Now, imagine the secret of the $1 build is available to at least one other commercial builder. The "your margin is my opportunity" aspect of a free market kicks in. There's a high demand for housing, so competing builders compete for the same buyers. Over time it'd drive down the price.
If this doesn't happen it's probably a combination of:
1. limited land available to build on
2. the money chasing uniqueness e.g. unique builds, pretty views, access to schools, etc.
3. price fixing
4. other..?
If you can reduce the cost of making new infrastructure to a pittance, I'd expect house prices to fall even in the absence of any change to the manufacturing costs.
That's definitely "grass is always greener" thinking, of the same sort that makes others hear about Google project manager salaries and think they should be working as a programmer.
For every one person making 250k+ at a construction company, there are probably a hundred making <100k. Salaries don't go much beyond 120k unless you're in the owner sort of category. And the industry comes along with working 10+ hour days (630am to 5pm is a pretty regular schedule, 4pm on Fridays tho!), outdoors, regardless of weather. And it's physically demanding work
It can be physically exhausting work, and long hours for sure. Still, it's impressive that they can pull in those kinds of figures.
Fluctuations in interest rates, material costs and the housing market in general means they also have a lot of risk on the business side. This is especially true for those building spec houses.
Honestly, compared to the software world, that profit range sounds too small.
In most localities, you can get an idea of how the government values your land vs your home from your property tax statement (improved vs unimproved).
The new houses in my neighborhood were all built 2017. There are 120 units in 2 styles: houses and semi detached houses. They all look identical and they were all built with a lot of economies of scale.
The price 2015 was: 500.000 Euro for the semi detached units.
The price 2022 is: 1.3 million.
The neighborhood did not change, the infrastructure did not improve. Nobody can explain you a logical reason (except of EcOnOmiNCs) why the house price exploded. Fine, some construction risk was prices in, let's be it 10%, also risk of default and other factors 10%. That explains 650k.
My boomer parents came, watched and complained: terrible houses, all look same, no garden, no basement, tiny garage, too close to the neighbors. They bought their house back than for 230k!
And there was this amazing time in Germany where prices for houses did not increase. They stagnated and even slightly dropped - which is intuitive as the house is getting older and less attractive!
The American crisis 2008 destroyed everything and it's incredible that until today we are not pointing towards those who's fault it was.
tldr: houses can be build with economies of scale, prices are up because of American politics 2008+
Is the rest of the world, including the EU, so helpless and agency-less that it can't recover after a 15 year old event that originated on a different continent?
Unfortunately at least in the EU we seem to be (I am your neighbour from CZ). One of the reasons why so much money flows into houses is that they promise better returns than normal stock (shares of corporations). And that is because our corporations have become sclerotic.
Another reason is the artificially low interest of the Eurozone, designed so that Italy and others do not go bankrupt when servicing their own debt. This fuels a mortgage bubble, but it has zilch to do with America.
The Czech central bank raised interest rates (we do not use EUR yet) and the prices of houses stopped climbing very abruptly. They stabilized on a high level, but they don't grow anymore. Given that there are no buyers anymore, the prices will have to go down.
The evidence seems to point to yes. The bottom line is that in many construction rates and employment have simply never recovered in many countries.
As to why the politicians do nothing, I can think of only two reasons. Neo-liberalism has so broken the back of socialism that governments do not have the will. Or legislatures are now so stocked with bourgeoisie property owners that they don't see the problem or in fact they like that they benefit from it.
In the U.S. we have now a panick over crime. The media and the politicians love to point at drug addled homeless people with implications of their criminality. And even the Democratic party has begun to bang the drum for the police "to do something" yet they say nothing about housing.
There is something very wrong in our time.
Our societies have grown older, and with it, they have a lot less tolerance for change. The "get off my lawn" mentality is becoming stronger with every extra year added to the national average age.
That is a very odd way of saying German banks don't want a debt cut. It is very easy to blame Italy and others when Germany runs a structural export surplus by cutting imports which means money is flowing into Germany only to be reinvested abroad where it flows back to Germany through structural trade imbalances. The fact that this is unsustainable shouldn't be surprising, but we want to keep the farce up and point fingers at every other country.
>The Czech central bank raised interest rates (we do not use EUR yet) and the prices of houses stopped climbing very abruptly.
You mean the price of land went down, the price of the house went up because it has gotten harder to finance it.
Also, the EU still does not have a cross border deposit scheme or Eurobonds, so it’s a matter of not if but when the next country gets underwater.
Interest rates falling. As rates go down the price of property goes up. If Europe were to aggressively raise interest rates to 10% then those 1.2 million euro homes would cost about 300k. But the monthly payment would be the same.
Homes cost what people that want to live in an area are willing to pay per month to live there. That means interest, principal, and taxes.
You people are seriously the worst!
The Europeans must get distance to you as much as possible. We have nothing in common.