| This Matt Stoller guy paints a misleading picture of the dynamics of what is to be in the industry. I grew up in the housing industry as the son of a homebuilder. Not to date myself, but I wrote what was probably one of the first cost accounting spreadsheets on the nascent PC of the day using VisiCalc. The spreadsheet took into account all costs associated with building a starter single family home, including land acquisition, financing, municipal fees, material, and labor costs, I.e. everything one one need to run a successful business as a home builder. I know this industry intimately. Yes, Stoller is correct it’s harder to be a small (i.e. 10-20 homes per year) home builder than it was 40 years ago. But it’s not due to some conspiracy. It’s because the local zoning has become much more arcane and the red tape so Byzantine that the little guys have been effectively pushed out. For instance, you need a full time staff person to negotiate with your local ZBA (Zoning Board Association) to get permission to get something built. Beyond the direct costs, the delays and uncertainties are killer as they eat into your profits. (The gross margin is slim, somewhere between 10-20% on a home for a small time builder. I know - I wrote the damn spreadsheet that calculated it.) As a consequence of all these regulations, only the big builders can afford to absorb and amortize these costs over tens to hundreds of homes. Of course, this also means the big guys still need a fatter profit to to deal with zoning hurdles, long time frames, uncertainties, and what have you, thus margins need to be higher on average even for them. This is what is going on. Not some monopolistic conspiracy. I looked Stoller up. Here’s the Wiki: https://en.wikipedia.org/wiki/Matt_Stoller His gig is railing against monopolies. The housing industry is just another nail for his one-size fits all monopolistic hammer explanations. The real culprit here actually is a cartel ironically. But this cartel is made up of homeowners who flex their power through local zoning codes that make it near impossible to build new homes, especially apartments. TLDR: In other words, the YIMBYs are right: the problem is zoning restrictions on new supply. Reform zoning and small time home builders will be back with a gusto. |
Part of the issue is that the big guys have pushed out players like this. But another part of the issue is the onerous code process in place today. Could you even get a few guys together to build a home without having a certified electrician or engineer? And even if you could, does the present generation of able bodied workers even have the knowhow as my grandparents generation? The guy would spend all the time I waste on TV or the internet working out projects and plans until the day he passed practically. Seems present generations are a bit distracted by the digital world to pick up so many useful analog skills.