[x5n1]

Housing is the #1 money sink in developed economy it consumes by far more money out of people's pockets than anything else. And the banks and the owners of capital are totally okay with this. And as the housing crisis showed, it's in no way a sure bet. It's a gamble just like anything else.

[vbezhenar]

What makes houses in developed countries so expensive? I live in Kazakhstan. I can buy some land near city, it would cost me $5-10k for 100 sq. meters of land. I can build my own house for $40-80k (including materials and workers). It might not be the huge house, but it will be fine to live in.

Is land more expensive in developed countries? Are materials more expensive? Are workers more expensive? (probably all components are more expensive, but I still don't understand where those hundreds of thousands of dollars are coming from, those prices are just insane).

[x5n1]

In Kazakhstan you would have to save for that housing. In developed countries banks loan you the money for the housing. Which essentially means that housing price is determined by how much money people make. The more money people make, the more the people selling the house demand because the banks are willing to loan them that money, based on their ability to pay the amount on their mortgage. So in essence housing always costs a significant portion of whatever you make. That then affects the pricing of land. Labor is also very expensive, at least legal labor. In California you have a lot of illegal Mexicans that you can use for cheap construction, but elsewhere labor to build housing is also very expensive because they expect to be able to function in the economy so they charge a premium for their services, unlike in the third world where construction workers are treated like crap. So to answer your question everything is expensive here and the cost is determined by how much money people make rather than some other value.

[branchless]

This guy gets it. And the corollary? No matter how efficient we get land will soak up all surplus wealth creation.

Land value tax.

[norea-armozel]

I use to be against LVT until I thought about the scenario where you have someone who buys a house cheap (probably a poor neighborhood) and renovates it. Under our current system of property tax, which depends on the assessed value of the property plus improvements, that inevitably prices home owners and renters in the neighborhood over time. Hence one of the reasons why gentrification pushes out the original residents from the neighborhood. And who gains? Those who do the improvements and those who bought the property before the up tick in valuation (and property taxes).

But under LVT, the tax stays the same whether or not you improve the property. Obviously, there may be some means to game the tax, but ultimately land speculation and gentrification wouldn't work out so well. Rents would still rise due to property improvements, but people would be able to justify those rents based solely on said improvements and not on some market bubble due to speculation. Plus, any improvements done by anyone (speculator or not) are not taxed any worse than those who can't afford or see no use for improvements. Ultimately, it's a more balanced approach to a real problem to be sure. Or at least it's one part of the solution.

[branchless]

It's a method that attributes reward to where the effort is put in, therefore you can be sure the rich hate it.

[im3w1l]

The big thing you pay for is to have good neighbours. You want to live close to highly productive in your field. You want to live far away from the criminals. You want to live close to fun people to hang out with.

If Alice and Bob want to hang out then they have to pay a big proportion of their wage to Charlie the Capitalist for the privilege. The land owners sell us to each other.

[justincormack]

All those are more expensive, but its mostly land prices. We are talking about cities too, you can hardly buy a plot of land in London, as it is largely built on. Prime central London property costs £20k/square meter and rents are £50/square meter per month, so if you move your 100 square meters of land to London you can do well out of it!

[pjc50]

Land with planning permission, in desireable areas, is very expensive. Random example from near me: http://www.plotfinder.net/plot/land-sale-city-edinburgh-situ... - that's just over $100k.

More stringent building regulations probably add to the cost, but the planning system is the big factor. "Desireable area" makes a difference in some cases: a while ago Stoke-on-Trent were selling derelict houses at £1 to anyone who promised to renovate and live in them.

[branchless]

Planning permission is how the establishment introduce artificial scarcity.

[ajuc]

Who will build the infrastructure (roads, electricity, water, sewage)? If you build sth without planning you can block or make it harder to provide these services to others. It only makes sense to plan such thing beforehand.

[branchless]

Sure. But in the UK the govt is planning to artificially restrict building land to boost asset prices in place of actual growth.

[pjc50]

Planning restrictions are very popular with the local public. So much so that some places in the US invent their own weird private contract law versions (HOAs).

[branchless]

Planning restrictions are very popular with old people who are "alright thanks".

[presty]

> What makes houses in developed countries so expensive?

Demand and lack of (enough) supply. Buying a piece of land that you can build on in a city like SF costs a lot more than $5-10k for 100 m^2.

According to http://www.trulia.com/real_estate/San_Francisco-California/m...

Average price per square _foot_ for San Francisco CA was $962

[bencollier49]

Supply and demand. Kazakhstan has a population density one hundredth that of the UK.

[branchless]

It's not demand. Prices have detached from wages. It's the application of near-unlimited credit.

[TACIXAT]

I disagree that housing is a gamble. It's a long term investment and historically it has gone up. The housing crisis was a correction.