How much do construction costs matter to the price of housing?
Some interesting historical context on construction costs:100 years ago the cost of construction was about $45/sqft when adjusted for inflation and today it is closer to $220/sqft, approximately 5x the cost. Blue collar wedges are pretty similar across time, but the cost of house construction (ignoring land) is dramatically higher.The 1914 sears Model 147 house was 900sqft and cost $872 for materials, estimated at $1,530 with labor.[1] Adjusting for inflation from 1914 to 2020, that is about $22,000 for materials and 40K with labor.Looking at 1913 US national labor statistics, the average baker in 1913 San Francisco worked 54 hrs/wk and made $0.46 per hour for an annual wage of $1,291[2] (or 33K in 2020 dollars)The median baker in 2020 California makes 36.5K/yr [3]. The cost of new housing construction is $220/sqft[4], or 200K for the same size house.http://www.searsarchives.com/homes/images/1908-1914/1913_014...https://fraser.stlouisfed.org/title/union-scale-wages-hours-...https://www.careeronestop.org/Toolkit/Careers/Occupations/oc...https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/Ha...