It is often interesting for me to read HN when these topics come-up because you can see lack of life and business experience in the comments. In some cases you can also see the great job our schools are doing indoctrinating people with bullshit.

This thread does not disappoint.

Someone mentioned supply and demand and was summarily put down. And yet, that's at the top of the list in every city in the world.

Here, let's explore...picking at random:

https://www.zillow.com/homes/for_sale/La-Crescenta.dash.Mont...

16 results

https://www.zillow.com/homedetails/2713-Starfall-Dr-La-Cresc...

Built in 1972, 4 bedrooms, 3 bathrooms, 2,201 square feet.

$1,675,000

Let's move north a bit.

https://www.zillow.com/homes/Palmdale,-CA_rb/

500 results

https://www.zillow.com/homedetails/38903-Barrington-St-Palmd...?

Built in 1991, 4 bedrooms, 3 bathrooms, 2,202 square feet.

$580,000

Move north a bit more...

https://www.zillow.com/homes/california-city,-ca_rb/

500 results

https://www.zillow.com/homedetails/10600-Peach-Ave-Californi...

Built in 2022, 4 bedrooms, 3 bathrooms, 2,137 square feet.

$379,000

Of course, some of the price reflects quality of build, finish and materials. However, at a baseline, these homes are comparable.

Why does the first cost nearly three times the cost of the second and 4.4x that of the third?

When all the smoke and bullshit clears out, the answer is brutally simple:

- People are not willing to pay the same price
for a similar house in different locations

- Less homes are available where people want to live

- People bid-up prices in an effort to buy homes
where they want to live

No, zoning laws are not the main drivers.

Why?

You can't double or triple the number of homes in the first neighborhood presented. It is physically and logistically impossible. The area cannot support such a move.

Someone might say: Sure you can! Buy all the homes and build apartment buildings.

Sure, in fantasy land anything is possible. Just the lawsuits from neighboring communities due to the destruction of property values, increased traffic, etc. will take 50 years to resolve. If we leave fantasy-land, this is simply impossible. The power, water an sewer system in that neighborhood might not be able to support expansion.

The point is, there's a difference between fantasy and reality.

The more expensive homes don't necessarily cost more due to higher construction costs. Although, yes, it does cost more to build in some of these neighborhoods because there is a minimum expectation of quality of materials, fit and finish.

For example, in that neighborhood, most homes have smooth flat walls without texture applied. This might not make sense to non-US reader, sorry. Spray texture is used on drywall to hide and mask imperfections. This allows for more relaxed finish requirements, massively reducing labor and all other costs. A smooth wall without texture is what's called a "Level 5" wall and sometimes referred to as "Gallery Finish"...because of how expensive it can be.

And still, at the core, it's supply and demand. It's what people are willing to pay to live somewhere. If more people want to live somewhere, prices go up. As prices pass a certain threshold, build quality and architectural design move up several levels, contributing to higher prices as well.

This is where all the other factors start to come-in. The cost of materials, labor, fuel, freight/transportation, regulatory frameworks and fees also play a part. If you want to build a house today it will cost you a lot more (maybe double or more) than the same house built, say, ten years ago. That's just a fact of our economic reality. This is affected by everything, from minimum wage to the cost of oil.

Real estate isn't complicated. And, no, the housing shortage has little to do with evil planning on the part of the elites to keep the little guys from their turf. This is the same all over the world. Want to buy a house on the Herengracht in Amsterdam? Good luck. You are going to pay about $1MM per 100 square meters (~1000 square feet). Why? Because there are only so many homes. People want them. And they are willing to pay more.

Reality does matter.