My takeaway from his or her comment was that housing is expensive because it’s nicer.
And it’s true. It is hard, if not impossible, to find a modest, small house. The median size of new construction is more than double what it used to be. And houses are full of glitzy appliances, fixtures, moldings, and counters. It really does just heavily inflate the price.
How much would a 1,000 square foot house with modest fixtures cost in your neighborhood, if it existed? That’s what the typical house used to be.
> It is hard, if not impossible, to find a modest, small house.
True, but small condos have seen similar appreciation
> houses are full of glitzy appliances, fixtures, moldings, and counters. It really does just heavily inflate the price.
This do increase the price of real estate, but not that much relative to the bigger picture. The price of a "glitzy" fridge vs. a non glitzy fridge is going to be what, $500? $1,000? Likewise, appreciation has occurred on older properties without these features unless you're below the inflection point where the risk of the property declining in value faster than the market appreciates is so high that the price remains poor.
A sizable percentage of people don't want to live in condos. And they aren't necessarily small, either.
>This do increase the price of real estate, but not that much relative to the bigger picture. The price of a "glitzy" fridge vs. a non glitzy fridge is going to be what, $500? $1,000?
That's an extreme understatement. A glitzy refrigerator might only had $500 but marble counters might add $20,000 or more. Same with flooring. The price difference on a house full of stick on vinyl and real hard wood might be an additional $20,000. Then you get to other cosmetics such as crown moldings, jacuzzi tubs, walk in showers, vaulted ceilings, heated towel racks, and more. You could take the exact same house structure, and through flooring, counters, and cosmetics alone you could easily jack the cost up by $60,000.
>Likewise, appreciation has occurred on older properties without these features
Not really. Houses get upgraded with better floorings, better counters, additions, and other renovations. Go find a house in your neighborhood built in the 1950s with no major additions, laminate counters, and cheap flooring. Good luck.
> A sizable percentage of people don't want to live in condos. And they aren't necessarily small, either.
Most condos are small. If a sizeable proportion of people don't want to live in condos, that would make them cheaper. The fact that they're appreciating similarly that is further evidence that the premium for size is not the driver of what's happening.
> That's an extreme understatement. A glitzy refrigerator might only had $500 but marble counters might add $20,000 or more. Same with flooring. The price difference on a house full of stick on vinyl and real hard wood might be an additional $20,000. Then you get to other cosmetics such as crown moldings, jacuzzi tubs, walk in showers, vaulted ceilings, heated towel racks, and more.
Most properties don't have jacuzzi tubs or vaulted ceilings. You're not wrong, but they're not relevant to the discussion of what's happening to the median home buyer.
It's nonsensical to think that the price of housing has risen primarily because of quality increases because many, many houses have seen large appreciation with no changes.
> It's nonsensical to think that the price of housing has risen primarily because of quality increases because many, many houses have seen large appreciation with no changes.
So it should be absolutely no problem for you to take me up on my offer. Locate a home, built in the 50s or 60s, without any additions adding square feet. Cheap counters, cheap flooring, and cheap fixtures. If what you say is true this should be relatively simple.
How much is it, and how much more or less expensive is it than newer construction in the area. If homes are just rapidly appreciating while they sit there unimproved, this should be a trivial exercise.
My parents bought a 1400 sqft, 1950s-built home in 1993 for $350k. It still has all old appliances such as a 1950s oven that looks like this [1], old gas heating vents, no central cooling, no pool. No additions. The fixtures and flooring aren't cheap, but they're not luxurious, and are over 60/70 years old at this point - only real maintenance they've done is re-shingling the roof and repaving the driveway every decade or so.
The house is now worth $2.1M (+500% gain). Obviously if they sold a new buyer would tear the whole thing down and build some huge modern home on the land (which is the actual valuable portion of the asset) as has been happening in their neighborhood.
You are placing way too much importance on the relatively small value of fixtures and "nice" amenities vs. the global glut of capital chasing appreciating assets (made much easier through online platforms) such as land in desirable areas.
And it’s true. It is hard, if not impossible, to find a modest, small house. The median size of new construction is more than double what it used to be. And houses are full of glitzy appliances, fixtures, moldings, and counters. It really does just heavily inflate the price.
How much would a 1,000 square foot house with modest fixtures cost in your neighborhood, if it existed? That’s what the typical house used to be.