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Factoids - Housing Costs and Demographics
By: Jon Dougal - Tuesday, February 21, 2006
Source: Various
According to the U.S. Cenusus Bureau, the housing industry supports 25% of the investment dollars in the U.S. and 5% of the overall economy. Housing starts dropped 8.9% in December of 2005, but the construction industry was still over $1.16 Trillion in gross dollars for last year, up a couple billion in the last 2 years - that’s almost real money.
At the Pacific coast Builders Conference in June 2005, the President of the California Building Industries Association, said that a lot ready for construction cost $200K. No streets, no plumbing, no slab. And on top of that went cities fees – mostly to position the development in the price range they wanted to add to property values.
The Rest of the story:
BREAKING DOWN THE PRICE OF A HOUSE
Soft Costs ……………………………………………………………….27%
Overhead, profit and warranty………………................…………….15%
Finance, property tax, insurance………………................…………..5%
The House……………………………………………………………….33%
Labor……………………………………………………..16.5%
Materials………………………………………………….16.5%
There are some 40 subcontractors working on building a house. They buy the materials, pay their employees, and charge the General contractor a lump sum based on a bid they gave for the work they are doing. A $1Mln house has about $330K committed to materials and Labor.
$330K is spread out like this:
Financing……………………………………………..30%
Concrete………………………………………………..9%
Plumbing………………………………………………..7%
Drywall………………………………………………….6%
Case work……………………………………………...5%
Electrical………………………………………………..5%
The Land ………………………………………………………………40%
Raw land purchase……………………………………20%
Improvement costs
(grading, installing, water & power lines)…..............................….10%
City /Agency fees………………………………………..10%
Percent of Americans preferring to live in suburbia………………………..51%
Americans preferring to live in a dense urban place……………………….13%
Countryside or Remote preferences………………………………………….33%
Preferences differ with young families and empty nesters.
While we new urbanists would like to think and report that the move is back to the city for shorter commutes, more family time and more culture the fact is that the population is still flowing out of the cities to the suburbs. Nearly 85% of post 2000 growth has been to the “Burbs.” Suburbs account for 2/3rds of the populations of cities. This phenomenon is called “out-migration” and is fueled mostly by middle class folks trying to cash in on their real estate appreciation and or finding more affordable digs in the remote corners of the regions. Trading windshield time for affordability. Of course this trade off has its hidden costs in failing marriages, turnkey kids, more drops outs from school, less parental involvement, less family time, and may other issues that arise as a result of less time at home. STRESS!
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