I understand that, but it means that labour cost has increased faster than we have improved our process of building homes, even though the finished product uses cheaper materials and has worse outcomes. I would like to look into timeframes of home start to completion to know if we are faster at building now, my gut feeling from friends and family is that getting a home built takes as long if not longer, but I can't back that up. Regardless, still a major societal problem to fix. Are wages needing to be higher because housing is more expensive? If we had a cooler housing market, would people be happy being paid less as they could afford the same standard of living with less?
I think it's because house construction techniques haven't improved. Look at cars: back in the old days, cars were hand-built, one at a time, and were horribly expensive. Then Henry Ford utilized the assembly line process and made car assembly much more efficient: instead of laborers sitting around waiting for other workers to get their part done, everything was organized to maximize labor utilization.
Houses aren't like this: they're still made with the same primitive construction processes used centuries ago, by people who are all semi-independent contractors and not an organized labor force.
If houses were made in factories the way cars are, you wouldn't be complaining so much about construction costs. Sears tried addressing this problem over a century ago with their famous kit homes, to an extent (by standardizing and factory-izing much of the carpentry work and then delivering the parts to the site to be assembled more quickly by local labor), but those are gone now for whatever reason and the industry returned to doing all the labor on-site.
That's not surprising. Distributing the cars to the customers from that centralized assembly line is easy.
Houses, not so much. Mobile homes can be built and distributed that way, but that's the hard size limit since you have to transport them via roads.
With mass-produced houses they do put together cookie-cutter sections of walls and roof structures at the assembly line and truck those in to the site where they get assembled together. But you'll always face a hard size limit since no section can be larger than what can be trucked in. Even a tiny house is far larger than what a wide-load truck can take on the road.
The Baumol Effect may be at play. If over time the average worker has become twice as productive (farm combines, computers, factory robots) but construction workers have only become one-and-a-half times as productive, then construction grows more expensive relative to other goods and services.
It's very counter-intuitive, but in essence labor is reallocated to its most productive applications, so if a certain type of labor does not get more productive while others do, labor is moved to other applications (unless you are willing to pay more for less)
