The actual cost of constructing a house is almost meaningless in most areas people want to live. What your paying for is the infrastructure around houses. So, if we really want cheap housing find out how to make cheap roads, bridges, water and sewer systems, electrical systems, schools, hospitals, ... etc.
That said, people are also living in much larger houses with more amenity's like AC, and dishwashers.
PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.
A house in SF might cost around a million dollars. The same house in Columbus, Ohio, might cost 100k. Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?
No, "what you are paying for" is the artificial scarcity created by restrictive zoning codes and NIMBYs. If the city council let me build on one of the many open fields around I-280 tomorrow, I could get it constructed for a pittance-- and then turn around and sell for hundreds of thousands of dollars.
PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.
Do you understand how "the existing infrastructure" is funded? It's funded by taxes. And developers pay taxes like anyone else. What they do isn't cheap.
This is the correct answer, all the others are looking the wrong way.
We know it is the correct answer because it identifies how farmland sold by the acre can turn into residential land sold by the 1/4 acre. All because the zoning (and/or approved buildings) changes on that same land, the value changes substantially.
Anything that has such a dramatic change in value is subject to some kind of scarcity, like the difference between a real cezanne and a very good copy.
I believe some cities in Texas have relaxed zoning, and the housing prices are much more reasonable as a result.
Cities like San Francisco and New York are also subject to physical scarcity because of water and topographical features, but it is artificial scarcity that drives prices up.
How do you undo it? I don't think that is possible, simply because there is too much vested interest. Existing owners and banks must keep the status quo or the 2008 problems would look like a picnic. Maybe with some gradual relaxation over time the eventual market structure could be changed. It's doubtful.
I do think it is undoable just big monopolies with special interests such as the Rockefellers were broken up. It takes leadership (such as Teddy Roosevelt) that is given a mandate by the people. The issue is that this artificial scarcity, "rent seeking" is not visible to the public at large, esp. those who are renters and the young. Specifically, if rents in NYC were made aware they might vote their representative in city council out of office and the mayor as well.
> Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?
I would. Working around a couple centuries of existing infrastructure, dealing with the issues regarding vastly limited space, and of course having to stay compliant with California's ever-changing and ever-more-expensive environmental regulations -- pfft, 10x easily.
Systems get more expensive as they get more complex. Car repair is a salient example.
SF doesn't have "centuries" of infrastructure. The great earthquake and fire in 1906 destroyed nearly everything. SF doesn't have "vastly limited space" either. It's not even in the top 100 cities in the world in terms of population density. Source: http://www.citymayors.com/statistics/largest-cities-density-...
Nor are SF's roads and bridges really all that complex. Pittsburgh, Pennsylvania, has 446 bridges, and is one of the cheapest cities to live in in the United States. Maintaining two big bridges just isn't that complex, certainly not enough to explain a 10x factor in the cost of living. Sure, SF has a high minimum wage for construction employees, but so does California in general. And somehow it is not that expensive to live in Fresno or Sacramento.
If anything, rural and suburban areas tend to have to maintain more infrastructure per taxpayer, since people are more spread out.
Not really. Japan's "sunlight laws" make it really hard to go above around three stories or so, meaning that nearly all of Tokyo's skyscrapers are concentrated in a few hot spots with commercial zoning (Shinjuku, Marunouchi) plus a few mega-developments like Roppongi Hills where the developer could pull enough strings to buy a large chunk of land and bulldoze their way to an exception.
Of course, compared to Silicon Valley, even the suburbs of Tokyo are indeed densely packed -- but then, Tokyo also crams in something on the order of 7x more people into the same area.
An even clearer way of looking at this is to compare
1: The price of a plot of land with a house on it
2: The price of an equivalent plot with no house but the right to build a house there.
3: The price of an equivalent plot with not right to build.
In places like SF where housing is expensive 1 and 2 cost within 10% of each other. In places where housing is cheap 2 is closer to 3.
> That this does not happen is simply a form of corruption...
That's what property taxes are, to the tune of ~$500 billion per year in the US! The market price of a dwelling is inversely proportional to the tax rate, so it IS priced into the sale.
That said, people are also living in much larger houses with more amenity's like AC, and dishwashers.
PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.