Hacker News Reader

Comment by poulsbohemian | Hacker News Reader

>The main question is, why are houses not like every other commodity?

I'm working on a deal right now that could be a 40 house development... or it could be nothing. Why? Because the infrastructure doesn't exist to support the development, and it could be as much as $2MM to put in the infrastructure (think street and sewer), and because of setbacks, etc, it could be down to as few as 20 houses without some kind of variance. And that's before the cost of the land and the cost of the construction, all of which would rest on the shoulders of the developer. Shoes, a car, etc an assembly line can be configured and stamp out near identical products year after year. Even if you intend to build generic tract houses (like this development would be...), you still have tremendous up front costs and "tooling" and the variation of each new development -- location, elevation, access to services, etc.

View on HN

While there are legitimate planning problems (does it make sense to run utilities out to serve yet another suburb?) that are separable from pure politics, I think you're sort of burying the lede when mention the 'cost of the land' then quickly move on to other topics.

'Cost of land' is inherently a political question, because land is not generally produced by human labour. It exists, then is divided according to some moral or political criteria. A state cannot arbitrarily say 'everybody gets a free car', because the car industry will go bust, then nobody will get a car. A state can (and states have) say that you can divide land ownership in whatever way you want. It's a purely political decision.

In many countries, areas, and states, land costs account for the massive majority of new construction costs. What's more, they force planners and developers to act in a counter-intuitive way to work around them. They incentivize insane behaviour, like empty lots in the middle of highly dense cities, due to the logic of financial speculation.

You can't 'fix' housing without fixing the political question, which ultimately starts with making people broadly recognize it is a political question, and addressing it as such.

> I think you're sort of burying the lede when mention the 'cost of the land'

Not at all - you wanted me to answer or address a different topic than the previous poster. They wanted to understand the difference between commodities. My main point was not just about cost, but about the difference in production as well as a nuance around regulation. In my market, land costs while important are not the gating factor in whether something can be developed.

I do real estate and politics for a living, but I can’t quite wrap my head around the rest of your point. I think you are advocating for some kind of government reallocation or loosening of property rights, which makes me very uncomfortable but also would not be anywhere near how I would fix housing in my state.

> I think you are advocating for some kind of government reallocation or loosening of property rights

I'm really just drawing attention to the fact the relevant property rights (what you can build, who can live there, how much it is worth relative to other things) are the product of continuous government intervention (planning, consultations, law, etc). Further, the government has basically free reign to legislate however it likes, unlike regulating conventional industries (automakers, etc).

My point is not that the government should just seize all inner city land - that would work, but it would also work to just rebalance the right to own land against the right to shelter in planning law, then use existing procedures to work out the consequences. For instance, one thing that could help would be to obligate developers to increase the number of housing units on a residential site if they redevelop.

In many markets, especially the most expensive ones, the cost of housing / real estate has nothing to do with the cost of construction.

A garden or a parking space in London, NYC or Sydney can be hundreds of thousands of dollars.

Of course - and that’s part of what I was trying to convey to the previous posted about why housing is different than cars and shoes.

Construction costs are a significant portion of the cost of (new) housing in nyc because of the labour cartel situation

Reply on news.ycombinator.com