Construction companies can still turn a profit building and selling them. The idea is that houses should be depreciating assets, like cars. If houses are appreciating in value it means you're not building enough of them.

▲

nradov an hour ago | parent | next [-]

Most houses do depreciate, or they require frequent expenses just to maintain their value which amounts to the same thing. There are occasionally exceptions to this rule in times of rapid construction price inflation but that's rare.

It's the land under the house that typically appreciates. Land is unlikely to depreciate unless the broader regional economy declines.

	▲	mothballed 28 minutes ago \| parent [-]
		It's the actual house in many areas. Where I live a burned out, unusable trailer only good for rebuilding the whole thing (that is, negative value based on purely structural value) on a piece of land is worth ~100k+ whereas the land itself (unmortgagable) is only worth about $35k. When you have a house you get basically a special token to have a house built under the codes, zoning, and other restrictions that were in place when it was built. And possibly the permission to build it all. Also a token that includes getting utilities, etc under the old rules. In many places this may have been done back in the 60s when "a guy and his pickup truck" could just build a house with almost no questions asked, and many of them were done that way. Coming back to why the burnt out trailers are worth $100k+ on $35k land where I'm at even though you'll just have to pay to raze them 1) It includes planning/zoning pre-approval, just re-do the same structure on the standing foundation and you won't have to spend a gazillion dollars doing everything back to the new rules. 2) The presence of the house includes the ability to use debt to mortgage the land up to a gazillion dollars. The exact same piece of land magically becomes mortgageable with the burnt out unusuable trailer on it, which let people bid the price to infinity during the covid era, then locked into high rates no one will give up. Meanwhile, I got one of these pieces of land for ~1/3 the price the exact equivalent raw land value was rolled into on mortgageable properties. Think about it this way. If I build a house with the cheapest, shittiest, materials and the most illegalist of Mexicans 30 years ago. And then pass a bunch of laws that say nobody gets to do the thing I did, and now you need code-magic expensive materials and deport all the Mexicans, require expensive environmental reviews, and maybe even make it harder to legally build. That appreciates the value of my house -- because to substitute my cheap house you have to build an expensive house, so I can just charge almost as much as the expensive house and the market will bear it. Thus you end up with stuff like raw land value prices in my area not appreciating at all, yet house prices massively appreciating.

▲

s1artibartfast an hour ago | parent | prev [-]

or that the cost to build them is going up.