John, those are critically important points, thank you. IMO these trace back to the dominance of finance over the entire economy, financialization and globalization, which turns everything into a financialized commodity--including housing, which is an "asset" for global capital just like a corporate bond, interchangeable as a financial instrument, meanwhile, as you say, the real "asset" can't be reduced to dollars--community, stability, a functional local economy and a durable house.
David, I'm glad you brought up these questions. When I was a builder, my partner and I built about 90 houses, from a 43-unit subdivision to modest starter homes to fancy model homes. Everyone has been counting on a "factory home" that exceeds the quality of stick-built and we're still waiting. Housing hasn't changed much b/c our basic needs are still the same, and cultural habits don't change much.
That said, as the cost of land has skyrocketed, it no longer makes financial sense for developers to build starter homes, as the profit margins are too thin. So they build McMansions to increase the total cost / value and thereby increase their margins.
So houses have gotten a lot bigger and more complicated than they were in the past. I look at the overly complicated roofs on McMansions--numerous gables, etc., all due to fashion, not necessity--and all I see is potential leaks if the flashing wasn't done correctly,
Materials have been "innovated" but this is Anti-Progress: manufactured materials don't hold up like natural wood, regardless of claims to the contrary. The quality of hardware has collapsed. Locksets made 50 years ago are still functional and burnished, where modern locksets corrode quickly and rarely last 20 years, never mind 50.
So the irony here is buying a house that's 60+ years old may require less maintenance than a 30-year old house. My house is 70 years old and needed some plumbing and electrical upgrades but the structure is sound. The redwood siding would not be available / affordable now, and the fir framing is full dimension and of a quality that today would be Structural #1 or #2 or better--these are lumber grades far above "construction" grade, which today is full of knots, etc.
As for construction quality--nail gun nails pull out easy compared to galvanized hand-driven nails. The pressure is to build fast and cheap, and so workers no longer have the experience of building real quality. Some do, of course, but what's different is "production" workers used to have high standards. I'm not so sure about the current generation of workers; they may have little experience of real quality materials and work.
Part of the problem is the lack of craftsmen and their traditions. Few people these days take pride in their craft. Especially among the younger generations. You are very right in regards to financialization. That is one of the primary forces that lead to our current dire situation. Increasing profits at any and all costs has warped/corrupted our entire civilization (such as it is...). Housing is just another market sector of that. Medical is vastly worse. Having anything to do with the current medical-industrial complex is a real roll of the dice. As for the insurance mafia, I have little sympathy for them. Its little more than another cartel. Until real competition and a valued reputation returns, matters will continue to grow worse.
Charles, I'm glad you mentioned these, but they're not new. There were kit homes 40+ years ago and various attempts at prefab homes that never made it to the mainstream dating back to the last 60s and early 1970s. I built a "tiny home" myself in 1978, 47 years ago. Most prefab ideas end up not saving enough money to make a difference, as the majority of the total costs include land, permits, infrastructure, fixtures, flooring, overhead, etc., none of which can be reduced by prefabbing the basic structure.
I'm all for tiny homes and it is positive that some cities are finally encouraging them to be built in backyards to increase housing density. Unfortunately these cost $100K and up as the costs of plumbing, electrical, infrastructure, etc. are basically the same for a 300 sq. ft house as for a 1,300 sq ft house. But of course total costs are a lot lower.
Regulations choke off many such practical innovations, and those who benefit from the stranglehold resist any reduction in regulatory limits. warm regards, charles
Agreed, regulations prevent a handyman attempting a house. You have to be a licenced builder to get a building permit. Minimum floor areas in subdivisions institutionalize the McMansions. In Australia, the greens desire to prevent the removal of natural vegetation prevents clearing of rural land to accommodate tiny homes or small dwellings under the shade and shelter of the trees. Planners adopt green ideals. The bushfire regulations are an excuse for conserving natural vegetation on private land. Its natural that land values will increase in desirable areas but this is accelerated by the opportunity for investors in second and subsequent homes to take advantage of rising property values.
A dual interest rate structure would help. The state, via a fund instituted for the purpose could lend at an interest rate that equates to the rate of inflation on the first home. Second and subsequent homes should incur a capital gains tax that disincentives investors.
Abolishing town planning strictures should be trialled just to see what a free market can achieve.
The Greenies are just another aspect of the Cult mentality. The worst of the Climate Change types are greenie cultists. Most I've seen are very anti human. They view their own species as a plague on the face of mother gaia. In reality, "Mother Nature" is a murderous psychopath who has been attempting to kill us since we evolved here. It is only the application of our technology that has made our lives safer, healthier, and more comfortable. That is especially true since the advent of cheap, abundant electric power. Which is one of the reasons for the attacks on its continued production.
As for free markets, in the absence of government intervention, they would provide goods and services of much higher quality and lower prices. This is inherent in the nature of real competition and pride in ones craft.
For me, this issue is a reflection of the values of our culture.
1. Lack of value placed on community means that a house is primarily a financial asset, not a home,
2. Lack of valuing community, means that we have not supported local business / industry and allowed these to be centralized or outsourced.
3. Lack of valuing self sufficiency means that the only way we can view a house as an asset is when it increases in value. How much income does your house generate every month? (even if you count that income in tomatoes)
Most of the housing being built is nothing more than boxes with a roof no matter how fancy the box. There is no awareness of how that housing is a part of the ecology that it is built in.
As the quality of materials and construction have slowly declined, even houses that are 25 years old or less may require costly repairs--especially if construction defects were undiscovered until major damage had been done.
Unquote
I am curious about the lack of innovation in building construction
In theory with advances in knowledge and productivity housing construction should get cheaper
Or is it just a rising cost of raw materials such as lumber because of resource depletion and 8.3 Billion people on the planet
I have relatives who are in housing construction industry
There is actually great innovation going on in the housing industry, for example in pre-fabricated homes and tiny homes, converting office buildings to apartments, etc.
As part of an overriding strategy of pacification it's very effective. Combined with media, schooling and the medical industry it makes for a very docile, scared and financially enslaved population. Come crash 2.0 BlackRock et al will come in hoover up all the foreclosures, and rent to former owners.. if they are lucky as they did in 08.
Is the enslavement intended or unintended? Is there no empathy for ones fellow man at all? How far can this be pushed? Is there any limit on tolerance?
Seems to me that the housing problem is due to 1. Selfish zoning practices enshrined as virtue in the practice of town planning. 2. An economy that can't get up and go even under a negative real interest rate regime. 3. Politicians priming the pump of fiscal spending eventually requiring a return to higher interest rates that stalls infrastructure spend, including housing. 4. The ability to borrow at very low interest rates that funds investment in appreciating assets like real estate as a hedge against inflation. 5. An irrational belief that the tech sector can use subscription as a revenue source in the absence of competition.
Enter stage left, Chinese competition. The most aggressively competitive society on the planet. A lesson in what capitalism and individual initiative can offer if there is a value for sharing the proceeds of production. Open source.
Your California friend - seems like assessed value is about $1.5M which js the average price here.
We clearly have stability on property taxes thanks to Proposition 13 which limits annual increases to 1%. That needs to be passed in all the other states.
John, those are critically important points, thank you. IMO these trace back to the dominance of finance over the entire economy, financialization and globalization, which turns everything into a financialized commodity--including housing, which is an "asset" for global capital just like a corporate bond, interchangeable as a financial instrument, meanwhile, as you say, the real "asset" can't be reduced to dollars--community, stability, a functional local economy and a durable house.
David, I'm glad you brought up these questions. When I was a builder, my partner and I built about 90 houses, from a 43-unit subdivision to modest starter homes to fancy model homes. Everyone has been counting on a "factory home" that exceeds the quality of stick-built and we're still waiting. Housing hasn't changed much b/c our basic needs are still the same, and cultural habits don't change much.
That said, as the cost of land has skyrocketed, it no longer makes financial sense for developers to build starter homes, as the profit margins are too thin. So they build McMansions to increase the total cost / value and thereby increase their margins.
So houses have gotten a lot bigger and more complicated than they were in the past. I look at the overly complicated roofs on McMansions--numerous gables, etc., all due to fashion, not necessity--and all I see is potential leaks if the flashing wasn't done correctly,
Materials have been "innovated" but this is Anti-Progress: manufactured materials don't hold up like natural wood, regardless of claims to the contrary. The quality of hardware has collapsed. Locksets made 50 years ago are still functional and burnished, where modern locksets corrode quickly and rarely last 20 years, never mind 50.
So the irony here is buying a house that's 60+ years old may require less maintenance than a 30-year old house. My house is 70 years old and needed some plumbing and electrical upgrades but the structure is sound. The redwood siding would not be available / affordable now, and the fir framing is full dimension and of a quality that today would be Structural #1 or #2 or better--these are lumber grades far above "construction" grade, which today is full of knots, etc.
As for construction quality--nail gun nails pull out easy compared to galvanized hand-driven nails. The pressure is to build fast and cheap, and so workers no longer have the experience of building real quality. Some do, of course, but what's different is "production" workers used to have high standards. I'm not so sure about the current generation of workers; they may have little experience of real quality materials and work.
warm regards, charles
Part of the problem is the lack of craftsmen and their traditions. Few people these days take pride in their craft. Especially among the younger generations. You are very right in regards to financialization. That is one of the primary forces that lead to our current dire situation. Increasing profits at any and all costs has warped/corrupted our entire civilization (such as it is...). Housing is just another market sector of that. Medical is vastly worse. Having anything to do with the current medical-industrial complex is a real roll of the dice. As for the insurance mafia, I have little sympathy for them. Its little more than another cartel. Until real competition and a valued reputation returns, matters will continue to grow worse.
Charles, I'm glad you mentioned these, but they're not new. There were kit homes 40+ years ago and various attempts at prefab homes that never made it to the mainstream dating back to the last 60s and early 1970s. I built a "tiny home" myself in 1978, 47 years ago. Most prefab ideas end up not saving enough money to make a difference, as the majority of the total costs include land, permits, infrastructure, fixtures, flooring, overhead, etc., none of which can be reduced by prefabbing the basic structure.
I'm all for tiny homes and it is positive that some cities are finally encouraging them to be built in backyards to increase housing density. Unfortunately these cost $100K and up as the costs of plumbing, electrical, infrastructure, etc. are basically the same for a 300 sq. ft house as for a 1,300 sq ft house. But of course total costs are a lot lower.
Regulations choke off many such practical innovations, and those who benefit from the stranglehold resist any reduction in regulatory limits. warm regards, charles
Agreed, regulations prevent a handyman attempting a house. You have to be a licenced builder to get a building permit. Minimum floor areas in subdivisions institutionalize the McMansions. In Australia, the greens desire to prevent the removal of natural vegetation prevents clearing of rural land to accommodate tiny homes or small dwellings under the shade and shelter of the trees. Planners adopt green ideals. The bushfire regulations are an excuse for conserving natural vegetation on private land. Its natural that land values will increase in desirable areas but this is accelerated by the opportunity for investors in second and subsequent homes to take advantage of rising property values.
A dual interest rate structure would help. The state, via a fund instituted for the purpose could lend at an interest rate that equates to the rate of inflation on the first home. Second and subsequent homes should incur a capital gains tax that disincentives investors.
Abolishing town planning strictures should be trialled just to see what a free market can achieve.
The Greenies are just another aspect of the Cult mentality. The worst of the Climate Change types are greenie cultists. Most I've seen are very anti human. They view their own species as a plague on the face of mother gaia. In reality, "Mother Nature" is a murderous psychopath who has been attempting to kill us since we evolved here. It is only the application of our technology that has made our lives safer, healthier, and more comfortable. That is especially true since the advent of cheap, abundant electric power. Which is one of the reasons for the attacks on its continued production.
As for free markets, in the absence of government intervention, they would provide goods and services of much higher quality and lower prices. This is inherent in the nature of real competition and pride in ones craft.
For me, this issue is a reflection of the values of our culture.
1. Lack of value placed on community means that a house is primarily a financial asset, not a home,
2. Lack of valuing community, means that we have not supported local business / industry and allowed these to be centralized or outsourced.
3. Lack of valuing self sufficiency means that the only way we can view a house as an asset is when it increases in value. How much income does your house generate every month? (even if you count that income in tomatoes)
Most of the housing being built is nothing more than boxes with a roof no matter how fancy the box. There is no awareness of how that housing is a part of the ecology that it is built in.
Quote
As the quality of materials and construction have slowly declined, even houses that are 25 years old or less may require costly repairs--especially if construction defects were undiscovered until major damage had been done.
Unquote
I am curious about the lack of innovation in building construction
In theory with advances in knowledge and productivity housing construction should get cheaper
Or is it just a rising cost of raw materials such as lumber because of resource depletion and 8.3 Billion people on the planet
I have relatives who are in housing construction industry
They just say everything is more expensive
There is actually great innovation going on in the housing industry, for example in pre-fabricated homes and tiny homes, converting office buildings to apartments, etc.
As part of an overriding strategy of pacification it's very effective. Combined with media, schooling and the medical industry it makes for a very docile, scared and financially enslaved population. Come crash 2.0 BlackRock et al will come in hoover up all the foreclosures, and rent to former owners.. if they are lucky as they did in 08.
Is the enslavement intended or unintended? Is there no empathy for ones fellow man at all? How far can this be pushed? Is there any limit on tolerance?
Seems to me that the housing problem is due to 1. Selfish zoning practices enshrined as virtue in the practice of town planning. 2. An economy that can't get up and go even under a negative real interest rate regime. 3. Politicians priming the pump of fiscal spending eventually requiring a return to higher interest rates that stalls infrastructure spend, including housing. 4. The ability to borrow at very low interest rates that funds investment in appreciating assets like real estate as a hedge against inflation. 5. An irrational belief that the tech sector can use subscription as a revenue source in the absence of competition.
Enter stage left, Chinese competition. The most aggressively competitive society on the planet. A lesson in what capitalism and individual initiative can offer if there is a value for sharing the proceeds of production. Open source.
Your California friend - seems like assessed value is about $1.5M which js the average price here.
We clearly have stability on property taxes thanks to Proposition 13 which limits annual increases to 1%. That needs to be passed in all the other states.
And glad I refinanced at 2.75%