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Comment by smallmancontrov | Hacker News Reader

Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives. It's undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive. I'm glad to see a focus on pushing statistics to do a better job of reflecting that, but yeah, this is all downstream of structural incentives so fixes are only going to happen through legislative choices that will make people angry and until then the problems will continue to get worse.

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> undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive

Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.

My personal take is that a lot of support for contemporary political extremism in many countries comes from the fact that a significant portion of population is pissed off and see no realistic chance of the 'settle down and thrive' life, not because they are racist/prejudiced or whatever (although labeling them as such only makes things more extreme)

> Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.

It's not really coming from those though? At the same time that housing costs have ballooned, we've also had a significant migration back to cities. When a larger % of the population are living in high density locations you are going to naturally have a larger % not owning homes. Owning your own home does not align with the density required for a city to function.

At the least, narrowing down the topic to 'Why do people rent instead of own a condo?' is a much more meaningful topic over 'Why do people rent instead of own a SFH?' since a condo is a more viable option in locations where most of the renters are.

> Owning your own home does not align with the density required for a city to function

Much of Europe would like a word. I grew up in a block of flats where everybody owned. 16 apartments, around 60 people, lived on the footprint of a typical American house. All our parents were homeowners, together they owned the building. Two buildings actually and the land they stood on.

So a total of 32 apartments, 120 people, a small parking lot, and a bit of green lawn owned by the people who lived there and self-governed through a sort of HOA. Little communities like this were extremely common in the city.

Nowadays with my generation homeownership is becoming a little more rare. Still people own apartments in these self-governed buildings, but many have become priced out. Too much demand not enough build.

Why does being in a city “naturally” mean less home ownership? More demand and higher prices yes, but you also should be earning more and dense housing projects should be trivial to justify. It’s legislation all the way down, politicians protect the interests of the wealthy who want to rent seek regardless of location. Look at how mamdani got a common sense luxury home tax in NYC, before that ultra wealthy owned multiple homes just because they could.

Because multi-family buildings (required for higher density) come with more complicated ownership models. Owner occupied triple deckers in Boston, for example, often come with their own condo associations because there needs to be some way to handle the shared maintenance and expenses.

That's for a three unit building. Now scale that to a twenty or one hundred unit building. At some point, it makes sense for a single entity to handle the common maintenance through outright ownership and rent. Individual families have the flexibility to leave if things suck without being financially tied to the building long-term and subject to changes in housing prices. Yes, moving as a renter is expensive. It's still lower cost and friction than moving as an owner.

Source: rented for years in cities. Now happily a homeowner in the hinterlands of Vermont.

A counterpoint is that a huge number of suburban Americans already have experience with a condo association through being in an HOA.

Rural homeowners and people with single family homes in streetcar suburbs or cities don't, but most new developments already have an organization with dues for shared maintenance.

Pulling from fuzzy memories here, but to my knowledge the legal framework for the bastardized entity known as Homeowners Associations here in the US originated from the exact thing your describe; multiple person ownership in parts of a single building.

One thing soviet commies did right was housing builds. Build factory for city blocks, then just pop them up, constantly, keeping the line busy.

It should really be city that is building the new housing (even if in the end it gets subcontracted, at least the top level have vested interest in keeping the quality and cost in check). Maybe even offer some rent-to-own programs where part of rent gets put into savings that can be used to either buy it after few years of use or be withdrawn when moving so renter have nice lil bit of money to put forward for buying new apartment/home.

Then the city can actually plan for it, rather than hope housing developer that bought the land does something good for city and not just their own pocket.

China and their ghost cities of unoccupied high rises would say otherwise

>One thing soviet commies did right was housing builds

And yet, the housing was a much bigger problem in the USSR than what amounts to "housing crisis" in the USA. One of the big points of the CPSU platform was to provide non-shared living accommodations to each family by the year 2000 (the USSR collapsed before that but the Party admitted they are not meeting the demand already in 1989). In rich cities most of these pre-made buildings had been already scraped.

There's no need for the city to build it, they have zoning plans, and they can easily zone "that corn field over here" into an aera of commie-style apartment buildings (5+ floors, commercial on ground floors, apartments above, garages underground), and assign some percentage of space for green areas.

I live in one of those used-to-be-commie countries, and we somehow manage to keep cornfields in prime locations, and in many areas, the most the local government allows you to build is a two-apartment two-story house, but none of the non-built land is actually buildable, so you need to demolish something else first. Here and there someone is able to build something with maybe 6-8 apartments (probably with an envelope switching hands), but that's it.

It's as if some rich people connected to the government managed to get a lot of realestate in the 1990s when communism fell, and now they don't want prices to drop. But hey, we're building office buildings without any issues and making airbnb even easier instead... so yeah... the situation is pretty bad.

> One thing soviet commies did right was housing builds

I disagree. I have yet to see a nice-place-to-live low-income project. In USA Russia Brazil or Southeast Asia.

There are plenty in e.g. East Berlin. High rises with alot of parks around.

You need to imagine them as they were new though.

Does this look like a bad place to live? https://en.wikipedia.org/wiki/The_Round_Houses_in_Moscow

Easter European commie blocks usually have strategically placed parks, shopping, kindergartens, schools, medical facilities within walking distance. For this reason, apartments in these areas are actually appreciating at a faster rate than housing built from the 90s onwards. It's hardly a Pruitt-Igoe.

Most people don't see that as viable because American cities don't have the public transit needed to make that viable, and equally important, don't have condos built that are the size of a family home. And there's a big push among suburban parents to judge their kids for living in cities, even if they're not as dangerous as the parents think.

If we modeled Spain, we could have more condos. That would require good, safe transit, condos with green space and multiple rooms at a SFH price point, and a cultural change among the older generation to view cities as having less crime.

Housing costs have boomed and are still booming in rural areas and regions where the population is decreasing and all young workers are moving away.

"…not because they are racist/prejudiced or whatever…"

Perhaps wealthy actors (or those representing them) are attempting to distract the aggrieved—focus their anger toward some non-wealthy group.

This seems like an interesting theory, but when I look at the two ways it may be actuated it seems to fall apart.

Either there is explicit collusion where they meet and discuss how to do these things, or there is implicit collusion where they all act in their own best interests and the results is the same. Neither of these mechanism seems particularly likely to me.

I would be happy to hear some thoughtful explanation of how other people approach this issue

I agree that your two examples don't stand up to scrutiny.

There is historic precedent for blaming immigrants (as an example, or just others, if you like) for one's woes. So on one hand you have well-known "playbooks" that don't require some secret meeting of a cabal.

That aside though, even if actors don't collude, if they're each throwing a lot of things at the wall, they may well all arrive at the same things that seem to "have stuck". It's as though there are universal fears and even prejudices among populations of people.

Hi, this is a well known phenomenon in politics that is much discussed in political science and sociology, and goes by many names (strategic polarization, racial capitalism, split labor market theory, etc, and depending upon how you frame it, it encompasses all politics going back to Plato’s Republic). There are many examples where elites have stoked division amongst the poor (usually along ethnic or religious differences, but any difference can be utilized).

The most famous examples in America were the divisions created between poor white and poor black Americans during Reconstruction and the Jim Crow era to prevent them from forming class solidarity, and then later, the Southern strategy that enabled Nixon and the Republican Party to regain power during and after the Civil Rights era.

If you are unfamiliar with this topic, you can look at wiki articles and blogs like these, and then go deeper by reading academic papers and books on the subject.

https://en.wikipedia.org/wiki/Split_labor_market_theory https://en.wikipedia.org/wiki/Black_Reconstruction_in_Americ... https://en.wikipedia.org/wiki/Southern_strategy https://belonging.berkeley.edu/new-southern-strategy

This is seriously the basis of the manual of populism as mass control tool: identify something attacking their group identity, hang it before their eyes, and they will follow you blindly in every other aspect. Many books have been written about this and nowadays we can see their implementation at work about everywhere.

You can spin many things to sound as racism if you want them to.

My small eu country has in the recent years started importing workers from asian countries, and people are against that... of course it's branded as 'racism' in the media.

The reality is, that some businesses have been having troubles with finding workers to do hard work for minimum wage (which is easily solvable by paying people more and creating better working conditions, but hey, think of the profits), and importing foreign workers means that wages can stay down. We're talking about AI and how we'll all lose jobs,and at the same time, importing new people, and that doesn't compute for many, especially those underpaid who can't negotiate for better options because the government approved new foreign workers in their field.

Then you have the more on-topic problem of importing thousands of "outsiders" into a relatively small city (~300k pop), without building any housing, neither for them, nor for locals, who want to move out their 30+yo "kids" out of their childhood bedrooms, nor for others living a bit further away who'd like to live closer to work. Sure, you can fit 8 "poor foreigners" into a 2-bedroom apartment with 4 bunk beds for 200/month each, and it'll be cheap for them, but for a young couple wating a child, 1600eur for such an apartment is around 1/2 of their combined income, so nope, no apartment and no kids for them, since they have nowehre to put them, and "we need foreigners, because our people are not having enough kids".

Then the third problem is integration... and the government does nothing about it, no language courses, no nothing... the laws say that businesses must use our native language, but in some areas, you can interact even with waiters or shop clercs (so, first line of interaction with customers) who can't speak a word of it.

But hey, it's easier to say "racist people hate foreigners", than to solve the issues.

Because the issues are nearly unsolvable.

Your small EU country probably has a replacement rate of something like 1.5 which means you're heading towards extinction. This puts a crimp on labor and increases wages, and it leaves openings in higher paying jobs which people want. You end up with no one to do naturally lower paying non-specalized labor.

Modern standards of not having 100 people die in a house fire have changed the dynamics of where immigrants live when they moved to a country. New York City, for example, just shoved people nut to butt in the smallest most unsafe places they could make. We don't do that in first world countries now, so something has to give.

It could be 1.7 if we actually built apartments young people could afford.

It could be 1.9 if we had better paid jobs for those without college.

We could have even more if kindergarden didn't cost as much, and if people could afford everything else.

"Back in the time", you'd start work at 18 (or even earlier, most people didn't go to college), settle down with a partner at 20, 21, and what else is there to do than to make a kid? And since it was communism, having a kid meant you'd get a larger apartment. You're 23, 24... another kid, why not, you're still young. Third kid? An even larger apartment!

Now, you need college to get any kind of proper job, so nothing before 25yo, then you need to build up your career, and the age of first kid is going towards 30yo (for mom) or more. That's before accounting for the place to put your kids in. We used to build apartment buildings in communist times, now we don't. And it's not unique to communist areas, even in places like london and paris, low income housing blocks were being built in the 1960s, 1970s and even 80s,... now? Almost nothing.

So, change the law, import as much workers as you've built housing for, give priority to locals with zero houses already, give tax breaks and create assimilation programs (language first) for foreigners. You can't just bring people in, without having (livable) places to put them in and then leave them be. Hey, you big company needing workers... until you pressure your mayor to approve more housing, you won't get them, and mayors listen to "big money". But nope.

I like your take. Do you feel it also a lack of interest in genuine evaluation of hard options?

Not all policy is easy to understand, but I feel (anecdote) that lots of folks don’t want to understand what isn’t an obvious benefit to them, especially if benefits accrue over a longer period.

> Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.

That's been a long standing element of capitalist propaganda: attempt to distract and invalidate people's real, legitimate complaints about their situations by noting that not even the Kings of old had color TVs and refrigerators.

Who cares if your housing situation is insecure, getting healthcare is challenging, and politically you're dis-empowered? Look at the boob tube and rejoice at your good fortune!

> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.

BLS says housing, transportation, and food are the top 3. Insurance/pensions is #4, but that also includes car and homeowners insurance and retirement contributions.

Over the past 50 years, both transportation and food got cheaper. Moreover, clothing actually used to be one of the top categories, but that’s fallen off completely.

I've never owned a car since I live in NYC (I'm in my 40s), so the only transportation numbers I'm vaguely familiar with are with the subway. The MTA budget has gone way up over the past 50 years [1] and the cost to build the subway in NYC is hovering in the $2 billion/mile range. This is largely political and bureaucratic, as in Japan and Europe it's about $200 million - $400 million/mile. [2]

So clearly something is going wrong with the way we deal with our mass transit as well if Paris can do things for a fraction of NYC.

[1] https://nypost.com/2017/06/25/it-took-50-years-for-the-mta-t... [2] https://www.city-journal.org/article/why-cant-new-york-contr...

I should have said "mandatory expense inflation", yes. There are still some difficult problems the economy is making progress on, but the correct attitude towards those is "keep up the good work" and to focus our attention back on the parts which are robbing us of progress as fast as we make it, where costs soar in excess of wage increases: health care, housing, and education.

Transportation has got cheaper? That seems at odds with what I'm seeing (although I was only 12 years old 50 years ago).

Gas prices have barely changed in inflation adjusted terms over last 50 years, and if anything, the trend is slightly downwards. At the same time, inflation adjusted incomes went up, and cars became significantly more fuel efficient.

I have a hard time believing healthcare expenses is not in the top three.

It might be that a lot of the cost doesn't show up in the data because it comes out of your paycheck before it's "yours," in the form of your employer's contribution to health insurance premiums. (Anecdotally this is true for me - "my" portion of premiums would not be in the top three, but the total premiums are #2 after housing (for a while when I had roommates they were #1, which is ridiculous).)

(BLS gets this data from surveys: https://www.bls.gov/opub/hom/cex/home.htm )

Correct. You can argue this is money that you’d otherwise get if it wasn’t going to healthcare, and that’s a fair point. But then you have to count that in the top line income.

I don't know about the first half of those 50 years, but over the second half (2001-today), transportation - or at least cars - got significantly more expensive. Disappearance of cheap new cars + massive supply reduction of used cars + repair costs of old cars + gas prices.

Inflation has been high enough that it messes with our perception of things, but I believe the data shows otherwise (at least in the US).

- Disappearance of cheap new cars: You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars and many more of those cars will last until 200,000 miles and have safety features only available on luxury cars in 2001.

- Massive supply reduction of used cars: I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities. That said, cars these days have much better quality and last longer. A car with more than 100,000 miles in the 90s was near the end of its life. That's a typical listing Facebook marketplace these days.

- Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier. Even simple things like recommended oil change frequency changing from 3k miles to 10k miles for most models makes a huge difference in total cost of ownership.

- Gas prices: Gas prices have certainly spiked recently (gee, I wonder why), but the cost of gas in real dollars has been higher several times in the past 25 years (see the second chart here: https://www.macrotrends.net/4453/us-gasoline-prices) It peaked in 2008 over $6 per gallon in 2026 dollars.

> You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars

For comparison, an entry level car in 2001 was <$9k. That's <$18k in today's dollars.

The extra safety features is part of why transportation has become less affordable, yes.

> I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities.

That, plus Obama-era Cash for Cars, plus engines becoming so complicated and expensive to fix that 10+ year old broken cars are scrapped rather than repaired at much higher rates.

You used to be able to buy a car for literally less than $1000 that would last you a few good years with minimal maintenance.

> Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier.

Not 5x more reliable, as in requiring 5x fewer engine renovations over 15 years now that it costs 5x more to do so.

I wonder if some of this will reverse once more electric cars are available on the used market, which are cheaper to fuel and require less maintenance. Already some of the explosion of non-luxury EVs with >200 miles range around 2020ish are starting to be available used, albeit a bit more expensive than gas counterparts.

If battery degradation isn't too great, maybe in 10 years people can buy 15 year old EVs that are cheap to maintain and run (for those who can accept the tradeoffs of EVs - and that would reduce demand on ICEVs). We'll see.

The numbers are just bullshit. The current inflation numbers tell us the price of health insurance is falling for example.

When reality seems to be in conflict with logic, the next step is to question assumptions.

Is the cost of health insurance falling because people are settling for worse plans?

I would wager they are non insured and going to the emergency room when desperate. As another poster linked healthcare costs have grown exponentially.

https://www.aei.org/carpe-diem/chart-of-the-day-or-century-8...

It's a bit like when the inflation basket subs ground beef for steak, and then says food is getting cheaper.

Where are you seeing inflation numbers showing health insurance falling?

The CPI showed health care price dropping by 7% in the most completed numbers, which were June.

It's fucking ridiculous and obviously so. The problem does involve methodology and so on but mostly it's just that "the map is not the territory" to be honest. The CPI is a synthetic measurement.

There are other examples too. It's not just health insurance. For example, interest rates are generally excluded from the CPI. So they don't affect the tracked price of owning a car even if they cause car payments to go up by double-digit percentages. Which has actually happened.

If you want a link though: https://www.bls.gov/news.release/cpi.htm

Scroll to health insurance and note that it's showing over a 7% decrease year over year.

Industrialized agriculture drove the cost of food from 50% of a normal person's income hundreds of years ago to like 5% now.

The problem is that after a few centuries of relatively good times, structures have been built up so that the owners of assets can claw back all that income again. They are using housing as the sink for all that wealth, because land can't be industrialized.

They want us to be peasants again.

> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.

Definitely true for my household. The mortgage, college for the kids, and health insurance for a family takes up a huge amount. Not to mention the housing expenses like HVAC fixes, trash collection, sewer, utilities, etc.

It's not a coincidence that the three sectors you mention are the three most heavily regulated and subject to political intervention in the US, all with schizophrenic policy frameworks that simultaneously restrict supply and subsidize demand.

luxeries also haven't gotten cheap, really - their manufacturing has been outsourced into places which often don't pay decent wages - so it's just out of sight/out of mind.

We're currently living in a time where some of the issues are being hidden by the nature of a global market - it's friggin impossible to make any good analysis with a global market, it has just too many influences and ways to hide criteria...

> Health care, housing, and education

In Europe its only housing, and still proportionally cheaper than what US has, often in higher quality for older homes (bricks / concrete vs cheap creaky wooden houses).

The idea of saving massive amounts for my kids potential university studies is ridiculous to me. Same for any health issue. I mean any health issue as long as I can work, and then social state takes over (that is not ideal but at point nothing is).

This is also how happiness can be defined - lack of (much shorter list of) constant worries and pressures to deliver, sustain etc.

In the US, bricks and concrete are unsafe, not "higher quality". Much of the US has severe earthquakes which collapsed the European-style masonry buildings they used to build. There are many old photos of what happened to cities that were built with brick/concrete after major earthquakes. The main alternatives are steel and wood, same as in Japan.

My home is rated to survive earthquakes stronger than any in recorded European history without structural damage.

Concrete houses suck and Europeans need to get off their high house about them. I own a concrete brick house in Europe and I’d strongly prefer a wooden American one. It’s hard to insulate, hard to alter, uglier, has a terrible embodied carbon footprint, has too much thermal mass, and alterations that would make it more livable (like having eaves) are illegal.

On the flip side, window AC's are really effective at cooling the single room they're in.

In the wooden house I have, I just can't get the room that cool if the temperature is in the 90's, because the internal walls provide very little insulation. It was trivial when I lived in concrete buildings. It's a ridiculous waste to have to use central air conditioning to cool a whole house when I really just need to cool 1-2 rooms.

OK, but window AC and also mini and multi split systems, which are also like this, work just fine in wooden houses, so I don’t see the connection. I had multi splits in a wooden house in Ireland.

Edit: re-reading… I guess it depends on the house but I definitely have had a substantial temp difference between rooms in a wooden house

We may just have different standards on what "cold" means :-)

Let's say it's 35C outside. Just using a window AC alone, I want to cool the room to where I'm uncomfortably cold (not quite shivering but close) - within about an hour of turning it on (2 hours max). I can't do that with my wooden house in the US when the outside is that hot. I can make it comfortably cool, but no cooler.

(I had better experience in a wooden apartment building, but that's likely because the walls between apartments have insulation).

Actual numbers: If I leave the AC on at max cool all night, I can get the temperature down to 20C. Keep in mind that it's cool outside at night (and actually will dip below 20C at some point at night).

I've never gotten it below 20C.

When I lived in a concrete place, we would never set the thermostat on the window AC to the coolest setting - it would get too cold!

(Yes, I clean the filter and have even replaced the AC - the unit wasn't the problem).

> I'm glad to see a focus on pushing statistics to do a better job of reflecting that

“You have lies, damned lies, and then you have statistics”

> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives

In every developed country two of those are basic human rights, and you get them free even if you’ve never worked simply because you don’t want to.

Every developed country except one, that is.

It's not possible for any of these to be "basic human rights", regardless of what rhetoric may be employed by states seeking to assert centralized political control over their provision. Goods and services that must be actively supplied by other people cannot be rights.

Rights are norms that protect people's inherent rights unto themselves as baseline rules we use to negotiate society in the first place. They can't pertain to things that can only be obtained within society.

All of those are free to the poor in the US with our very generous welfare to the bottom and top percentiles.

* assuming you don’t live in a state with a Medicaid work requirement/disqualified by earning “too much” as working poor, and lucky enough/have dependents to win a Section 8 voucher from the lottery after waiting for months to years

I agree the working class gets screwed over as usual.

What a shame it’s not for everyone

>this is all downstream of structural incentives

You are mostly right and the structural incentives are more related at root to unsustainable national debt than any legislative choice (unless that's what you were referring to)

I don’t follow your logic. The recent legislative choice by the current administration is continued tax breaks, corporate tax holidays, and capricious tariffs. There is no serious discussion about the debt.

Nobody spends like republicans.

Trump increased the national debt by $7.8 trillion in his first term (rising from ~$19.9 trillion at inauguration to ~$27.75 trillion when he left office), 39% increase (more than WW2, the Manhattan project and the Moon landing combined)

Each and every US citizen will be required to pay $22,400 for the (ahem) accomplishments of Trump's first term.

So far in his second term, Trump has added $3.2 trillion so far, if you calculate by the end of his second term it will be about $8.8 trillion.

Each and every US citizen will be required to pay $25,000 for his accomplishments now.

For comparison: you owe $9,200 for Barack Obama's last term, and $20,300 for Joe Biden's term. Oh and Clinton was by far the cheapest president since WW2, increasing the debt by a measly $600 during his 2nd term.

I don't see how. National debt is just a form of money-printing. And it has to equal private savings.

Not necessarily local savings though. Savings from other countries works just fine.

Nothing to do with poisoning the non-AI parts of the economy to drive investment in AI? Its not like this bubble was gonna blow itself.

It's clear that there's plenty of money to go around. It's just that none of it is being spent on things that improve people's lives, mostly due to corruption.

These problems have existed since well before AI.

Sure, it's only the most recent example of how lopsided economies like ours cyclically shoot themselves in the foot.

Or we just wait for automation and robotics to make building housing much cheaper and the free market system to fix things - which 5 years ago I assumed was too far out, but with all the advances in the sector, seems like we might get significantly cheaper building costs within the next 10 years or so.

The cost of housing mostly isn't in the building. If it was, we'd just build smaller and have houses. But you can't because the land costs too much.

"If it was, we'd just build smaller and have houses."

Someone needs to tell the big developers. They keep turning out McMansions (and somehow selling them?).

There's no profit in building smaller.

The local business producing single-wides seems to be doing fairly well and has been in business for over 60 years, so I am not sure it is accurate to say that there is no profit. The market is small, though. If you can afford a small new house you can also afford a large used house and most people are going to choose the larger house every time. In aggregate, there isn't a whole lot of incentive for someone to build a small house.

Yep. If you're already paying for whatever the city says is the minimum amount of land you can buy, the house on top is trivial.

Huh? I have a 650sqft house, it costs 430K in a small town. I looked at building a new place, it would cost roughly the same to hire a building team to make it - not to mention years of waiting on development. The land is fairly affordable if I buy a little bit out of town. It's the cost of building that is stopping me.

If I look at the value of the place where I'm living, a bit more than 2/3rds of it is attributable to land instead of structure. This ratio will change depending on whether you have a multistory structure on a small plot of land, or a SFH with a yard on a larger plot, but land/value ratios > 50% are typical.

Houses depreciate. Markets can do funny things (remember the COVID days when a used car could sell for more than the same new car?), but generally the remaining value of a standing structure is going to be a fair bit less than the cost to build the same thing new. It is likely that the parent also sees >50% land value on the current property now that the house has been lived in and is showing some wear and tear, but key here is that to rebuild the building from scratch it would cost as much as the land plus current building is worth just to build the same structure again.

I guess it depends on how you look at the numbers.

My current place would sell for say $1.4M or so.

The lot itself is worth around $600-700k if it was empty.

A similarly sized home would cost well over $1m to construct to similar quality levels - normalizing a bit for modern construction techniques and all that.

So about $2.4m to build new, or $1.4m to buy a fairly similar 25 year old home next door. New construction here costs more than the older structures on the land in most cases. This ignores permitting and financing costs which throws a light wrench into those calculations, likely making it a bit more expensive on the build side.

That is using numbers I would pay a custom builder for, but even if you add in 20-30% profit for the builder the math isn't super great for the new build end of things.

If it's costing $650+ per sqft to build, it sounds like there may be some externalities about the site(s) that might be relevant here?

For scale, in much of the country it is possible to build a new home for well under $200/sf. New detached homes retail for <$175/sf, which includes the builder's profit.

I had a 1200 sqft house built for about €180,000 in Ireland.

Why would you build a small new home when you can buy a large used home for the same price?

1- Costs of operating an larger house are higher than a smaller house 2- Yearly maintenance of a new house is cheaper than an older house (older the house, the greater this gets) 3- Easier to keep a smaller house tidy 4- Mobility/lifestyle issues. 5- Indifference towards resale value

Not everyone wants a giant house, and plenty of people like a small one. It's not the size that matters, it's how you use it.

I don't think anyone is talking about giant houses. Last time I priced a new 1,500 sq ft home they wanted over $800,000. That was an instant nope from me. Another commenter pointed out that their 650 sq ft home would be $400,000 to build new. These are already beyond most people's affordability even before considering the cost of the land.

So when we talk about small and affordable we're talking more like 100 sq ft. Large compared to that is what most would call a modest home.

Okay, if you just want to have a conversation with yourself I can see myself out as you addressed literally none of what I said and went off on some affordability tangent about housing in general.

Housing prices are too high for most people to afford. That wasn't what the sentence I responded to was asking about.

It does address what you said: Nobody is talking about giant houses. In context, "large" houses are still quite small. It remains that very few people want a 100 sq ft home even if it is technically cheaper to own and easier to take care of. If you won't give your comments any thought before posting them I'll happy keep making fun of them.

If homes were expensive we'd buy less of them.

Which is why we do buy less of them nowadays. We're buying slightly more of them than we did during the Great Depression, but we are on the low side as compared to the historical norm. If we bought more of them we wouldn't be talking about it in the first place.

How about a bit of empathy. People don't have 10 years to wait for necessities, those vulnerable are suffering today

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