>People concerned about building more housing are right to pay attention to zoning and land use rules: over 100 million Americans live in places where most of the cost of residential property comes from the land itself. But they should not neglect the physical costs of building homes, which are overall more important.
I think the author misses the reason people focus on the post-construction demand/supply issues, rather than the cost of construction parts and labour. You can only reduce the cost of parts and labour for newbuild properties (improvements in prefabrication techniques for example, will not reduce the construction cost of a 1930's townhouse). The price increase from building a home becomes essentially irrelevant, as far as construction costs are concerned, the second it's complete.
Supply-side changes & reforms impact all houses - new builds and existing properties. Increasing supply or reducing demand lowers the price of all homes, which is why people focus attention there.
Reducing the cost of newly built housing does also reduce the resale price of existing old-stock housing, because they're competing for the same buyers.
In urban areas, the limiting factor in urban housing supply isn't the cost of construction, it's the finite quantity of land with a valid state-granted construction permit. We could innovate until the cost of construction approached $0, but if there's fewer homes supplied than there are people demanding them, the prices will rise.
This is why in Brooklyn, an entire townhouse can cost $2.7m, while the neighbouring plot of empty land costs $2.4m, then a short walk away an un-permited empty plot is $700k. The item of value in the housing market market is weirdly mostly not houses.
Kind of. A house built in, say, 2024 would have to be quite significantly less costly before I’d consider it over a house from, say, ~30 years ago. Construction is making a terrible name for itself. I am far from alone in this mentality.
Sure, but the market will/would equilibrate to a price differential for new vs. old stock. What that differential is ( and how it matches to your personal valuation) is irrelevant to the net validation decrease.
It really depends on the area and builders and buyers - around here 30 years puts you right into the last building boom, so the average house from then isn’t necessarily well build, and is much worse from an energy/HVAC viewpoint.
I think the author misses the reason people focus on the post-construction demand/supply issues, rather than the cost of construction parts and labour. You can only reduce the cost of parts and labour for newbuild properties (improvements in prefabrication techniques for example, will not reduce the construction cost of a 1930's townhouse). The price increase from building a home becomes essentially irrelevant, as far as construction costs are concerned, the second it's complete.
Supply-side changes & reforms impact all houses - new builds and existing properties. Increasing supply or reducing demand lowers the price of all homes, which is why people focus attention there.