It’s not the house that’s worth more. It’s the land. If cities and towns develops, land prices should go up. Buildable land near an office, supermarket and bar should be worth more than the same piece in the middle of nowhere.

I slightly disagree. The land definitely factors; I don't think we can argue that. But there's also a lot of value of a house just being on the land, no matter its quality (ignoring complete dilapidation).

If labour and material costs are also high that increases the value of houses that are pre-existing. It means the buyer does not have to pay extra for and wait for a house to be built, which has some value. Also, there's a certain tolerance that I'm sure many people, if I may project, have for how crappy of quality a house actually is. They just want a damn place to live and call their own. Especially when the market is not in the buyer's favour.

At least that's how it all seems in Toronto. In the city of Toronto proper, a detached house selling around $1,000,000 is almost guaranteed to be of relatively bad quality right now.

Yes but if prices rise, its 90-100% of the land price increase, and 0-10% of the house itself. That is land with all network connections and permit to build the house. It basically goes up only with material and labor costs.

House is often a necessary evil - its never what buyers imagine as ideal, but in comparison with going through the hell of building one's own (or also adding tearing down the old) its an acceptable compromise for many.

Life is too short, and no house is worth destroying a marriage.

This depends on where you live. In rural areas, and dying towns (most of america geographically), land prices have stayed about the same over the last decade or so. However, materials and labor have increased a lot. So there are certainly situations where the building itself inflates in value more than the land.

I heard an anecdote from a rural insurance agent that the fire insurance is crazy because repairing/rebuilding a house after a fire costs much more than the market price of the house + land, or an equivalent house + land nearby - the issue is that (in some areas) the rural house prices there are way down as there's no demand and everyone's leaving, while the costs of construction are sky high.

So if they offer a policy that covers the market value of the house, that's much less than what it would cost to repair/rebuild (so insured people can't afford to get their house back after a fire), and they don't want to offer full repair/rebuild value, as that incentivizes people to just burn the house down because in that case the insurance payment would be much more than what they can sell the house for.

To steal a phrase from Matt Yglesias: we only have so much "throughput" from land prices to housing prices because we refuse to build vertically.

Slight correction - people don't want to live in vertically built accommodations. Everyone wants a nice little house they don't share with anyone. Can't exactly blame them.

i just have trouble understanding this angle. i grew up in the suburbs and moved into the city during year 2 of my career. i rent a home with 3 roommates even though i could afford that SFH you’re describing. why does a person desire to live in the city for any reason besides for the density?

“jobs”, “good food”, “nightlife”, “dating” and “social opportunities” are all things i hear. the last two are a direct result of density. the first 3 are only possible as indirect results.

anecdotally, the price per sqft of townhomes exceeds that of detached homes in several Seattle neighborhoods. several confounding factors, including the year of the building, but in general that suggests a preference opposite to what you claim. or at least, that, in the face of constricted supply we can’t really tell where the preferences truly lie.

If we're looking statistically, detached homes are more expensive than apartments pretty much everywhere once you take into account location. And having a family with a toddler myself, trust me, apartments are not the best fit for that situation.

Anecdotally, in Australia, post COVID both rent and real estate in regional areas have gone up dramatically - much more than in cities - rapidly pricing locals out and forcing them to move elsewhere and sometimes find temporary accommodation. Now that WFH is more normalised and either want a quiter lifestyle or straight up can't afford houses in major cities, so they are moving to smaller towns instead.

My own preferences are fairly different but I can't argue with data.

You requirements for a good life change as your age changes - what you value during your 20's is not the same as what you value in your 40's, in the same way what you value in your 20's isn't the same as what you valued in your toddler years.

Everyone wants to live on an acre in the city in a palatial mansion.

But if you have to decide between an hour commute and living vertically plenty of people would choose to live vertically.

But factor in hybrid remote and the palatial mansion has become an option again - what's 2 days a week of a hellish commute if you can stretch out on a lawnchair the other 3?

I don't know... The suburbs are really popular

Most of the people I know who moved to the suburbs did so for better schools and a larger house.

Eh, I don't think that's true. Maybe for older generations, but for people in their 20s and 30s I suspect the opposite is true. People want to live in cities and if they've done any research at all don't want to live in suburbia since it's a living hell.

People in their 20's and 30's eventually reach their mid to late 30's and realize living as a couple with a child or two running around in an apartment, taking elevators to walk the dog or have the kids play in a park (a park probably with homeless people laying on benches if it's the parks I'm thinking of), and folding a stroller to walk down the subway is -- a giant pain in the butt.

And eventually those people visit friends or see pictures on social media of people similar to them with large back yards, land and big kitchens - and say, shit, maybe we should look into this.

As it happens, just possibly a black swan pandemic event keeps those folks indoors with their kids and dogs, with their nonplussed neighbors, children running around behind Zoom conference calls, and pictures on social media of people with houses and backyards causing massive envy...

And welcome to today.

That's the housing situation in the suburbs and exoburbs. This is BEFORE even even talk about the insanely low interest rates on offer during this time.

If we’re going to ban things because “trust us, you don’t know your own preferences” or “you’ll change your mind later” then we’d better start with alcohol and cigarettes. Apartments would be pretty far down the list.

This is mostly true in the US. There is, and has always been for the last century, a population of city dwellers who don’t care to ever own a house. But outside of the cities in the suburbs and rural areas owning your own home is seen as the thing that makes you an established member of a community.

Living in the city only implies renting because condos are so rare, only the richest few can afford them. Allow condos to be as abundant as single family homes - what we’re asking here - and that would easily change.

Depends on upbringing. I grew up in tall buildings, and am comfortable in that environment. When I had an opportunity to buy a detached house, I saw how much work it is, and it felt a bit lonely there, so I decided it's not for me.

I don't think that's true. Obviously a lot of people pay a lot of money for them. I think even the most craven NIMBY would adore a high rise condo if it had comparable square footage.

It's everyone else's vertically built accommodations that attract the hatred.

In the UK the fall out from the Grenfell fire has made even low rise flats look a very poor investment.

And the experience of high rise social housing from the 60's and 70's shows that that tower blocs do not solve housing problems.

I'm not sure that we build at all. Out, up, down, or anywhere else.

> It’s not the house that’s worth more. It’s the land.

They are both worth more over time.

To build a new house just like the old one will cost more since labor went up and materials went up.

Somewhat true if you mean not adjusted for inflation. But that means you can buy more too with higher wages (except low-wage jobs haven't kept up). If you mean rare woods and stuff, maybe so. But compare the labor part of modern forrestry to the stuff 130 years ago:

https://www.komatsuforest.com/-/media/komatsu-forest/images/...

A machine grabs the tree, cuts it from the ground, rolls it through a thing to remove all the branches all in just a few rapid smooth movements.

to build an old house like the old one will be impossible because you can't put asbestos in your walls and and have to comply with other build codes that were introduced over the last 120 years.

It’s also partly the monetary unit being worth less than 20 years ago. $2 20 years ago is about the same as $3 today.

On the contrary, it’s demographics. If you had any land, as long as more people want to live on it, the price goes up. If there are more people full stop, land goes up more, because there’s more people to at the bid.

Now whether anyone should be allowed to own land is a good question. Lots of folks can’t even imagine a world where that’s impossible, but ownership is just law, a social construct.

I'd disagree that houses are the same as they used to be. There's a spectrum of housing from from degraded to new to renovated. But the ideal house today, compared to the past, today's house has so many more luxuries and conveniences: appliances, energy efficiency, air quality, amount and variety of lighting, safety standards and knowledge of advanced materials, there's literally no system that you can't improve in a house. Even the humble hand made log cabin could be outfitted with an efficient modern solar battery system with a precisely engineered woodstove to boot.

All this to say, many houses are upgraded over time, not merely degraded. I'd much rather live in my house now after the decades of upgrades than when it was freshly made in the 70s.

If everyone lived with their siblings in the same house they grew up in, we wouldn't have a problem.

As is, people have children who occupy a cumulative more houses with or without others than their parents/grandparents did, and there's not more land being made. So that's why the old land and what's on it go up in value.

Basically, the increasing population (demand) is the cause of an asset increasing in value despite not increasing in quality.

One can make policies which reduces the number people who wish to use homes in the domestic market of a given country if they want to prevent that from happening without expanding the supply massively instead, that may lead to other negative externalities though based on which method is chosen (birth limits, immigration controls, ect.).

What's 10x is not the house, but the land, the physical space the house seats on. The land is a finite resource, thus it can only appreciate in value.

>"The land is a finite resource, thus it can only appreciate in value."

This is a non-sequitur; lots of things are limited, but often collapse in value. As a former Saudi energy minister once said: 'the stone age ended, but not for lack of stones'.

land is the one thing almost never goes down because we can't create more of it. for almost every other aspect of our lives, they are alternative solution to the problem but you can't create more land. Building vertical to increase density is only kicking the can down the road in a context where the humain population is always increasing.

Well, apparently worldwide population will peak sometime and then slowly fall. The mitigating factor being that it probably won't happen in most of our lifetimes yet. That said, some countries might experience their population plateauing sooner than others. So perhaps if we kick the can down the road for a while longer, it will indeed have been enough.

> That said, some countries might experience their population plateauing sooner than others

And all of these countries (except japan/Switzerland) are planning to bring more immigrants in to make sure the population is always increasing faster. Something that most people in first world countries don't realise is that the entire population of their country is smaller than the number of millionaires in china+india. Even if all if america+EU became sterile, there would still be enough foreigners to buy more unit and push the bubble further if they open borders. And they would, because the entire economy depends on it.

Only if the capital is available. Speculators tend to use borrowed money to do their thing and drive prices up. Good times until they’re not, then boom.

I have family who made a fortune off the backs of people living under this delusion in the 1980s and the 1960s.

Only if population grows. Land will depreciate if there are less people to live on it.

In the 21st century, even if country population stagnates or even drops, population still grows in cities compared to rural areas.

Not just land, but land in desirable places with amenities like roads, sewer, water, power, schools, food stores near by.

To add to this, it's not even necessarily true that the value of land itself is up 10x. It could very well be that the value of dollar is DOWN 10x. The effect on price tag is exactly the same.

By that logic the value of all consumer goods is down by almost 10x as well.

I think you’re confusing depreciation with value.

In most cases every 20 year increment backward yields a higher quality house. Newer houses are garbage in many dimensions.

An older home requires a little more capital investment, but if it has lasted 130 years, it’s sound and could be remade/modernized at a cost well below any new construction.

Japan is different in this regard: housing actually depreciates, it is understood that it will be rebuilt every 20-40 years, and if it is a condo or some kind of apartment, there isn't much share of land appreciation to count on. That is why Tokyo is considered to be more affordable than NYC.

Others have mentioned the underlying land values is the most important thing that is driving valuation increases, but beyond that the existing 130 year old house is worth more because the cost to rebuild it from scratch is increasing as construction costs increase.

it's also replacement cost. to build a new house would require a ton of money.