Doesn't seem like this production method was particularly advantageous:
> But even at its early-50s heyday, while Levitt was an efficient builder, he wasn’t unrivaled. Levitt and Sons sold its early Levittown homes for around $10 per square foot, but many other builders (none of whom operated at Levitt’s scale) sold their homes at similar prices.
As property prices have increased, I doubt that the cost of building the house is even the major cost factor - it's probably mostly property value for the lot.
Edit: It also strikes me that we have something even better today - pre-fab or "mobile" homes that can be delivered by truck to a suitable plot of land. These haven't solved the housing crisis either.
home prices also dont scale linearly across their subcomponents. the most expensive part of a home is often the kitchen and bathroom. once youre on the hook for those costs, the tendency is to increase square footage overall in order to justify the price at all to the market. the nadier of homebuilding during the bush era was the McMansion at around 5000-6000 sqft, with a triple garage. not that you had three cars, just that the Hummer H2 took most of that real estate. most of these either got demolished after 2008 or sit in a capital management firms investment portfolio, about as attractive as a barrel of radioactive waste.
the other issue is a lot of municipalities (United States in particular) mandate and encourage large single family homes with outmoded energy and environmental requirements. suburbs work by siphoning resources from larger cities, sort of like a parasite. in turn they produce and encourage among the worst trends in US homes. acres of irrigated lawns and uninsulated attics and windows arent a concern but a feature of their housing code malaise as the cities subsidize this largesse.
> suburbs work by siphoning resources from larger cities, sort of like a parasite. in turn they produce and encourage among the worst trends in US homes. acres of irrigated lawns and uninsulated attics and windows arent a concern but a feature of their housing code malaise as the cities subsidize this largesse.
That is the narrative, but it doesn't stand up. Suburbs have existed for over 100 years now, and those older ones have managed to tear out the streetcars (on hindsight a mistake), put in sewer, water, phone, electric, cable tv - most of the above list has been replaced several times. They seem like they must be siphoning from the larger city until you realize that they are not replacing all of that every 20 years and so depreciation is not a clue as to the real long term costs.
There are exurbs where you get acres of land, those are generally surrounded by farms (at least for the first 30 years until the suburbs expand out that far - but then a developer will buy those acres and divide it for more houses) In the suburbs you are looking at more like 10 houses per acre - which is not very dense, but still much denser.
The US has good building codes. There is no place where you can get by with an uninsulated attic - except in the bad parts of big cities where houses from 1880 are still around and not upgraded.
> ... managed to tear out the streetcars (on hindsight a mistake)
Having lived in places with OK (SF) or good streetcar service (Berlin, which is a nice A/B test case with East/West Berlin) I am a huge fan of streetcars.
But my understanding is that in general the streetcars never made money in suburban developments. What I remember reading (on HN first!) was that they were deployed in early (post WWII) suburbs to entice urban people to move to a suburbs, but were operated at a loss. When the town eventually had to take them over they shut them down.
Does the economics really work out when you don't have urban density?
> they were deployed in early (post WWII) suburbs to entice urban people to move to a suburbs
No, the streetcar suburbs were ALL pre-war. Pre-WWI, mostly. (See https://en.wikipedia.org/wiki/Streetcar_suburb ) And the streetcar companies were generally private companies that operated at a profit -- until they had to compete with cars for both riders and space. And this is key, nobody loved the streetcar companies, because they had a history of gouging commuters. So when those companies got in trouble, there was no political will for any kind of bailout.
roads often were until the Eisenhower administration pushed for free national highways, since he was part of a military test convoy that only made it across the country after 62 days on poor, or nonexistent roads. https://www.eisenhowerlibrary.gov/research/online-documents/...
The highways that are present from before that time in the US are tolled, like the turnpikes found in the Northeast.
It's more than that. For intra-city transit, anti-transit people generally demand that public transit pay for itself, while still demanding all the roads (inside the city) be free. Of course, there's a big question about practicality when it comes to putting tolls on all the small roads and streets in a city, but these same people are the ones who oppose "congestion charges" like that implemented in London, which effectively imposes a toll for using any of the roads inside a certain area.
To be fair, I think a lot of the benefits of public transit go to people who aren't even using it. When you make it easier to go somewhere, more people will go there which is good for business at that somewhere. There are also the benefits of reduced traffic for those who do end up driving.
Yes. Although my argument would be slightly different. Subsidizing public transit in many cases is cheaper than upgrading roads. There is also social element. Elders & kids, disabled, DUI crowd… Public transit helps a lot to engage them.
I thought streetcar not making enough money was related to stupid price controls (pardon the redundancy) setting it to a fixed cost not indexed to inflation and then wondering why it can't sustain itself.
Rail gives you more capacity. Of course if you don't need that capacity then the value proposition is questionable: perhaps better to start with a BRT and try to get things to grow.
BRT would be a good (and cheap) upgrade for a lot of the absurdly wide stroads covering US cities. Bonus points if you can get the intersections on those roads converted to roundabouts. The whole reason why those stroads got so comically wide is so that all the cars have somewhere to park while they're waiting for the next light. Roundabouts are continuous flow and can handle a lot more traffic than a signaled intersection, so you can take out the center lanes in favor of dedicated bus infrastructure.
The reason why most buses suck to take is because they can never keep to a schedule when they're sharing the same lanes that private cars take, have to wait at the same lights as them, etc.
>The reason why most buses suck to take is because they can never keep to a schedule when they're sharing the same lanes that private cars take, have to wait at the same lights as them, etc.
They're also pretty damn uncomfortable to sit on: bouncing motions, herky-jerky steering motions, etc. Compare that to sitting on a subway car: the subway is FAR more comfortable because it's riding on rails and doesn't bounce around a lot. And if it's really crowded, it's a lot easier to stand up while riding a subway than a bus.
Besides the sibling replies, it can also be powered better, from direct connection to the electrical grid. More efficient than lossy conversions from battery storage or combustion fuel, and also saves the weight and complexity of those components.
Except it usually also has a dedicated lane. Businesses and people also know that the bus line is fixed, so it makes all development along it significantly more attractive. A bus route can come and go per financial quarter.
I admittedly don't tour a lot of homes, but I'm pretty sure insulating between the attic space and the living space is close to universal in my area. Maybe if you live in Southern California or Hawaii and your home doesn't have A/C you could get away without it. Especially if you have a whole house fan that vents into the attic. But even then it is so cheap to blow in insulation that it seems foolish to not do it.
Yep, it's pretty universal in the US. You insulate the attic floor (ceiling of your rooms). This also means that you need to keep your attic cold. You do that by letting air in from your soffit vents to either ridge or gable vent. Ridge vent is arguably better because it runs along the right of your roof allowing the air to travel between the trusses that holds your roof up.
why would you be able to "get away with it" specifically without A/C? Seems to me having A/C would make a house with an uninsulated attic at least somewhat less miserable.
Oh. But I mean, you'd still be much better off with insulation. FWIW I wouldn't want to live in SoCal (hot) or Hawaii (hot and humid) without A/C. We don't have A/C here in the bay area, and I wouldn't want to live anywhere warmer without it.
there is no insulation between the ceiling. Having the attic not part of the conditioned space is normal in the us. I wonder if that is what OP meant, if so it is a stupid requirement to add.
I've seen some convincing arguments (e.g. from Matt Risinger on YouTube) that the attic should be inside the conditioned space, even though this isn't the normal standard. Particularly if you have a slab foundation and your HVAC and ducting in the attic. Main reason is that if your HVAC ducts are up there, your attic is going to get really hot during the summer so you lose a lot of energy efficiency in your AC.
Yes, but the ducts themselves are normally insulated too, so either you're getting heat through the insulated walls of the ducts, or you're getting heat through the roof and walls (on 2 sides) into a much, much larger volume of air, which you're now using more energy to keep cool. I'm not sure which one is going to be more wasteful. This does make the ductless ("mini-split") HVAC systems look more attractive, however those lose the advantage of economy of scale (having a bunch of small ACs instead of one big one), but might gain some back by making it really easy to not waste energy cooling all the rooms if you only want some of them kept cooler.
> Yes, but the ducts themselves are normally insulated too, so either you're getting heat through the insulated walls of the ducts, or you're getting heat through the roof and walls (on 2 sides) into a much, much larger volume of air, which you're now using more energy to keep cool.
It's not an either-or though. If you have a vented attic, you're still getting heat through the roof and walls into the attic, and you're getting much more of it because it's not insulated (because it isn't a conditioned space). And then that heat is going to try and go through the relatively poor insulation of your HVAC ducts. At least in the south, it's common for a vented attic to get even hotter than the ambient outside temperature, going well above 120 degrees or more. Conversely, when you're going with a conditioned attic, you would insulate the ceiling of the attic, blocking as much of the heat from getting in as you can. And then your HVAC ducts only need to insulate against a gradient of maybe 74 to 50 degrees rather than a gradient of 120 to 50 degrees or even more on an especially hot day.
Yeah, I understand all that, but now you're having to waste energy to condition all that volume, instead of just wasting energy overcoming the heat coming through the duct insulation. So I'm questioning which approach actually wastes more energy. Also, there are other options: you could install a fan to ventilate the attic, so that the temperature isn't higher than ambient outside temperature.
I think you’re underestimating the efficiency you get from having a well insulated conditioned space. You also mentioned mini-split systems as possibly being more efficient because they don’t “waste energy cooling all the rooms”, but that doesn’t really work because if you only cool some of the rooms in your house you just end up with those AC’s fighting a constant temperature gradient as the heat from the rest of the house rushes into the conditioned room. And if you stop fighting that temperature gradient it’s only ever because you’ve cooled the whole house anyway. Likewise, if you have an insulated and conditioned attic, keeping it at whatever temperature you’re cooling it to doesn’t have to take a ton of energy.
Ultimately what this basically comes down to is that you can insulate the ceiling of your attic to a much higher R value than your ducts are going to be insulated.
> Also, there are other options: you could install a fan to ventilate the attic, so that the temperature isn't higher than ambient outside temperature.
I guess you could do that, but now you’re spending energy running that fan to cool the attic from maybe 120 degrees to 100 degrees, and hoping that your central AC saves enough energy from that to make up for running the fan? I dunno, it sounds pretty marginal to me, especially in terms of whether or not the fan is even going to pay for itself.
> suburbs work by siphoning resources from larger cities, sort of like a parasite. in turn they produce and encourage among the worst trends in US homes. acres of irrigated lawns and uninsulated attics and windows arent a concern but a feature of their housing code malaise as the cities subsidize this largesse.
There’s a reason that this narrative, the Strong Towns narrative, comes from an organization with “Towns” in the name. It was originally noticed in small rural American cities (county seats in the rural US and the like), and applies fairly well there, since the trend is to build suburbs in unincorporated land surrounding the main city to avoid city taxes. Suburbs surrounding large American cities tend to be incorporated cities of their own, so they raise their own taxes and don’t steal from the main city.
One major advantage cities used to have in the US but no longer do is that it used to be necessary to be annexed to a city to get access to things like their water system. That was a major driver of cities growing pre-WWII. However, as the US got richer and governmental structures became more sophisticated, things like water districts not coterminous with a city became common. Now there was little reason to become annexed to the city in most cases, unless your city or county ran into budget troubles, in which case the central city probably doesn’t want to pay for you either. Lots of suburbs remain separate specifically to avoid being subject to the city school system as well.
While this might be true on the technical level you mention, I don't know the details, I think the general pattern holds true even for larger cities. Think of NYC, where many suburbanite "bridge and tunnel folks" choose to live in Jersey, Long Island, etc. to avoid the higher city taxes but have no problem availing of all the city-funded infrastructure. They even caused the state governor to backtrack on congestion pricing so they could keep driving their vehicles in at the expense of NYC residents.
Ah, but NYC benefits from suburbanites and other outsiders visiting the city for work, deliveries, government services, culture and everything else. Sure, they have to build infrastructure (very much including trains) to service them, but the return is that NYC gets to accrue a larger metro area and the associated wealth. Also, it’s easy to forget that much of NYC’s infrastructure needs to live in suburban areas due to NYC’s density. All the warehouses needed to keep NYC fed and supplied can’t fit inside the city, to name one prominent example. Even to bring all the residential housing in the metro area into the city itself would make the city have to spend an ungodly amount on infrastructure to support them inside the city limits. The city actually benefits by having other jurisdictions be responsible for housing much of the metro area population.
although there the financial argument does apply. Nassau County has eye-wateringly high property taxes and the highest median income of any county in NY state, and has been under state fiscal supervision since the year 2000. https://en.wikipedia.org/wiki/Nassau_Interim_Finance_Authori...
Huh, shows what I know. Although the financial troubles don’t seem especially related to inefficient suburban infrastructure, but rather mismanagement that could occur anywhere.
If you work in NYC, you pay tax in NYC, regardless of where you live. New York has agreements with most states such that you get a tax credit in your home state for what you pay NYC, but the big Apple gets first crack at your paycheck.
New Jersey has pretty much resigned itself to this situation and gets funding via property tax.
NY state works the same way too. If you work remotely you're still required to pay NYS income tax on your wages, even though basically no payroll company knows to check for this scenario unless you bug them about it. The technical term for this is the "convenience of the employer" rule, and in the specific case of NYS you are liable for taxes on nonresident income unless your work specifically requires you to be out of state[0] or you work from an employer-run office in another state. Remote employees like me get to pay quarterly estimated tax and then claim refunds from my resident state, which is a pain in the ass.
Aside from New York, Pennsylvania, Arkansas, Delaware, and Nebraska have the same rule. If you work for a company headquartered in any of those states you probably should be paying nonresident income taxes there just in case. My personal opinion is that "convenience of the employer" should only apply to people who regularly travel to and from the state for work, but last time I looked this up, some guy in Connecticut sued NYS and lost over that exact issue.
For the record, the tax credit isn't part of the agreement, it's a constitutional mandate. SCOTUS prohibits two states taxing the same income, they have to divide it up, so every state has a "taxes paid to another state" credit. Though, funnily enough, that credit is taxable, ASK ME HOW I KNOW.
If you wanna see some real double-tax bullshit, wait until you hear about how Americans have to pay both American and Japanese income tax if they live and work in Tokyo...
[0] i.e. it's not at the convenience of the employer
FWIW, if you are actually living in Japan, your first $120k or so qualifies for Foreign Earned Income Exclusion (FEIE) so you're not actually paying double, but talk to your tax person.
>If you wanna see some real double-tax bullshit, wait until you hear about how Americans have to pay both American and Japanese income tax if they live and work in Tokyo...
Sorry, no. I live in Tokyo, but I only pay tax in Japan. I still have to file my taxes in the US, which is a real PITA, but Americans living and working abroad get to exclude most/all of their income (unless they earn a really huge amount), and/or get a tax credit for any foreign taxes paid. Generally, an American living abroad won't pay any US taxes unless they 1) make a ton of money and 2) live in a country where the tax rate is lower than in the US.
What truly sucks about the system is just the filing requirement. Doing your taxes in a better-run country is really easy for a normal wage-earner company employee. Here in Japan, the employer generally does your taxes for you. If you have some adjustment to make, you can do that pretty easily before the filing deadline, but otherwise you don't have to do squat. In the US, everyone has to go to a lot of trouble to file their own taxes, even though the IRS usually already has all their information, basically because Intuit has bribed Congress to make it illegal for the IRS to be run as efficiently and conveniently as the tax collection agencies in Japan or Europe. A lot of Americans end up renouncing their citizenship simply because the tax-filing requirement is such a PITA.
Taxes are higher in the suburbs of NYC due to the funding of segregated school districts. MTA (mass transit) is a state agency and most of the highways are paid for through the state.
Ain’t that the truth! I have 4.5 spots in my garage (not a big house, just 3000sf, but it’s very common in my area to oversize the garages) but only two ever have cars in them. The rest is my home gym, craft area, and a workshop.
> the most expensive part of a home is often the kitchen and bathroom
Absolutely this.
Back in 2018, mum got dementia and her old home was not one the rest of us could really move back into due to commutes, so we sold it and bought a new one in a better location. The new one wasn't quite big enough, so we converted the existing garage into a granny annex with its own mini-kitchen and shower.
That took about 6 months.
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I've also recently had one kitchen installed (4m^2 for an apartment I let out), and ordered a second (6 m^2, for a house I'm about to move into), and despite both being tiny and already having the water and electrical connections, they were both in the £€ 10k range.
Plumbing, cabinets, countertops, appliances, and even the flooring. Everything adds up, and quickly.
To be fair there are lots of ways to save money when doing a kitchen or bath remodel, but if you're doing the remodel in the first place you aren't opting for the linoleum floors, plastic countertops, and "builder grade" appliances.
Linoleum floors are amazingly durable and water resistant (some were recovered intact from the Titanic), made from a renewable source (linseed oil), and quite attractive these days.
Perhaps you are thinking of vinyl flooring, which is petroleum derived, and the among cheapest types of flooring.
> Kitchen remodels that I've seen pretty much always opt for some form of tile, which adds considerably to the cost.
Not sure what you are answering on my comment. My point is that linoleum isn't a cheap, builder grade material, whether in tile or sheet form. So I think we agree?
> I doubt that the cost of building the house is even the major cost factor - it's probably mostly property value for the lot.
This is certainly the case here in the UK - but I suspect it depends on your local laws.
I looked into building my own house and essentially when you found a plot of land where you could legally construct a house - if a high quality house in that location would be worth £400k and cost £150k to construct, then the landowner would want £250k.
I do sometimes wonder if it could be politically advantageous to separate out the business of physically constructing houses from the business of capital management, land investment, risk management and house price speculation.
If a council knew they could construct 20 families worth of good quality social housing for £100k per house, with no risk of cost over-runs or late delivery, and they just had to provide the land? That could give them the motivation to find the land.
I wouldn't discourage speculation on the price of the physical dwelling (i.e. the house). But land speculation is corrosive to society, and the way to fix that is with a land value tax.
> separate out the business of physically constructing houses from the business of capital management, land investment, risk management and house price speculation.
That is how it mostly works in the US. The developer buys a large plot of land and puts in roads, utilities then sells the lots to several home builders who build houses on it. The home builders contract out the foundation, framing, plumbing... to separate companies. while it is common to be in more than one part of this, only the smallest developments are all one builder (and even then plumbing is contracted out).
> As property prices have increased, I doubt that the cost of building the house is even the major cost factor - it's probably mostly property value for the lot.
I'm not so sure. Looking at my property tax assessment my 1/5th my 1400 sq ft house + 400 sq ft detached garage has an accessed value of about 3.5 times that of my 1/5th acre lot.
Accessed values here are based on market values and are reasonably close to what I see when I compare to recent sales on Redfin or Zillow, so it looks like the total is close. And the accessed value of the building is reasonably close to what my insurance company says it would cost to rebuild them.
Checking Zillow for lots for sale, it looks like my assessed value is reasonable.
I'm in a relatively low density area though. As a check I looked at a nearby significant city, Seattle. Comparing lots for sale there to nearby similar lots that have houses on them it looks like it is similar to where I am in some places and very different in others.
It looks like if the lot is zoned for commercial use or for tall buildings the price if very high. I saw one that was something like 0.38 acres for nearly $7 million. But for lots in single family house areas it looked pretty similar to what I'm seeing at my place. The lot is around 1/4th or 1/5th the value of the property.
Counter example in coastal California (in basically the West Coast version of levitt Town),my tax and insurance assessment has my physical house only representing a third of the total value. So the lot is with double the structure.
But I'm guessing that is not a common situation across the country.
Is there anything especially attractive about your location? Lots with a good view for example can go for a lot more than similar lots in the same general area that lack a view.
In my market (Portland, OR), the cost for new construction seems to be in the range of $250-350/square foot. A buildable lot in a decent neighborhood costs $300k-ish (if you can find one).
Assuming you’re building a family sized building of 2k+ square feet, building costs definitely exceed land costs.
Anecdotally, all the new construction in my neighborhood is top of market - builders are selling large houses at $1.3M+ when a typical existing house sells for more like $700k. Smaller homes would sell faster, but the economics seem to only pencil out for larger/higher end.
> Edit: It also strikes me that we have something even better today - pre-fab or "mobile" homes that can be delivered by truck to a suitable plot of land.
Why would you sell for less than the market price? If I can sell something at $10/sq ft and my costs to produce it are $5 and my competitors are $9 then there is no reason to cut prices. We will both profit, I will just make larger profits.
Because if you cut prices, you'll get a larger share of the market. So even if you make less profit per unit, you make a larger profit overall. Also, as you scale, some costs stay fixed, so your costs per unit might go down as well.
The catch is that if you charge less than a small difference to your next closest competitor people will think something is wrong with it. Saw it happen many times working at an antique store for years. It was amazing how often raising prices made things sell that had been sitting there for months, or longer. You rarely want to make something too inexpensive, along with never using the word "cheap". There's also issues with trying to give something away for free. Generally people value something more depending on what they paid for it. Upscale brands like Coach and Channel exploit that aspect of consumer psychology.
>As property prices have increased, I doubt that the cost of building the house is even the major cost factor - it's probably mostly property value for the lot.
More like 10-20% depending on a lot of different factors like location, cost of house, and size of lot.
Pre fab and mobile could solve the crisis but they are mired in all kinds of stupid rules. A living space for a human being doesn't need to cost hundreds of thousands of dollars.
Yeah home prices are mainly based on location and sqare footage. Condition, age, and amenities factor in but pretty much all the houses in a neighborhood sell for similar prices. It's definitely possible to over-improve a house and find yourself upside down in it at least for a while, which is OK if you want to live there and enjoy it but can backfire if you're planning to sell soon.
Keep in mind this is not true in the Northeast. It’s very common to have multi million dollar homes within spitting distance of dilapidated buildings worth only land value.
My parent’s house, while nothing special, sold for a couple hundred thousand when they sold in 2019. A few months before hand our neighbor sold theirs for over 2 million.
Not sure whether the original contention is untrue in the Northeast or just much more rapidly-varying in space.
Where I live (Baltimore) your second sentence is certainly true. There are boundaries across which the vacancy rate is basically discontinuous. In connected regions surrounded by such boundaries I think the original contention pretty much holds, though. There are a couple variables (nbeds, nbaths, sqft, parking space) that pretty much determine the value of the home and going HAM on any improvements they don't capture is probably negative ROI.
tl;dr: For new developments, land is only about 20% of the total sale price of the home, and this share has been dropping since 2005.
However, he also notes an important selection bias to this stat: new homes do not get constructed in areas where land is expensive, unless it's a custom build for a specific wealthy buyer, because developers cannot make a profit building SFHs if they spend a majority of the purchase price just buying the land. He notes that in wealthy areas like eg. Silicon Valley, 80% of the purchase price is land value, but developers are not building homes there, which is part of why the purchase price is so high.
And sure enough, if you go out to Mountain House or Discovery Bay, prices are like 25% of what they are in Silicon Valley. But then you have to commute from Mountain House. America's housing problem is as much a commuting or job distribution problem as housing, but those problems are even harder to fix than housing.
> But even at its early-50s heyday, while Levitt was an efficient builder, he wasn’t unrivaled. Levitt and Sons sold its early Levittown homes for around $10 per square foot, but many other builders (none of whom operated at Levitt’s scale) sold their homes at similar prices.
As property prices have increased, I doubt that the cost of building the house is even the major cost factor - it's probably mostly property value for the lot.
Edit: It also strikes me that we have something even better today - pre-fab or "mobile" homes that can be delivered by truck to a suitable plot of land. These haven't solved the housing crisis either.