American Housing Ripoff Part 2

Typical starter home in SE Asia
Typical starter home in SE Asia

So let’s say you’re a young couple who want to buy their first house. You’re tired of living in apartments and spending all your money on rent. You want a place of your own, a solid investment that will become more valuable over time and hold up as you grow older. Let’s compare what you get in the US with some developing parts of the world – SE Asia and Mexico. Assume 600 sq. ft. with just the basics. Costs are ballpark averages.

US: 2×4 frame, sheetrock, pressed board siding, OSB on wood floor joists, synthetic vinyl and carpet, wood trusses, OSB roof sheathing, asphalt shingles, particle board cabinets, plastic laminate countertops, modern plumbing and electrical and Internet. $100/sq. ft. Approximate construction cost (can vary significantly): $60,000

SE Asia and Mexico: concrete slab, reinforced concrete post and beam, mortared brick infill between posts, cement plaster, steel frame roof, tile roof, brick or block cabinets covered in tile, tile countertops, tile floors, modern plumbing, electrical and Internet. $34/sq. ft. Approximate construction cost (can vary significantly): $20,000

This example shows roughly triple construction costs in the US due to a number of reasons. Note, generalizations like this have all sorts of exceptions and details that can blur the main point. For instance, much of the US is colder and this explains some of the higher costs for heating systems, insulation, etc. But when you take into account the higher quality building materials used in Mexico and SE Asia, the US housing market is a giant flaming ripoff.

Have you seen recent charts of US housing prices? Some experts say the downward trend could continue indefinitely (10-20 years or more) since so many jobs have been exported to other countries. They’re basically saying how can house prices go back up if people don’t have jobs. Homes sales are so abysmal that realtors have admitted double counting to slow the downward slide.

Comparison of the percentage change in the Case-Shiller Home Price Index for the housing corrections in the periods beginning in 2005 (red) and the 1980s–1990s (blue)
Comparison of the percentage change in the Case-Shiller Home Price Index for the housing corrections in the periods beginning in 2005 (red) and the 1980s–1990s (blue)

Image source: Thailand Blogs
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7 thoughts on “American Housing Ripoff Part 2”

  1. I’ve found that materials are significantly cheaper in Mexico, especially lumber, concrete, tile, rebar, metal, glass, and insulation. The things that are more expensive here are those that are imported from the US: OSB, pink insulation, any kind of vinyl siding, etc.

    Most rural Mexicans are not afraid of doing a bit of work to drop the price, as well. I know of several homes in our village that were owner built for under $10,000. And those were concrete block “American Style”. For the traditional own-made adobe homes (75%+ of the village), the cost is extremely small (under $10/sf).

    We built our home in pieces, and our most expensive section (kitchen/living/dining) was still under $12/sf.

    • Abe, I really appreciate your input, and I’m sure readers do too. Over and over again you offer valuable suggestions and feedback.

      For those who don’t know, Abe has a great website called Vela
      We featured his CEB floor method. His site explains all the details:

      So there you have it from someone with building experience/first-hand knowledge of building in Mexico. At $10/sq.ft. the 600 sq. ft. house in my example would cost $6,000. And Abe says American style concrete block houses are sometimes under $10,000. That’s half what I’m showing because it’s owner built.

      Also, I wanted to point out that these type of houses are not just for the rich. That’s why I chose to use a starter home in my sample comparison. What I’m describing is standard construction for new homes.

      • Thanks for the kind words, Owen. That means a lot to me coming from you.

        If you choose local materials like adobe, cob, earthbag or CEB’s, you can easily build for $10/sf, even hiring out some labor, here in Mexico.

        Our home is a combination of ferrocement, CEB, adobe, rammed earth, and reinforced cement. We averaged around $10/sf for the house, but some parts are more expensive, other parts are less. We built it in sections, and we plan for an innovative west wing/master bedroom next year.

        Additionally, we have a passive and active solar design, buried into the side of a hill, making it easier to maintain a constant inside temp of 65-70 degrees year round.

        The house is now at 1300 square feet, and is completely off grid. All of our power comes from solar and wind, and all of our water comes from the roof (even for livestock and gardening).

        We’ve been working on this place for 4 years, now, and both of our sons were born here. It serves as an example of what can be done with a bit of work and a lot of innovation.

        Previously, we built an adobe home in Texas for under $10/sf. Though it is more difficult to do in the US, if you are not afraid to get your hands dirty, it can be done.

  2. That’s a very nice looking starter home, Owen. If US builders build and sold those kind of houses (with the quality construction you describe) for $50,000 or less, they’d sell like hotcakes, even here, even now in this economy. It’s just a myth pushed by realtors that everyone wants to live in a McMansion, and at that price point of less than 50K, it just makes more sense to buy, than rent.

  3. Yes,but for people in other countrys the houses are crazy expensive for them to.
    I like how they have concrete roofs in guam and other places with typhoons.
    I find it funny how big most homes are built,even storys about straw bale homes the people want like two story houses.
    To me a home should be built partially underground and a bit above. And the roof needs more insulation than i see most having.


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