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Comment by PretzelFisch | Hacker News Reader

Why would the builder want to build enough to let prices drop? They seem to play a lot of games to give buyers incentives that do not lower the sales price.

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My wife really wants to build a house; we've started by doing some light remodeling using GC's who also build houses to a "get a feel for it". There's a strong incentive for a good GC to truly believe the estimate he gives you. (They're all dudes, around here.) However, that estimate is rarely close — usually the budget goes over 50–100%. Here's the thing: the GC gets paid off the total cost, not the original contact, and he gets a cut of the cost. So, really, there's no incentive at all for him to control costs.

A buddy of mine works for a large grocer down here (HEB). The way HEB builds is that they get a build contract and a bunch of lawyers, and the GC has to demonstrate that they have enough assets that HEB can go after to make them (HEB) whole. If the GC goes over estimate, then that's on the GC, not on HEB. HEB gets a building or they take the money back.

As an individual, you can "act like HEB" by going with a major builder. Down here that'd be Pulte or someone like that; alternately, there's a lot of high quality factory-built custom homes. I'm trying to convince my wife that we should build a metal building on post-and-beam with a crawl space. We can build a minimum viable house for 25¢/$ compared to a custom, and the quality is straight-up an order-of-magnitude better. The rest of the house can be finished out using off-the-shelf components.

I'd be interested in any details/links you can share about a metal building post-and-beam.

Well because they hold inventory. If homes didn't have a year long build pipeline with another 6 months+ holding for sale buffer they'd probably care a lot less. Otherwise a 10% drop in prices can lead to their bankruptcy.

Oh, that's good. Those are institutionalized builders who hold inventory. Let them go. Let builders who are paid workers to do the job, whose income doesn't depend on house price but is described in contract between owner, bank and the builder. What's wrong with such a schema?

Most houses are not built 1:1 with the land underneath it. Builders buy larger plots and then use it to make multiple houses. So a builder would need to enter at least the land risk in your scheme still.

Then if they had to wait for each plot and future house sale to occur before pricing the sale they couldn't get economies of scale.

Effectively your scheme turns every house into a more complicated bespoke futures contract with more parties involved.

There maybe benefits to that but it doesn’t seem like a system designed to get more houses built.

It surely wins if the other side just walks away from the problem.

Only if there isn't still demand for more houses or a growing population.

Otherwise houses won't get built and the prices of existing houses will go even higher.

>Builders buy larger plots and then use it to make multiple houses.

Most people that had their house built decades ago don't realize the requirements for things like runoff control in modern subdivisions. In the past your water was someone else's problem, which as populations grew lead to some people getting screwed when flood waters reached new heights because of all the new impermeable land. Water impounding and runoff control are very hard to build by an individual unless they have a large chunk of land (which acts as the sink). Any dense new SFH typically ends up in a MUD that provides all the utilities and water controls and this is insanely expensive unless distributed across a large number of units.

If we want to control housing prices it won't be by building more SFH. It will be by building more dense style housing.

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