House price dynamics--land vs. construction? You can now (finally) face a felony charge for stealing a car, regardless of value. Lastly, do we want trial lawyers working with AG's (and your money)?
An exhaustive look at some of the dynamics behind the cost of housing.
I got turned on to the Construction Physics site after hearing the man who runs it give an interview. I've been doing some reading of his stuff and thought I'd share an article with you.
If housing and construction are an interest of yours, you should give some thought to signing up for the newsletter.
I put a link below to this gentleman's post about what role construction costs play in house prices. I will leave it to you to read through it--there's a lot going on here--but if you wanted a big top-line summary I would point you to screenshot #1.
It's a long quote because I like to include context, but the parts in red are what he emphasizes and they provide some counterpoint to what you hear from many politicians in this state and from major media outlets (which I boxed in blue to highlight). This, more than anything else, is what I want you to note here.
Things are more complicated than the simple solutions and platitudes pushed by media and politicians.
Reading through this post, in fact, I'm struck by how complicated trying to tease out how much of a role one factor vs. another plays in the valuation of anything.
In thinking this over, it makes me question whether or not this is even a fruitful exercise, and whether or not it's possible or fruitful. I.e. is it a case where the more you try to parse out valuation, the more things you'll see that contribute, will it stop or will it be "turtles all the way down" as the saying goes?
Seeing it actually attempted also contributes greatly to skepticism I have about the solutions offered by politicians and talking heads.
Let's look at what kinds of broad conclusions one could reasonably take here.
First, you should note that (as you might expect), not all housing and not all regions have the same issues. In urban cores, it would appear that the land value for the housing stock that currently exists is a much larger percentage of a home's value than it is for new homes built on the periphery or farther from a large city. This would seem to suggest, broadly, that zoning changes might have more of an effect on home prices there than for new homes outside the city.
Though, you need to be careful in being too quick to nod here. There are some caveats involved (which I'll leave it to you to read up on).
Second, and interestingly, when it comes to building new houses, it appears as though land costs play less of a role in the price of a home. Therefore, we probably shouldn't expect zoning changes to matter much here. See, for example, the section labeled "Land Value and New Construction" for a further discussion. It would seem that, for new houses, the main driver (by a long chalk) of cost is the cost to build the thing.
On the subject of costs for new houses, an interesting pattern pops out: there doesn't seem to be any one single factor jumping out as a driver for housing costs. That is, the prices for housing are going up, but no one factor is increasing greatly (as a percent of total cost) compared to the others.
Take a look at screenshot #2 (from the Construction Physics post) and screenshot #3 (from the second link below--one of the references used in Construction Physics). Note how (outside of a relatively good-sized jump in construction costs from 1998 to 2015 you don't really see any one category growing by leaps and bounds. They seem to float around the same numbers.
What can we make of all this? Good question.
I don't think the developers are getting greedy and raking it in hand over fist. It would also seem that, no matter where you are, construction is a big driver of house prices.
Zoning plays a mixed role (depending on where you are). Scarcity of supply (land and/or materials), again, plays a mixed role.
There is also the role that regulation plays. No, I don't mean restrictive zoning per se. I mean the things you might not consider about regulation. You have to remember the time and costs associated with just pushing a damn permit through the government take. I had a mini experience with this in putting in my solar. I didn't mind the work and would have been done a hell of a lot sooner if the papers could get stamped and approved faster.
Lastly, and this is not addressed much in this gentleman's blog post, what about demand. For better or worse, we live in a state that a lot of people seem to want to move to. Houses are selling like hotcakes and have been for a while now.
Only fix for that is to have people not wanting to move here.
https://eyeonhousing.org/2020/02/cost-of-constructing-a-home-in-2019/
Fixing a problem that has needed to be fixed for a while now.
As of 7/1, the penalty for stealing more than one car, stealing it to commit a crime, and/or taking it out of state (and here comes the important fix here) regardless of the value of the car, will go up. to see what I mean look at the screenshot attached (from the new bill's fiscal note linked below).
Let me repeat that last important bit because, by the prior way car theft was punished in Colorado (a law dating back to the 1990s), car theft would be a misdemeanor as long as the car's value was below a certain threshold.
Now, if you're of modest means, your car may not be worth much in the blue book, but losing it can be crushing. This is doubly the case if you haven't the resources to get a new one.
I'm glad to see the change and I hope it helps stem the tide of car theft.
https://leg.colorado.gov/sites/default/files/documents/2023A/bills/fn/2023a_sb097_r1.pdf
Trial lawyers teaming up with Attorneys General to use your tax money to line their pockets.
My dad always told me to beware of trying to fight an HOA because when you go to court with one, they're not spending their own money.
I thought about that while reading the op ed below. Having proved the model to be profitable in the tobacco lawsuits, there is a trend in AG's working with trial lawyers on a contingency basis. I join the author in finding it worrisome.
Quoting his op ed,
"AGs hiring lawyers on contingency fees has spawned a national crisis and is bad public policy. Because contingency fees make litigation essentially free for the plaintiff, they have distorted decision making by AGs and DAs. With 'free' legal fees, these individuals can make decisions based on personal or political criteria rather than the worth of the case for the public."**
I find this troublesome as well because of its connection to public money and the fact that we taxpayers are used to support it.
After all, you might agree that our AG should use our money to sue an oil and gas company over climate change (a real possibility now given the Supreme Court's recent rulings), but would you want a conservative, just-as-much-an-activist AG suing an abortion pill maker with your money?
What about the fact that some portion of your money is being used to line the pocket of a private law firm? Is it fair that your tax dollars go to help enrich someone else?
I reached out to see if (and/or what) contingency fee litigation our own AG is or has been involved in. I also asked, per the op ed, whether or not he's aware of or signed on with the the Institute of Legal Reform’s recommendation for AG best practices re contingency fee litigation with private attorneys.
I will update when and if I hear back.
**I would also say that it skews the traditional calculus done on whether or not a suit would be worth it or advisable given one's resources.
https://www.coloradopolitics.com/opinion/ags-tort-lawyers-unite-to-our-detriment-podium/article_d9e09d46-1a16-11ee-b912-47c91206f95f.html