It’s also the huge amount of housing that’s built that’s not affordable. We have had 5 neighborhoods built within 4 miles of my house over the past 5 years. Nothing is below 500k starting price.
They actually can build homes cheaper than that, there’s a certain price point where they feel they’re making the kind of profit they want which is basically the cost of a older home profit-wise. There’s a recent article that came out that I’m can’t find right now but I read it just a couple months ago that talked about the 400 to $500,000 price range is the profit margin that builders want to make. That means they’re probably making 20 to 30% profit. And while they can build cheaper homes they make less profit so they are not motivated to.
I know it’s not going to happen under this regime but it seems like the solution is to offer tax breaks, subsidies, or whatever we think might give the developers some incentive to build lower income housing.
The land is expensive. Every time you buy and build or rebuild you want to make a profit off of your investment and effort so it goes up. Even if the structure is crap and you intend to tear it down and rebuild the seller still expects to be paid for the structure. The only way to make land more affordable is to build upwards and make condos/apts and increase the number of residents per unit area.
It’s also the huge amount of housing that’s built that’s not affordable. We have had 5 neighborhoods built within 4 miles of my house over the past 5 years. Nothing is below 500k starting price.
that’s because you can’t build homes for cheaper than that.
developers aren’t going to charge 300K for a home that cost them 400K to build
They actually can build homes cheaper than that, there’s a certain price point where they feel they’re making the kind of profit they want which is basically the cost of a older home profit-wise. There’s a recent article that came out that I’m can’t find right now but I read it just a couple months ago that talked about the 400 to $500,000 price range is the profit margin that builders want to make. That means they’re probably making 20 to 30% profit. And while they can build cheaper homes they make less profit so they are not motivated to.
I know it’s not going to happen under this regime but it seems like the solution is to offer tax breaks, subsidies, or whatever we think might give the developers some incentive to build lower income housing.
OK. you go develop those homes then.
since you’re such an expert and seem to think a 10% margin is totally worthwhile?
The land is expensive. Every time you buy and build or rebuild you want to make a profit off of your investment and effort so it goes up. Even if the structure is crap and you intend to tear it down and rebuild the seller still expects to be paid for the structure. The only way to make land more affordable is to build upwards and make condos/apts and increase the number of residents per unit area.