1. Different houses will be on different sized lots with different locations. This will create variance in price.
2. Different houses will be different sizes, made with different materials. This will create variance in price.
3. This market is oversimplified. Construction costs can rise if too much construction is happening (competition for labor and materials). Lower housing costs would attract buyers into the market that don't currently exist, driving up demand. Affordability is impacted by the cost of financing, which is rising.
4. New construction housing prices are actually really close to land value + construction costs. If you can find a way to make construction costs more modest then you have a fantastic future in real estate development.
Prices can vary and still all be affordable. Everyone isn't required to buy the most expensive thing they can possibly afford.
> New construction housing prices are actually really close to land value + construction costs. If you can find a way to make construction costs more modest then you have a fantastic future in real estate development.
Zoning and regulatory changes.
> This market is oversimplified. Construction costs can rise if too much construction is happening (competition for labor and materials). Lower housing costs would attract buyers into the market that don't currently exist, driving up demand. Affordability is impacted by the cost of financing, which is rising.
Lowering the cost of new construction is the premise. Ramping up construction capacity is a short-term issue, after which costs may decline further from economies of scale.
"Lower prices increase demand" doesn't result in high prices because if the price remained high there would be no increase in demand. What it causes is an increase in supply, since suppliers can profitably build even more housing at that price and will continue to do so until that is no longer true.
Higher interest rates have a largely neutral effect on affordability because they cause sale prices to decline.
Some percentage of the top of the range will always be unaffordable to the median income. Whatever a high-floor apartment overlooking Central Park costs is something that a median income won’t be able to afford. (IMO, that’s totally fine/normal.)
Yea it seems unrealistic. I imagine many people buying a home at $N would prefer to upgrade finishings or increase the size of the dwelling, or put in a tennis court than to actually pay less than $N. You can almost indefinitely add marble counter tops or antique bricks to increase the cost of a home. This luxury side of the market is actually considerable.
> Some percentage of the top of the range will always be unaffordable to the median income.
Maybe not in Manhattan, but you can certainly imagine some more modest town where the median house and the highest priced house are priced within the same order of magnitude and the latter is still affordable to the median buyer.
2. Different houses will be different sizes, made with different materials. This will create variance in price.
3. This market is oversimplified. Construction costs can rise if too much construction is happening (competition for labor and materials). Lower housing costs would attract buyers into the market that don't currently exist, driving up demand. Affordability is impacted by the cost of financing, which is rising.
4. New construction housing prices are actually really close to land value + construction costs. If you can find a way to make construction costs more modest then you have a fantastic future in real estate development.