements [0] -https://calmatters.org/commentary/2024/04/housing-construction-costs-supreme-court/ https://calmatters.org/commentary/2024/04/housing-constructi...
ghaff 3y ago
It's primarily land. And there are (some) areas in the US that geography/etc. makes it hard to basically commute out of high cost of living areas (especially if you want to live urban). I live about an hour out of the nearest major city on multiple acres and my propery isn't Midwest cheap but it's pretty sane.
HEmanZ 3y ago
What use is your 3d printed house if you can not legally put it somewhere that people want to live (near real jobs, schools, amenities)? What are you going to do with it when the local, county, and state government decide there are only a handful of lots you can place one? The price is mostly scarcity created by severely limiting what can be constructed through many layers of laws. You can’t cut through that with innovation.
deleted 3y ago
[deleted]
pixl97 3y ago
> to places where absolutely nobody lives I mean, have you actually looked into building a house in one of those nobody lives places? First question I have is "can you". You might get an outright no on attempting to build it there. Next question is how long before you get permitting. Even if you get permitting, what are the hookup fees for utilities. Doesn't do you any good if it costs a million for them to run a water pipe out to you. >If it is expensive to build a house - could it be optimized, 3d-printed, automated in some way? We 3D print houses now, and this doesn't reduce the price of the house any if at all. Things like electric and plumbing certification cost a ton and are not currently automatiable. And in general pre-manufactured is not allowed or extremely limited in most places.
tzs 3y ago
> Is it the land or the house itself? Some places its one, some places the other. Where I am, western Washington across Puget Sound from Seattle, its mostly the buildings. Here were my assessed values in 2008, 2016, and 2024: Year Land Buildings 2008 82k 158k 2016 55k 149k 2024 94k 309k

by mg 3y ago

Rebelgecko 3y ago

Mostly the former. Plenty of examples of burned out husks selling for over a million

Kalium 3y ago

Decades of policy designed to promote detached single family houses, discourage density, and make it easy to object to construction have combined with tax policy favoring stasis to create a political environment incredibly hostile to housing. This drives up the price of land significantly. Yes, construction can be made cheaper. The current way to do this is by using pre-fabricated modules turned out by a factory. This reduces the cost and time of construction somewhat, but does nothing at all for the price of the land.

caeril 3y ago
> promote detached single family houses, discourage density, The cheapest housing in this country comprises primarily single-family homes in very low-density areas. These homes are substantially less expensive than the vast majority of dense urban bugman studio pods. But yes, if you exclude flyover country because you regard farmers, ranchers, loggers, or steelworkers as subhuman (a common urban attitude), then your abject denial of reality makes sense.
- Kalium 3y ago
  Please bear in mind that in this particular context, we're talking about Los Angeles. There are few farmers, ranchers, and loggers in rural LA.
  - caeril 2y ago
    Yes, but people can move. Remaining in an urban hellhole is a choice. Bitching about the consequences of your choice, and blaming local policies for your own cost issues when you could literally just get out of there, is a whole level of solipsism I can't believe HN takes seriously. Everything in life has tradeoffs. People complaining about a situation of their own making are simply unwilling to tolerate the "ick" of living among people who aren't fellow bugmen. And that's fine, but they need to own that they've chosen their place along the spectrum of tradeoffs and stop bitching about the choice they've made.

Tiktaalik 3y ago

It's the ground they sit on. The land value of my house is 1.4M. The house itself, a near derelict built 100+ years ago is worth 90k. While construction costs have increased, the actual building product is not the real problem here. What flows from this though is the clear solution: Subdivide the valuable land. Take something worth 1.4M and divide it by more than 1. Create a small apartment of several units on my land and you can generate a product that is cheaper than $1.5M. So the core problem right now is that subdividing land and building apartments is largely banned in many places. Accordingly people are only able to buy very expensive plots of land. (Now yes obviously if you subdivide land the value of the underlying land increases as one can generate more revenue from it, so there's some friction to price drops here, but much has been written about how ultimately this does result in a greater amount of cheaper end product in the grand scheme of things)

lokar 3y ago
You can see this clearly in the detail of hazard insurance for expensive homes.

bigtex88 3y ago

Currently in the US (and I'm guessing most everywhere with high housing costs) the problem is that we don't build nearly enough housing. So simple supply / demand takes over at that point. There is way more demand than supply. Add in the mortgage interest deduction (this raises prices because people can spend more than they would if they had to pay the tax on the interest); add in idiotic zoning laws / parking requirements in most urban areas of this country (40% of the buildings in Manhattan could not be built under the city's current zoning laws https://www.nytimes.com/interactive/2016/05/19/upshot/forty-percent-of-manhattans-buildings-could-not-be-built-today.html#:~:text=The%20reasons%20are%20varied.,could%20not%20be%20built%20today https://www.nytimes.com/interactive/2016/05/19/upshot/forty-....) and viola, you have super high housing costs. The problems are easy to fix. Places like Tokyo have low housing costs compared to other cities of the same density. It can be accomplished, it's simply a matter of IF we'll do it. Given that homeowners and landowners have a gigantic portion of the assets in our world economy, I'm not hopeful that they'll ever willingly lower the price of assets for the good of society.

ericmcer 3y ago
The population of Los Angeles has decreased in the last 5 years though, is the housing supply also decreasing? I don't understand how housing demand goes up as population goes down.
- pixl97 3y ago
  If 5 people live in a house and 4 move away that has not changed the housing situation any. If 5 single family houses sell and the people move away, then 4 of them become AirBNB/Verbo's then you've lost 4 houses on the market. There is a ton of different factors you don't seem to be considering.

hnburnsy 3y ago

It is not the building cost (materials and labor) it is also things like... - Impact fees (example California wanted to charge a $23,000 traffic impact fee for placing a manufactured home on a lot. [0]) - Permitting and development timelines - Regulatory requirements [0] -https://calmatters.org/commentary/2024/04/housing-construction-costs-supreme-court/ https://calmatters.org/commentary/2024/04/housing-constructi...

ghaff 3y ago

It's primarily land. And there are (some) areas in the US that geography/etc. makes it hard to basically commute out of high cost of living areas (especially if you want to live urban). I live about an hour out of the nearest major city on multiple acres and my propery isn't Midwest cheap but it's pretty sane.

HEmanZ 3y ago

What use is your 3d printed house if you can not legally put it somewhere that people want to live (near real jobs, schools, amenities)? What are you going to do with it when the local, county, and state government decide there are only a handful of lots you can place one? The price is mostly scarcity created by severely limiting what can be constructed through many layers of laws. You can’t cut through that with innovation.

deleted 3y ago

[deleted]

pixl97 3y ago

> to places where absolutely nobody lives I mean, have you actually looked into building a house in one of those nobody lives places? First question I have is "can you". You might get an outright no on attempting to build it there. Next question is how long before you get permitting. Even if you get permitting, what are the hookup fees for utilities. Doesn't do you any good if it costs a million for them to run a water pipe out to you. >If it is expensive to build a house - could it be optimized, 3d-printed, automated in some way? We 3D print houses now, and this doesn't reduce the price of the house any if at all. Things like electric and plumbing certification cost a ton and are not currently automatiable. And in general pre-manufactured is not allowed or extremely limited in most places.

tzs 3y ago

> Is it the land or the house itself? Some places its one, some places the other. Where I am, western Washington across Puget Sound from Seattle, its mostly the buildings. Here were my assessed values in 2008, 2016, and 2024: Year Land Buildings 2008 82k 158k 2016 55k 149k 2024 94k 309k