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Ask HN: Disrupt Housing?
This may be a dumb question but why is housing so expensive? Or I guess to rephrase that question more correctly why DOES IT HAVE TO BE so expensive??
Do you think in the near future with improved robotics, materials, building methods that an average size home might cost $25000 instead of $250000?
- gexla 14y agoSupply and demand. A house which is 60 years old and has changed hands many times doesn't cost X because the owners are still paying off the materials. It's because demand is driving up the cost. Even with cheap materials, the land the house sits on may still be scarce (depending on the location.)
- mpg33 14y agoSo in a sense housing will always be expensive because of scarcity of land and demand for housing?
- gexla 14y agoAgain, it depends on demand vs supply. Land in the middle of nowhere in Alaska is abundant with little demand, so land there isn't considered scarce. In Manhattan, New York, demand causes increased living space to be created by building upwards. In San Francisco, city restrictions on building heights limit supply (can't stack as high vertically as you can in Manhatten.)
- adrianmn 14y agoWhen it comes to real estate the 3 most important things are location, location, location. Most city centers do not have options to allow more housing as they are fully built. The improved materials already reduce the house building costs compared to 10-20 years ago but this mostly applies for rural areas....
- mpg33 14y agoSo what about increasing supply by building more?
- adrianmn 14y agomost of the highly desirable areas are either fully built or land costs a fortune. this is exactly the problem for housing prices: supply can't increase while more and more people want to live there(world population keeps growing and migration is at peak levels) opposed to that there are countries, cities or neighbourhoods where you can buy property cheaper than the price of building it
- GFischer 14y agoFor example: a lot of Detroit, Michigan.
- dinkumthinkum 14y agoThis really shouldn't be downvoted because it's completely right. Improved materials can have the opposite effect as well. There are other factors besides location but that's the primary issue. Now, two houses in the same neighborhood, comparable view, etc could vary in price because one is new, more modern, more energy efficient etc.
- lutusp 14y ago> This may be a dumb question but why is housing so expensive? Or I guess to rephrase that question more correctly why DOES IT HAVE TO BE so expensive?? That's easy to answer -- housing is expensive because in an open market, prices rise in response to demand. More demand, higher price. Less demand, lower price. > Do you think in the near future with improved robotics, materials, building methods that an average size home might cost $25000 instead of $250000? Possible but not likely. The cost of a house includes the cost of the land the house sits on, and persistent rumors have it that they're not making any more land. To see the sense of this, compare the cost of a house, with land, versus a similarly equipped mobile home, with wheels. The mobile home costs less because it has no land to call its own.
- genwin 14y ago"Supply and demand" is the obvious answer, but it doesn't answer the follow-up questions: what's fueling the demand, or lowering the supply? The answer to those is: easy borrowing, and foreclosure stickiness. Actually, easy borrowing fueled the demand in the past, and the bubble is still deflating, slowly because of foreclosure stickiness. If people had to pay cash for houses I'm confident house prices would be half or less of what they are today, in most areas. If banks got rid of their non-performing mortgage loans in short order, I'm confident that would cut house prices in half in most areas. House prices are also a hot political issue; namely, each generation wants future generations to pay excessively for their houses when they retire, so they support the gov't borrowing heavily to fuel house prices. (Of course they want future generations to pay for the gov't debt too.) Improved robotics, materials and whatnot will have limited effect on house prices. A lot of the savings would be absorbed as greater profit for construction and renovation. You see this happening in the pre-fab industry. For the next decade at least, nothing beats buying an existing house, financially. Most houses in the US are selling for less than replacement cost.
- ippisl 14y agoOne factor that increases housing prices is that people are competing on houses near good schools, because of the importance of education. But education might become less dependent on geography(by using remote ed tech) or in some scenarios(better AI) much less important, which will indirectly reduce housing costs. Another option is a growing availability of remote jobs and better remote social lives( remote telepresence and video conferencing, access to great and varied food through sous-vide, generally better digital experiences) might also decrease the demand for city life.
- mpg33 14y agoso if ideal geography and location increases price of land thus increasing cost of living in an area...then is it possible to disrupt this scarcity of space problem?
- tokenadult 14y agoOne factor that increases housing prices is that people are competing on houses near good schools, because of the importance of education. It's interesting that people who are in the business of selling houses and lots will tell buyers that they are selling a place "in a good school district" even in states like Minnesota, where there is statewide public school open enrollment, so that anyone can live anywhere in the state and send their children to schools anywhere in the state. http://education.state.mn.us/MDE/StuSuc/EnrollChoice/index.html http://education.state.mn.us/MDE/StuSuc/EnrollChoice/index.h... In my public school district, which aggressively seeks open-enrollment students, there are students enrolled with residence addresses in the territories of FORTY-ONE other public school districts. We happen to be homeschoolers who live in this school district for other reasons, but it amazes me how many families think they have to live in this school district to have their children in the schools here, when the law has been otherwise in Minnesota for more than twenty years now. Agreed that decoupling work choices from residence address constraints will help change the market for housing. Having public school open enrollment in all states, with public school funding rules more like Minnesota's http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf might also help rationalize the housing market, but the example here shows that will be a slow process as families readjust their habits in shopping for housing.
- autophil 14y agoYes, yes and YES. I think there's huge possibilities here, but the challenge isn't in designing or construction, but of re-education. Some people think owning a traditional home (and cars etc) will make them happy. We know that's not the case. Materials possessions and keeping up with the neighbours does not make people happy. That reality needs to be more widely accepted for a true disruption in the housing market. My .02.
- genwin 14y agoWhat's the alternative? I think it comes down to renting or buying. In the long run I'd say that owning leads to more happiness, since rent can be a lot more expensive in the long run (excluding buying during occasional housing bubbles).
- autophil 14y agoI would argue that the more you own, the more you have to lose and the more vulnerable and fearful you are. The less you own, and the less reliant you are on others and material possessions, the more at peace and happier you will be.
- genwin 14y agoI agree in general, but I think most people are genuinely more at peace and happier when they have a permanent roof over their head at night, in which case it comes down to renting vs. buying. They can still have few material possessions at home. Some of my friends were mobile for years, living out of vehicles, but eventually decided that having an apartment or house is better.
- autophil 14y agoNothing is permanent in life.
- vermasque 14y agoRenting a place to live is form of reliance; in this case, the renter is relying on the landowner to maintain the property and allow the renter to live there. Ultimately, we have to choose between what freedoms we want and what freedoms we are willing to sacrifice to live a good life. I've rented for a while because I needed the freedom to move around, and it has been the right choice so far. My parents own a home, and it has been the right choice for them considering that they have settled in one location for a much longer time.
- mpg33 14y agoInteresting TED talk on Automated Construction http://www.youtube.com/watch?v=JdbJP8Gxqog&feature=player_embedded# http://www.youtube.com/watch?v=JdbJP8Gxqog&feature=playe...!
- impendia 14y agoLowering house prices in Silicon Valley by 70% would be trivial: Let developers build what they want to build, where they want to build it. Those with $1MM+ houses, however, oppose this for obvious reasons.
- alpine 14y agoThis is also the case in the UK. Property price here is a trivial expression of the supply/demand function. Yet no one from any of the political parties will suggest the obvious: build. Those with £1MM+ houses (which includes all our politicians) seem to be against this (for some reason).
- seachanged 14y agoYes, sewage treatment and treated water supplies are completely optional for successful development, and unnecessarily increase the price of the house that is serviced by them. You can provide you own protection, so you don't need the police (I'm actually half-serious on that), and firefighting is just a scam. Why, I bet that you could find an insurance company that would insure your house without it being protected by a fire district. Heck, you don't need homeowners insurance at all! Just buy your cheap house outright, and there's no need! And zoning laws? Who needs them! People can live just as comfortably downwind of a sewage treatment plant or an oil refinery as they can by a lake! It's a scam, front to back! And to answer the poster's original question, why is housing so expensive, read Adam Smith's "The Wealth of Nations." Even if you just pick it apart, and read the chapters you want, it's a fascinating description of .. well, the wealth of nations. Rents are part of that equation, and he covers it.
- venturebros 14y ago"why DOES IT HAVE TO BE so expensive" It doesn't have to be. I live in a large city and all of these new apartment constructions are popping up. The thing about new apartment constructions is that they come with gyms,parking spaces, roof top decks w/ bbq grills,movie theaters,etc. All things that I and many others don't need.Yet my option is pay for it or pay half and move into a 100yr old building with "vintage old world charm". It would be nice to see a trend of new modern buildings with out the frills so people have some place affordable.
- brudgers 14y agoSeveral issues drive typical home prices. Among them are increases in buyer expectations and the cost of entitlement. Before modern development regulations, the infrastructure costs of greenfield development such as roads, schools, parks, and emergency services could be passed on existing residents. There were few or no environmental regulations to deal with either. As these costs are tied to entitlement upfront development costs rise, and thus the development of higher market segment products makes more economic sense - one feature of real-estate development is that it takes about the same amount of time money and effort to do a small budget project as a large budget one. To see how far consumer expectations have changed imagine the 800 square foot Levittown floor plans being marketed for growing families today. http://tigger.uic.edu/~pbhales/Levittown/building.html http://tigger.uic.edu/~pbhales/Levittown/building.html Of course the other piece of the puzzle is that housing in the US has been disrupted several times over the past 150 years, from balloon framing with dimensional lumber (factory production), the development of the mobile home (again, factory production), to modern large subdivision development such as the aforementioned Levittown (economies of scale using mobile production crews performing repetitive work). The problem with robotic production is that the capital investment is high, the demand for the product cyclical, and the end product is not transportable in an assembled state (except for mobile or modular housing).
- nfriedly 14y agoNot exactly the direction your question was heading, but check out http://shelterpub.com/ http://shelterpub.com/ - they have a few books about building your own house (for considerably less money than buying one.) You still have to get the land somehow though.