[snapplebobapple]

This is incorrect. If they are an investment then they should go up and down in relation to the value of being able to live wherever the property is. The big issue now is all places (but some more than others) are artificially constraining supply with excessive regulation and restriction on what one can do with their property. We need to largely get rid of that excessive regulation (i.e. much less strict zoning allowing much higher density, with drastically restricted ability of neighbours to interfere with what is built and much quicker turn around time on permits to get building rolling as fast as possible). Doing that will destroy a lot of "value" of houses that are only constrained because of these rules. Other places will go up in value as much higher density is allowed more easily on land in higher demand areas.

What your house would cost to replace is only very tangentially relevant to what its resale value is.

[s1artibartfast]

I agree with the first part of what you said, but disagree with your closing comment. I think a lot of people underestimate how significant construction costs are. I planned was infinite and there were no zoning regulations, my home would only give up like a third of its value.

Materials and labor are a huge component of housing prices

[snapplebobapple]

if your house is currently a million dollars then dropping in value by a third is roughly the difference between needing 220k a year of income to buy it or 156k a year of income to buy it. it's a 96th percentile income house vs a 92nd percentile income house, which makes it an affordable house to many millions more people.

That being said. I agree that labor and materials are a huge part. However, a large part of the labor and materials cost is itself driven by regulation and should decrease in a less regulated environment (everything from elimination of wasted trades time caused by regulators to it being much easier for startups in 3d printing, factory line production, etc. should drive costs down), Further, elimination of mundane but expensive required details like minimum parking requirements, multiple fire escapes in low rise smaller developments limiting floor plan design (while being unnecessary due to improvements in fire suppression), minimum suite sizes,etc, etc. should drive more right sized development to areas that are currently overheated, pushing prices down.

[s1artibartfast]

>if your house is currently a million dollars then dropping in value by a third is roughly the difference between needing 220k a year of income to buy it or 156k a year of income to buy it. it's a 96th percentile income house vs a 92nd percentile income house, which makes it an affordable house to many millions more people.

Another way to put this is it would set house prices back by 3-4 years, which is where I was coming at it from.

I do think there is a lot that should be done on the regulatory front, so that more people can own, and more people in general can have roofs over their head.

I think it is despicable that we as a society have enacted things like minimum unit size while there are homeless people struggling to find housing. I think there should be basically no regulations for owner occupied homes, and the bare minimum safety standards for rentals. IF someone wants to rent a 10x10ft cinderblock cell to live in, they must really be struggling, so why the hell would we want to make things harder for them.