[usnelson]

What surprised me the most was the fees that just piled on. I knew the land, labor and materials costs.

Just the sewer (the capacity only, no work done) was $11k. Then add on the park and school fees which both were over $10k. No wonder it a builder has to build something over 2000 SQFT to make it pencil out.

[drewda]

The reason for most of those fees for parks and schools is because Prop 13 has prevented property taxes from raising with the market on older property owners (and the LLCs that own commercial properties), so cities and school districts have to instead turn to newcomers to get some amount of revenue to cover the costs of providing public services.

[Incipient]

We have a great system here I believe - or at least great enough? - councils charge a percentage of the hypothetical rental value of the property in fees/taxes (in reality this hypothetical rental value is quite a bit below actual rental values - they don't seem to minmax their income).

[newsclues]

It shouldn’t be a surprise.

Buying property should have the same transparency (into costs and fees) as breakfast cereal with nutritional labels.

[bachmeier]

> No wonder it a builder has to build something over 2000 SQFT to make it pencil out.

I'm with you up until that. Maybe there are places where you have to build over 2000 sf due to regulations. For the most part, this is an industry talking point to justify building expensive houses on the limited land that gets zoned for residential. It gets repeated a lot.

You can build smaller houses but you can't charge as much for them. I'm not faulting the builders for maximizing profits, but it's still a talking point. (And in the grand scheme of things, it's not the reason housing is unaffordable.)

[irishcoffee]

> I'm with you up until that. Maybe there are places where you have to build over 2000 sf due to regulations. For the most part, this is an industry talking point to justify building expensive houses on the limited land that gets zoned for residential. It gets repeated a lot.

I kind of feel it is the inverse.

If you can build a house for X$/sqft, you have a linear relationship. If it costs 100k _plus_ X$/sqft (for sewer, permits, etc) now you have a floor. You can sell a bigger house for 600k, or a 35% smaller house for 425k, odds are you’ll sell the bigger house quicker. I bet the 325k homes would sell like beanie babies in the 90s in places like sf.

The actual problem, the elephant in the room, is that California is expensive, both by popularity and regulation. This makes for an embarrassing conundrum where California is simultaneously pushing poor people out while trying to subsidize their life via social programs.

I don’t think it’s working.

[bachmeier]

> You can sell a bigger house for 600k, or a 35% smaller house for 425k, odds are you’ll sell the bigger house quicker.

Yes, and that's the point I was making in my comment. What's driving the price gap is that you're selling to a group with a much higher capacity to pay when you're building the 2000 sf homes.

But that has nothing to do with it being unprofitable to sell lower-priced homes, it's just less profitable. The talking point makes it sound like the home builders are trying to do good things, but they're victims of the government. No, it's nothing more than a desire to maximize profit, because the folks that are looking for 2000 sf homes are high income households with kids, and they're willing and able to pay a steep premium for that house.

[irishcoffee]

I never suggested it was unprofitable. I said it’s easier to sell bigger homes because of regulations and financials.

You believe that builders are this nefarious cabal. I don’t think this is true. Hanlons razor and all that.

[bachmeier]

Didn't see this until now, but it's still worth a response:

> You believe that builders are this nefarious cabal.

No, calling them profit maximizers has nothing to do with them being a "nefarious cabal".

When folks come along and ask "Why can't I afford a house?" the builders don't give the honest answer "Because we're maximizing profit, and that means we don't build houses for you." Instead they say "We're trying but the government won't let us build houses for you."

[dangus]

.

[irishcoffee]

>>> What surprised me the most was the fees that just piled on. I knew the land, labor and materials costs. Just the sewer (the capacity only, no work done) was $11k. Then add on the park and school fees which both were over $10k. No wonder it a builder has to build something over 2000 SQFT to make it pencil out.

>> The actual problem, the elephant in the room, is that California is expensive, both by popularity and regulation. This makes for an embarrassing conundrum where California is simultaneously pushing poor people out while trying to subsidize their life via social programs.

> I think your comment works by making a bold assumption that construction in California is wildly expensive than elsewhere and that it’s the major driver of cost.

I didn’t make any bold claims.