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TheQuarantinian t1_j8p2q1q wrote

Reply to comment by roundearthervaxxer in Can 3-D Printing Help Solve the Housing Crisis? - Standard construction can be slow, costly, and inefficient. Machines might do it better. by speckz

If you can build a house for $80,000 and sell it fot $100,000 you will be happy.

If you can build the same house for $40,000 and still sell it for $100,000 you are not going to lower the price.

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roundearthervaxxer t1_j8pi28s wrote

No but the competition will. Farther down in this thread someone who is knowledgable explained this to me. Finishing costs, plumbing, electrical, these things are a large portion of the cost. It is better to prefab wall units and transport them onsite

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TheQuarantinian t1_j8pmrwp wrote

The competition still won't. They'd be dumb not to.

You receive two job offers, both paying 100,000/yr. You like both equally, benefits are the same, everything is identical except one requires you to spend $10,000/yr on transportation and parking and the other $1,000. Do I need to ask if you will accept the one with lower costs and tell them your labor is worth $9,000/year less?

Unless the motivation and goal is to sell cheaper houses the developer won't. And there isn't really any competition - it isn't like a restaurant or a shirt,there is one lot for sale just as there is only one year of your time for sale.

If the builder can sell the house for a million he will sell it for a million if he has to pay a plumber or not. And why wouldn't he?

Now if there are two identical units side by side and one needed a number and the other not and only one buyer then that's different. But when there is only one developer building every house in a 50 acre subdivision or condo highrise then they will minimize expense but maximize sale value wherever possible.

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roundearthervaxxer t1_j8qji03 wrote

Developers never undercut each other?

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TheQuarantinian t1_j8r4tvn wrote

Not like airlines or gas stations - you generally don't see price wars for a couple of reasons:

  1. You can't make more. You have only one shot to sell that specific lot
  2. Real estate opportunities are drying up: you'll probably never get another chance to build another sub in that division again unless you can do a lot of demolition
  3. If demand falls you just stop building and wait. Land doesn't expire or go out of style
  4. If you sell a unit for 100,000 then sell the one next door for 80,000 you affect the value of the first one and establish a trend that affects the value of the third one as fewer people want to buy in a neighborhood where prices are falling. Again, the best option is to just stop building rather than cutting prices. There are some exceptions here, mainly multi unit buildings where you have to pay for ongoing maintenance if the unit is occupied or not, but the are a bunch of other differences there.
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