Building a home increases the costs of buying land, the process of obtaining permits and multiple inspections. The farther your plan moves away from a standard model, the more expensive it will be. Building lots in urban areas can be prohibitively expensive. The houses are large, bulky and built with many different parts.
In addition, a house contains a wide variety of materials and equipment. Housing construction encompasses practically the entire field of raw material production, while nearly 70 different industries process materials, such as wood, cement, brick, plaster, etc. In normal times, the builder has a wide variety of materials. You can get window frames made of wood, steel, bronze, or aluminum; wood, clay, stone, rubber, cork or fiberboard products; asbestos tiles or tiles, cement, bituminous materials, wood, clay, or stone. Sometimes a piece is made of many materials.
Therefore, asphalt roof tiles can contain felt, asphalt and pieces of stone; windows can have wooden frames, glass panels, steel clips for glass, putty, nails and screws, aluminum strainers, bronze hardware, iron weights, cotton cords, glue, and oil and lead paint. Construction prices increased like most items during the pandemic and for similar reasons. Delayed packages, lack of workers and inflation, in general, are to blame for the high prices that remain today. The site alone, which is the lot and its improvements, represents a fairly large part of the total cost of a home. Another way to look at it is that in the areas where we need housing the most, zoning and regulatory factors are responsible for the majority of housing costs.
It divides homebuilding into several dozen different activities (structures, plumbing fixtures, drywall, etc. Since all homebuilders receive equal importance in the survey, it outweighs the costs of boutique and luxury home builders (who can build only a few houses a year) and underestimates the builders of larger economies (who can build hundreds or thousands of homes a year).Only in dense urban areas does the cost of land begin to dominate the cost of new housing, driven by regulatory and zoning restrictions that limit the number of homes that can be built in a given area. Homes are expensive primarily because they are large, bulky items that require a lot of parts that many workers have to assemble in one place. We can see that, in many zip codes, more than 70% of the value of the house is due to the cost of the land it is on.
Therefore, in general, the fixed construction costs and the costs associated with the construction of the actual physical building are the biggest and most important cost of a new home. Housing policy discussions often focus on issues of zoning, regulation, and other supply restrictions that manifest in rising land prices, but for most American homes, the biggest cost comes from building the physical structure itself. In fact, even in the largest cities, more than half of the builders obtained permits to build only one house within the city limits. And in dense metropolitan areas (the places that most need housing), it can be even higher, exceeding 70% of the cost of housing. Indirect costs, as we have noted, include funding, permits, inspections, design work and other administrative tasks that are not directly related to the construction of physical housing. These costs can also be difficult to reduce, because people's preferences for how different parts of the house look or feel can be surprisingly strong and limit the use of new systems.
In home construction, each unit is assembled on site under the direction of a builder or contractor, and most of the work is done by hand. There is also a large amount of data available on single-family housing construction that does not exist (or is much less accessible) for other types of housing.
