What Makes Housing So Expensive?

A typical American 1600 square foot single detached home costs $180K to build (~$122/square foot). Costs beyond that:

- the land underneath the home, which can be expensive or cheap, depending on location. Land costs are consistently in the order of 25% of the total cost.

- construction costs tend to be higher in more expensive locations (New Tork City)

- financing costs, $12K

- real estate/marketing fees, $27K

- builder profit, $60K

- permits and inspections, $19.2K

- architecture and engineering, $5K

Most significant is that about 125 million Americans live in a place where the land cost is more than 50% of the total cost and 16 million live in a place where the land share is greater than 70%.

In those places, lower costs come from allowing greater density, which divides the land cost among a much greater number of housing units.