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Two generations ago, my girlfriend’s parents emigrated from Ireland to Santa Cruz. The dad became a postman and bought a three bedroom, two bath house in that town. Sustained it on his individual income. My father in law bought a house that year in Saratoga, for $35,000 (sold long ago, now valued at $3.65 million).
17 years ago, I built a house in Willow Glen. The property consisted of two parcels and was abnormally deep. For a brief period during the pre-WWII days, an alley split our block. The city broke up the alley and sold it to houses on the north side to be their back yards. All but one purchased it. They then offered the sole remaining parcel to the homeowner on the south side, who purchased it, giving him an abnormally deep lot.
When I purchased the property, I gave consideration to building an ADU (additional dwelling unit). The city of San Jose, which had lax building standards, flat out refused. It would contribute to “density” so was overruled.
Today, in my neighborhood, half a dozen homes have ADUs under construction. One neighbor who had a triple-wide lot is tearing down his house to build condos in an area that is all single homes. Another neighbor built a duplex AND an ADU, effectively selling to three families. And the city and state blesses all, given the housing shortage that Gavin Newsom references. The state also has a “builder’s remedy” allowing builders to circumvent local residential construction rules as long as they build a percentage of low income housing.
American homes are both shrinking and unaffordable, says this article:
American Homes Are Shrinking. Why Are They Still So Unaffordable?
Land is more expensive. Increased building materials cost. Explosion of red tape preventing new construction.
But underlying those reasons is an explosion in population. My dad used to say they aren’t making any more real estate. But they are making more people. Twenty years ago, there were 295 million people in the USA. Today, it is 347.8 million, an 18% increase in population. Ergo, prices go up…for everything. And, not incidentally, an increase in homelessness for people who can’t afford it.
That’s the side of immigration you don’t hear about. Everyone who comes here means you split the pie. Everyone gets a little less, and it continues year after year. So, the result is shrinking homes, rising costs. Everything else is shrinking, BTW, thanks to Biden’s inflation.
It is simple market economics. Supply goes up a little, demand goes up a lot, presto, rise in prices.
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People have gotten wise to the reality that owning an MTV-cribs worthy home is very, very expensive.
We have four A/C units in our house… built in 2008, the “premium” lennox units are always in need of repair. I can afford it, but would love to have a smaller house with half the complexity.
We have areas of our house that are almost never used. It’s certainly a nice home but I could do with a fraction of the space.
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Sic transit gloria mundi (so shut up and get back to work) -
My dining and living room are the most under utilized rooms in the house. I could board up access to those rooms and never miss them, about 800 sq ft.
Looking at median home prices, cost per sq ft has not gone up that much since 1970. Median home price in 1970 was $24,400 for a 1500 sf home. CPI adjustment puts that home at close to $205k today. Today’s median home is 2200 sf, with a median sell price of $420,000, or roughly $190 sf.
These are not typical California or any west coast metro numbers, but it shows home prices may not be as crazy as they seem. New construction on that 1500 sf home today gets you $285k, which is not surprising when factoring in permits, fees etc.
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