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.