In reply to Duke :
Used car prices spiked during the pandemic due to a terrible supply shortage of new cars (plus Carvana's AI buying up all the used ones in what could seriously be considered hoarding behavior), since the pandemic they've been coming back down.
So what changed in the late '90s that caused home prices to break loose from construction costs when there was a correlation since at least the early '60s? It's totally plausible that a shortage of housing, or at least a specific type of housing, was at fault. Maybe this is when the the zoning restrictions on high-density/multi-family residences started to have an effect?
In reply to GameboyRMH :
Carvana did not "buy up all of the used vehicles" They had under 100K used vehicles in inventory at all times, that is less than 1 day supply of used in the USA. When Carvana goes under and liquidates the inventory, pricing will not crash, it will not even render a blip on the market.
Anyway, get back to the debate on what people are allowed to do with their own property, and why the world is not fair.
I am still curious if AZ taxes the land and improvements separately or together though
GameboyRMH said:In reply to Duke :
Used car prices spiked during the pandemic due to a terrible supply shortage of new cars
And used house prices have spiked due to a terrible supply shortage of new houses.
New house prices have spiked due to increases in direct construction costs, increases in indirect infrastructure costs that are charged to the development, increases in land acquisition costs, increases in market demand for larger houses, increases in regulatory requirements, increases in mandated energy performance, population-driven increases in general demand across the country, and extreme increases in demand for housing in specific areas.
Not to mention decreases in or stable low interest rates.
And that's entirely leaving out pandemic-driven radical increases in lead times for most construction materials.
We have assessments on land, improvements and personal property.
AZ State Laws prevents the percentages of land assessment exceeding a certain amount compared to improvements.
For example, cities can't charge 100% of the tax based on land value.
I think I can probably dig up what the maximum allowable "split" of percentages are.
From what I can just looking at assessments, it looks like 30% of the full cash value is land.
In reply to Opti :
No, your wood windows do NOT come close to the energy specs of new windows. No way, no how.
Even if they did, they still have 6" wide cavities in both sides with ZERO insulation to allow for the counterbalances. That's like leaving the window open.
I love old houses, but there is very little that is "better" from a construction standpoint.
I also have a personal preference for old growth timber. And yes, it is less prone to rot. Unfortunately, the installation techniques were crappy and MORE prone to rot (like no termite shields, wood close to ground, flashings that don't last, balloon framing, etc, etc).
Also MUCH more prone to fire.
Duke said:And used house prices have spiked due to a terrible supply shortage of new houses.
New house prices have spiked due to increases in direct construction costs, increases in indirect infrastructure costs that are charged to the development, increases in land acquisition costs, increases in market demand for larger houses, increases in regulatory requirements, increases in mandated energy performance, population-driven increases in general demand across the country, and extreme increases in demand for housing in specific areas.
Not to mention decreases in or stable low interest rates.
And that's entirely leaving out pandemic-driven radical increases in lead times for most construction materials.
Can you find any data/give any estimates of permitting costs? From what I can find they're around $3k for a house today. By housing standards that's chump change. Also any estimates of the price increases from indirect infrastructure costs and energy efficiency requirements?
Ran across this interesting graph showing that house prices and the number of houses listed on the market are almost a mirror image. The only places they move together are in the great recession and the pandemic, this suggests that home prices have little to do with what went into making them and a lot to do with how many are available:
And another interesting one with a perfect mirror image between single-home permits and 5+unit home permits, suggesting that ordinary houses and apartment buildings are in direct competition with each other, rather than the competition being single houses vs. duplexes or townhouses of a few units:
SV reX said:In reply to Opti :
No, your wood windows do NOT come close to the energy specs of new windows. No way, no how.
Even if they did, they still have 6" wide cavities in both sides with ZERO insulation to allow for the counterbalances. That's like leaving the window open.
I love old houses, but there is very little that is "better" from a construction standpoint.
I also have a personal preference for old growth timber. And yes, it is less prone to rot. Unfortunately, the installation techniques were crappy and MORE prone to rot (like no termite shields, wood close to ground, flashings that don't last, balloon framing, etc, etc).
Also MUCH more prone to fire.
Every bit of this.
In reply to GameboyRMH :
Permitting fees vary by municipality. A LOT.
My last job had $11,500 in permits. The previous one (similar in different community) had $120,000 in permit and related fees.
In reply to GameboyRMH :
You are hard to converse with. You said you were open to learning, but every time a construction professional gives you feedback, you post a graph that is only tangentially related, and debate further.
It doesn't look like you want to learn. It looks like you want to win an argument, and prove your point.
You are repeatedly over-simplifying things to the point of being irrelevant. How would you like it if I asked why cyber security is so damned expensive when it's obvious the inflation adjusted cost of memory per MB has dropped drastically in the last 30 years?
We aren't getting anywhere, because you are absolutely convinced you are right. Nothing left to talk about.
GameboyRMH said:Can you find any data/give any estimates of permitting costs? From what I can find they're around $3k for a house today. By housing standards that's chump change.
I'm doing an addition right now to add a large convocation room for 50 people (maybe 2700 sq ft all in). It's being added to a single-family residence. It's basically built like a house and only has 2 single-person restrooms. Construction is going to cost $2.2M.
The permit fee is about $1500.
The impact fee, on the other hand, is $97,000.
That's not chump change in my book.
I know you really want to hear that it's all greedy fat cat developers making excessive profit.
But it's not.
SV reX said:In reply to GameboyRMH :
Permitting fees vary by municipality. A LOT.
My last job had $11,500 in permits. The previous one (similar in different community) had $120,000 in permit and related fees.
Thanks for the numbers, I assume these weren't both for individual homes? I found an estimate for $3k for a house, of course I'd expect a school or mall etc. would be larger.
In reply to SV reX :
Yep. This thread has essentially gone.
"What about hypothetical A?"
People with actual experience, "No A won't work and here's why."
Moves goal posts.
"What about hypothetical B?"
People with actual experience, "No B won't work and here's why."
Moves goal posts.
"What about....."
Ad nauseam.
I find it even more hilarious when you look at housing prices and demographics of where OP lives.
GameboyRMH said:SV reX said:In reply to GameboyRMH :
Permitting fees vary by municipality. A LOT.
My last job had $11,500 in permits. The previous one (similar in different community) had $120,000 in permit and related fees.
Thanks for the numbers, I assume these weren't both for individual homes? I found an estimate for $3k for a house, of course I'd expect a school or mall etc. would be larger.
One number by itself doesn't mean anything.
Pull permit costs, since for some reason you're stuck on this, for multiple varied locations.
LA, Seattle, Cheyenne, Green Bay, Wichita, Amarillo, Nashville, Newark, Miami, etc.
Duke said:GameboyRMH said:Can you find any data/give any estimates of permitting costs? From what I can find they're around $3k for a house today. By housing standards that's chump change.
I'm doing an addition right now to add a large convocation room for 50 people (maybe 2500 sq ft all in). It's basically a built like a house and only has 2 single-person restrooms. Construction is going to cost $2.2M.
The permit fee is about $1500.
The impact fee, on the other hand, is $97,000.
That's not chump change in my book.
I know you really want to hear that it's all greedy fat cat developers making excessive profit.
But it's not.
I do want to find out if the real cause, especially if it's that houses effectively have too much tax built into their prices to be affordable. That would be another relatively easy problem to solve.
Would you say there are ordinary houses that could have near-6-digit impact fees built into their prices, and if so do you think it's a common issue? A $2.2M construction cost for something the size of a fairly normal house is clearly not a normal construction and $100k is only 5% of that, could it have something to do with the construction value, or that it was built on something very unusual?
In reply to GameboyRMH :
It's a big wooden box, about the size of a house. It's built exactly like a house, and not a super fancy one. It has 2 one-holer restrooms in it. It includes renovation of the attached existing residential kitchen, so call that the same as building a new house. It has heat and air conditioning, again with some HVAC renovations to the existing house. Figure $300,000 of the price is going into the existing structure.
In reply to GameboyRMH :
Impact fees are completely arbitrary by community, neighborhood, or specific lot.
SV reX said:In reply to GameboyRMH :
Impact fees are completely arbitrary by community, neighborhood, or specific lot.
...and are theortetically used to fund infrastructure improvements by the local government, whether past, current, or future.
That is outside of infrastructure improvements that are directly charged to the development. In my county, developers are required to install sidewalk along the entire parcel's road frontage on the existing main road, regardless of if it connects anything to anything at either end or not. And that's relatively cheap and easy, even if it is a quarter mile of sidewalk.
I've seen projects charged a quarter million dollars or more to install a turn lane and traffic signal at an intersection half a mile away from the development.
Is this getting us anywhere? Basically all we're doing is pointing out places you either don't have knowledge of all the various factors, or have substantially underestimated costs of those you do.
You can understand why local governments may prefer that, though.
Otherwise in a few years when sidewalks get built on either side of said development, they'll have to tax the entire community for those additions. Same goes for road and signals. If the developer incurs those costs, they are likely to pass them on to the development, rather than the whole community. There is probably also the fact that building that infrastructure alonside the subdivision development is cheaper than doing it later.
Perhaps that's a bad thing. Maybe we should instead expect that our taxes are going up because sidewalks are being built on the opposite end of town, even though we've got nice sidewalks out front, because that's life.
frenchyd said:93EXCivic said:In reply to frenchyd :
Ok. No one is forcing you to live somewhere like that. I am just saying that zoning should allow for neighborhoods that allow that to built new.
Help me understand what you're saying please. I understand and agree I'm not being forced to live like that.
But my city should be zoned to put a restaurant or grocery store in place? Someplace I could bike to and from?
If I've got it correct ( please correct if not) we need bike paths ( or sidewalks?) restaurants and grocery stores? Or at least zoned for?
I believe that zoning should allow smaller minimum lots with a larger percentage of the lot covered with house, allow smaller sq ft houses to be built and not have massive setback requirements. This would allow for neighborhoods that one are a bit more affordable then current (because lot sizes and houses are smaller) and began to allow for more walkable and bikeable neighborhoods as things are now closer together.
I also do think there should be a loosening of zoning regarding restraunts and grocery stores so that they can be closer to neighborhoods and there should be more allowances for multi-modal transportation but that isn't nessacarily tied to this discussion.
None of this is really an option in many parts of the US and yet I frequently see older neighborhoods and the few developments where things like this are allowed become some of the most desirable parts of cities. I am not saying this is what every has to do or anything like that I just believe the option to build this type of development should be allowed.
Industry experts, let me try to ask this a different way than trying to pick at different causes that could be responsible or highlighting random potential causes I run across. What do you think has caused home prices to increase so much, particularly in the late '90s to mid-'00s?
In the IT industry if the price of something flies up, I can usually find a reason - someone invented an awful new cryptocurrency that requires some piece of hardware to be put to waste, there's a raw material shortage, or a small group of component suppliers has slowly raised prices for no apparent reason (in what will probably turn out to be a price fixing scheme). If it's software, it's usually that some company is just being a greedy bastard and you let them lock you in to their product.
The general answer I'm getting on housing is that "nobody is doing anything bad, there's no one major cause, everything is just really expensive in general now and that caused a new housing shortage" but I don't see how this can explain why home prices across the first world all took an upward turn around the late '90s to mid '00s and have been climbing at a significantly sharper rate (apart from a great recession dip) ever since. One or more things went terribly wrong in multiple countries within a span of less than 10 years for this to happen. What changed? What do you think might fix it?
If computing somehow got so expensive that computers were being effectively uninvented for younger generations and boomers were trading the 486es they bought way back when for far more than when they were new, I'm sure that a major part of my career would be figuring out why and at least thinking about a solution.
z31maniac said:In reply to SV reX :
Yep. This thread has essentially gone.
"What about hypothetical A?"
People with actual experience, "No A won't work and here's why."
Moves goal posts."What about hypothetical B?"
People with actual experience, "No B won't work and here's why."
Moves goal posts.
"What about....."
Ad nauseam.I find it even more hilarious when you look at housing prices and demographics of where OP lives.
The mental gymnastics on this thread trying to blame others for why life is not fair is hilarious. Lets argue random information with zero facts.
The OP of this thread pays under $2k a year in property tax, I pay almost $50k. Somehow I'm the shiny happy person because my land is mostly unused, and I'm "hoarding it"
In reply to pheller :
Yes, I understand why governments prefer that.
It's because they are too cowardly to go the voters with legitimate costs that impact the entire community and should be paid from taxes.
The point is that a portion of the high cost of housing is because a fee is being attached to the property which could be spread across the entire community as a tax, but instead is charged to one owner or neighborhood.
pheller said:You can understand why local governments may prefer that, though.
I'm not particularly complaining about the practices. I understand them, even though they occasionally (frequently?) overreach.
I'm using it to illustrate why construction costs are rising at a rate much higher than general inflation, and how unreasonable it is to expect to be able to build something 1970s style, let alone for a simple inflation-adjusted 1970s construction budget.
Developers agree to stuff like that because if they don't, they don't get to build at all.
Then the land lies fallow, the housing shortage continues, and some well meaning folks get to debate how taxes should be changed so the developer can't sit on the land.
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