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Comment by jenniferhooley | Hacker News Reader

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.

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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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