Centerfield

Define what you mean by high-density and medium-density. I'm not sure exactly what you're referencing by the terms. High-density can be anything from three-story buildings to 50-story buildings--or taller. "Medium-density" can be anything from stand-alone single-family houses with teeny yards to twin homes with yards to multi-story complexes with some green space.

PS--density in housing is usually figured as dwelling units per acre.

Also, does Real Estate "value" figure into this comparison? Or is it strictly material and labor costs (ongoing operating costs such as elevator service repairs per year or repointing etc.?)? I am not sure what equation you are setting up.

As a generic answer, though, and knowing where Jon's at--sprawl is cheaper than high-density when there's room available for sprawl. Part of this is the real-estate prices of core versus fringe, and part is because sprawl infrastructure is subsidized and the cost spread out.

I read an interesting article recently about the correlation between home ownership and unemployment rates. It insinuated that owning homes makes people take settle for worse/less fulfilling jobs because they are "sunk in" now that they own a home. Maybe the answer is don't own at all!

Another factor to consider in the difference in price between houses and condos is that the difference is not necessarily due to differences in production cost. The relative prices of the two are determined by their relative scarcity of the two as measured by supply versus demand.

Ordinarily, if there is a difference in the margin between market prices and production costs of the two then construction will focus on the sector with the larger margin. However, in the presence of non-market forces, such as zoning regulations, the market might focus on producing more in the sector with the smaller margin because the sector with the higher margin is tapped out as far as what can get approval.

I'm not sure that cheap housing is the same thing as cheaper living. I would think that when someone says high-density living is cheaper than low-density living, "living" is much broader a thing than housing, and not necessarily restricted to individuals in the short term.

Imagine dismantling one of the WTC towers in upstate NY. If you took all the material, you could build far more dwellings in terms of real sq. ft. than were available in the actual tower. There is so much that goes into supporting vertical structure that isn't necessary in small homes. All things being equal, vertical structure requires more labor and material to build. Of course I mean, cheap home dwellings, not million dollar babies.

Property tax on condos in a high rise are less than similar property taxes on a Westchester home with the same sq.ft. You must include the land, trees, etc....

Curse you, Jon, you got me interested and I had to do some digging and satisfy my curiousity...

Cost of land aside and assuming infrastructure (power, water, sewer) to the edge of the lot, "stick-built" single-family homes can be built cheaper on a square footage basis than apartments or apartment-style condos. Cost starts immediately rising with basement excavation and extra stories above ground level, and with solid dividing walls between dwelling units.

In particular, with apartments/condos there's a lot of non-living-space infrastructure in the development that is incorporated into the dwelling price. Parking lots, pool, offices, and higher-volume water/sewer/electric infrastructure, clubhouse and/or laundry facilities, etc. And commercial real estate is often taxed at higher rates than privately owned single-family houses.

The result is that apartments/condos end up with a higher cost per sq ft of construction and (thus)required revenue generation. In my area a good quality single-family home can be built for $75/ft or less, but a decent apartment in a complex with amenities may run $100/ft or more in construction costs. With apartments, the uncertainties of the revenue streams also apply, boosting the financing costs. As well as ongoing maintenance on the complex infrastructure.

A friend of mine, who is an engineer, confirms Tully's comments (and mine) about high rise buildings v stick-built single family homes. He asked me to imagine how many sticks one could manufacture from one of the WTC great beams. And such a stick dwelling would be far more durable than a wooden one. Then add the differential in real estate value and it is a wonder high rise apartments in NYC don't cost even more.

In addition, the yearly service and insurance costs favor sprawl. As I write this, illegals (I suppose) have been doing a great job repointing the brickwork outside my 16th floor window. Imagine how much that costs. I think this thread sheds a bit of light on another issue........

Tully: "In my area a good quality single-family home can be built for $75/ft or less, but a decent apartment in a complex with amenities may run $100/ft or more in construction costs."

I'm not sure that if this is a problem that could be fixed, but it's not quite an apples-to-apples comparison. A comparison of just the difference between detached and multi-unit costs would have units of comparable quality with the multi-unit building having minimal common facilities. There again, the only way to produce that without making the multi-unit building an inferior product would be to have separate entrances for each unit as with duplexes or town houses.

"stick-built" single-family homes can be built cheaper on a square footage basis than apartments or apartment-style condos

What seems clear is that for a single building, the lowest per square foot cost option is one unit spread on one floor. The question is: for some number of units of some square footage each, what is lowest cost option to build them? Stacking them on top of each other adds the cost of multistory construction and requires passageways for upper level residents to get to their units without passing through the lower level residents' units without any offseting construction savings. However, putting the units together would allow substitution of interior walls for exterior walls separating them. While an interunit wall in a building is more expensive than an intraunit wall, it is still less expensive than an exterior wall. Offseting this, the multistory unit, if it has a common entranceway, would require something of a lobby and hallways connecting the units.

Maxtrue: Then add the differential in real estate value and it is a wonder high rise apartments in NYC don't cost even more.

The price of apartments in NYC is not driven by construction costs. It is driven by the scarcity of housing in the NY metro area and in certain desired neighborhoods in particular. The marginal cost of residential construction in NYC is roughly $200/sq. ft. while condos sell for $600/sq. ft. The difference comes from what Ed Glaeser calls the "regulatory tax." That is, building regulation results in housing being artificially scarce creating a substantial gap between construction costs and sale prices.

My understanding was that building a single family home could cost less than this average price with a simpler design and leaving out the exterior property enhancements that are part of the construction cost estimate.

That was what I thought we were comparing excluding also the luxaries of that Manhattan apartment such as a health club and parking. Check out the NYC Plaza's luxuries...

Compare the $70 per sq. ft. above (let's say $100 in 2007 dollars) to your $200 plus per sq. ft.(and rising more than sprawl construction is excluding overall waste, water and energy transportation considerations). That is twice the cost.

You are quite right about the major reason NYC prices are way over cost (not all property however).

This a intelligent take on Manhattan prices.

Construction costs are risingand rising as well as material costs. Steel is up while lumber is down. I think this trend along with labor projections and the skills required in high density construction favors their cost rising relative to single family homes (or where there is cheaper illegal labor).

Am I missing something? I am not sure why you think the proximity of one apartment over another reduces cost more than the cost of defying gravity. A factory can spit out 1000 sq. ft. modular stick frame homes faster than the crew that just put up the New Hearst Building. It took them how many years to make available how many sq. ft.?

Was the regional difference in labor adjusted from your comparison of construction costs?

Sorry if I'm sounding dense.... I just hope it isn't the high-density kind.

Wow....that "material" link went nuts.....

I can't find it now, but I forgot another interesting report supporting Scott's take on rising urban housing prices..... here

Perhaps someone can offer a link to a technical cost comparison in vertical to lateral construction.