No. That’s escalation in construction hard costs only, not counting land or soft costs. Land has been escalating too, of course, and soft costs are linearly proportional to hard costs (typically twenty percent).

Does the cost of the land factor into construction costs?

The Seattle area experienced more than a 14% rise in construction costs last year. About the same the year before that. A little less the year before that. These figures come from local construction industry and have been verified by both our in-house cost estimators and third-party consultants. Construction costs in Seattle have been anything BUT flat since the late 1990s.

While home price appreciation has outpaced that, it hasn’t done so by much.

Mark L said,
Along with housing demand, the prices of materials and labor have risen in lockstep.

Mark – do you have a source for that? This is an issue that Shiller dealt with extensively in “Irrational Exuberance” and the data shows exactly the opposite of your statement: Real construction costs growth has been essentially flat

http://www.irrationalexuberance.com/Fig2.1Shiller.xls

“Seattle has been built out since the 50’s.”

Umm, try the early 1900’s. My friend’s house in Ballard was built in 1906.

“Umm, Cringe, look into stated income, Alt-A loans, and the like and then get back to us. It has ZERO to do with what people can actually afford.”

Are houses worth more in Seattle now then 80 years ago? Houses have steadily and consistently appreciated in Seattle for the last several decades. This is much before stated income, Option ARMs and all the “sub-prime” loans.

Has the rate of appreciation been a bit higher the last few years due to the open lending standards? Probably, although in general not to the ridiculous levels that many cities around the country got to.

Somehow people have managed to buy homes here during all that time. Do you have any other theories?

Same is true for pretty much every major city. Seattle has been built out since the 50’s. How many cities can you name with a population of 500K where there is a large supply of vacant land within or adjacent to the city limits?

And those cities that do have lots of land, has their price growth been dissimilar to Seattle?

your right on about 25% min profit.
your talking about town homes I’m talking about single family Res. home, about 2-3 town homes can fit on one lot, so if you take your numbers and times it by X2 – 3 our figures are about the same, I was just guestimating, but my point was places like the midwest dont have Growth M G or Zoning laws so price can just drop fast, but here the GMG and Zoning laws keep priced artifically high. I guess the gov could always lower the fees, and that could lower prices. but i dont see that happinin soon

In Seattle, there little or no vacant land. If you want to build, you buy a tiny lot after a subdivide, or you buy a house and tear it down.

Along with housing demand, the prices of materials and labor have risen in lockstep.

That is the whole concept of a free market. If there was a way around the high housing prices, everyone will flock to that option until the price to do so rises to be consistent with the current new-construction market.

It’s a little more complication to do this, and certainly more risky. After all, most workers in the US will retire in the US. Regardless of where the dollar stands in the world, the retiree will be saving in dollars and spending in dollars.

I believe getting a foreign CD is a little complicated and most
people just don’t bother (including me). Also the same 50 %
up can go down 50% as well ;)

While I personally do not believe that the 15-20% declines will happen, prices are more likely to fall in the 5-10% range in my opinion over a period of 1-2 years. Again this is just my opinion and has no scientific backing because frankly no one knows the future :)

“There are still too many people with enough income to buy all these places and thus house prices continue to rise.”

Umm, Cringe, look into stated income, Alt-A loans, and the like and then get back to us. It has ZERO to do with what people can actually afford.

Not anymore. In Portland the inventory of available homes is up to 6.2 months. Twice as much as in 2006. A true buyers market poised to drop.

As a real estate agent do you think this is a good time to buy ? Where do you think the eastside market is headed ?

Just checking :)

yes…
I have friends who build townhomes in the seattle area. Their cost per door for permitting and construction? $125k. Their cost for land and prep? less than $250k. They don’t start on a project unless they can pencil in AT LEAST 25% profit.

so….. unless you have some facts based on personal experience building more than one house, yeah, I think you’re wrong.

That must be why another overpriced condo tower has decided to “go apartment”. They’re not selling. And the SFHs are languishing on the market forever.

Unless they increase the height limit. Nah, they wouldn’t do that. You’re right, we’re almost full to the brim.

1.5x – 2x+ is a HUGE margin when you are talking about population growth, estimates of which almost are always extremely rosy in their predictions anyway. I think if we end up with more than double the amount of predicted growth over the next 15 years we will have a lot more problems than having enough condos downtown for people to live in.

If you go to a place like Texas or Ohio, I’m sure hey have 10X or 20X. Double ain’t that much and it implies that it is not “unlimited”… therefor at some point, we do have limited supply.

More than half of the net land supply, especially land in single-family zones, is located in South County. SeaShore contains almost half of the developable land in multifamily and mixed-use zones. Most of that land could be developed at densities well in excess of 50 dwelling units per acre under current plans and zoning.

So am I correct that according to this report most of the land for houses is south of south center, and seattle has “buildable” land for 139,000+ condos (~3000 acres total)?

Good.

It still appears there are plenty of homes being built, too many if you take this post at face value, without paving over wetlands or building on unsafe slopes prone to erosion. I don’t find this to be a problem. Do you?

“…fewer than 5% of of newly permitted multi-family residential developments were meeting GMA density targets.”

Sorry for any confusion.

And that’s entirely aside from the problematic nature of the “buildable” figures are generated. Chris is exactly right that the way the buildable lands numbers are calculated is deeply flawed.

Cringe –
“See, There are still too many people with enough income to buy all these places and thus house prices continue to rise.”

okay….

did we read the post?