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Community and Q&A

The Economics of Green Building

DavidDrake | Posted in General Questions on

Last week, I attended a lecture by a green building specialist with one of top architecture practices in the Pacific Northwest. Among the case studies she presented, one stood out: a 5000 SF waterfront residence for a family of four, with estimated cost of construction in excess of $2000/SF. When completed, the project will be net zero for energy use. Living Building Challenge certification is a possibility.

It’s worth pointing out that in the area where the project is being built, the median cost of a single-family home is about ten times the median family income. Young college-educated professionals, including young architects, find it all but impossible to purchase homes in the cities where they practice. And of course, traditional home ownership is even more difficult for the workers who do the actual building.

No doubt, the new $10 million home will be beautiful, providing sublime architectural experiences for the owners and their guests. No doubt, the materials and construction methods have been carefully chosen to minimize embodied energy and carbon, and building systems have been designed for minimal impact during the life of the structure. And, no doubt, the cost of construction is well within the means of the family who will live there.

I wonder, though: is there a sense in which use of economic resources should as carefully (and collectively) scrutinized as use of environmental resources? Presumably, most readers of this site are troubled when someone proposes to build a poorly-performing, fossil-fueled mini-mansion, just because they can. Is profligate spending on a project, no matter how green, really so different? Is there a societal cost when the private sector spares no expense (and therefore a societal interest in minimizing private economic waste)? Or is this strictly a matter between home-owners and their banks?

More specifically, does money itself have associated embodied energy and embodied carbon? Is it possible to quantify the environmental impact of capital (a sort of economic LCA), such that using capital as efficiently as possible is also a part of green building?

In his 1996 book, Beyond Growth, economist Herman Daly observes that we live in a ‘full world’ where human economies push against the boundaries of the ecosystem, and what natural capital remains has become the factor limiting further economic development.

In such a world, architecture is a zero-sum game: consumption of resources by one project necessarily limits resources available to other projects. If these projects are private residences (rather than public buildings) this means one’s private choice to spend $10 million on a home has limited the choices available to other families, without their input or permission.

I’m in the early stages of trying to develop a journal article around these ideas. Any discussion or counterpoint is welcome, including pointing me in the direction of work that supports or refutes these thoughts.

—David

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Replies

  1. Expert Member
    Michael Maines | | #1

    That's part of the idea behind the Pretty Good House approach--it's better to make a lot of homes a little better than to make a one-hit wonder in the middle of the woods. But we also need what I call leadership projects--those that push the limits of what can be done, so others can learn and be inspired, even if they don't make financial sense and may even be wasteful of resources.

    1. DavidDrake | | #17

      Hi Michael,
      First, congrats to you and your co-authors on the book! It's a great read, and I'm thoroughly enjoying it. When I first encountered the Pretty Good House approach on this website, it was a bit of a revelation; like so many others, I've since put that admiration into practice and built my own Pretty Good House (Pretty Good ADU, in my case).

      About leadership projects: I get that, and the firm I'm referring to looks at their high-end net zero designs in that vein. I should make it clear: I like this firm a lot. I have friends and former students who work there, and they really are doing great work—ground-breaking even—in designing for a more sustainable future.

      I suppose I would prefer these sort of leadership projects be public, rather than private, if for no other reason than the community would then have access, and feel a sense of ownership and pride in the accomplishment.

      It seems there also comes a time when some leadership goals have been accomplished, and projects should strive to meet higher standards. I gather DOE has decided that time has come with respect to the Solar Decathlon, and no longer focuses exclusively on a Build challenge, due to concerns over the costs borne by participating schools and their donors.

      My sense is, net zero residential construction (for energy, carbon, waste, water, etc) is no longer an engineering challenge, or something that requires financial extravagance. Given that we have a ongoing climate crisis *and* a crisis in affordable housing, I'd argue real leadership would be successful projects that address *both* these issues.

      Of course this is incredibly difficult. Especially compared to building high performance homes with near limitless (financial) resources.

      1. jimbox | | #46

        "My sense is, net zero residential construction (for energy, carbon, waste, water, etc) is no longer an engineering challenge, or something that requires financial extravagance. "

        Realistically if you want something better than a code minimum home you will need to shop around for a builder at the least, and those builders who can do better than code min aren't cheap, and don't necessarily have off the shelf plans on offer, in which case you need to involve an architect, which isn't cheap either. And simply the process of going through all this isn't necessarily something someone who's just trying to make ends meet will have the time or self-education to do properly and ensure a satisfactory result, and like it or not, the buck stops with the buyer.

        So if we really want high quality, affordable housing, it has to come from raising the code standards. Large volume builders aren't going to do it voluntarily, and buyers are largely not going to self-educate.

        1. Malcolm_Taylor | | #49

          jimbox,

          "If we really want high quality, affordable housing, it has to come from raising the code standards."

          That has been my experience. The most significant improvements in the standards of building here in BC are the direct result of changes in the building code, and the supportive technical advice that was supplied along along with them.

          By making the changes universal, suppliers and trades all got on board. You don't have to spend an inordinate amount of time searching for specialized processional advice or materials here.

    2. jimbox | | #47

      "so others can learn and be inspired"

      I'm not sure the average buyer wants to learn about higher performance buildings, and if they did, it's not necessarily a realistic path for everyone due to a variety of factors (time, technical inclination, etc).

      If this family had cut their budget to $1000 per square foot--which is still extraordinarily extravagant--they could've easily spent that $5M to lobby/bribe local politicians to pass higher code minimums. It only cost Boehner $6,000 in 1995 to buy the 30 votes needed to continue tobacco subsidies.

      $5M could easily buy a city council for long enough to increase code performance standards.

  2. user-723121 | | #2

    2k per square foot, I am moving to the Pacific NW.

    1. DC_Contrarian_ | | #3

      You gotta find housing, remember.

  3. DC_Contrarian_ | | #4

    Almost all of the ills of our society can be traced back to disparities in the distribution of wealth.

  4. Expert Member
    ARMANDO COBO | | #5

    I’ve had this discussion many times when folks criticize the “greenness” of many large homes I design, which all homes conform to the DOE’s Zero Energy Ready Home Program. At least most of my 5k sf or 10k+ sf houses use half the energy than most of their counterparts, and a large count use zero, zip, zilch, nada!
    My argument to yours, and anyone else’s, conserving economic resources is that life is not equal for all nor fair, some folks have more money than sense, and some would like to have more money than they know what to do with it. Most people who make lots of money studied hard and have successful careers. Many people with money took chances that others would not take. Many people with money mortgage their homes believing in a dream and pursuit it.
    Most people that have lots of money work hard for it, and one should not penalize those folks for wanting to enjoy the fruits of their labor and spend their money in a large home, or two, or more.
    I know many people that live in modest homes that spend their hard earned money in alcohol ($100s in beer a month while scratching their bellies or $100s in bottles of wine to pretend they are Wine Connoisseurs), tobacco ($7 for a pack of cigarettes nowadays), thousands in dope, a $5k set of golf clubs and can’t brake 100, fancy cars they can’t afford the repairs, $5k TVs, $500+ blue jeans with holes, $200+ sneakers, handbags you can’t pronounce their brands, thousands on guns and ammo, boats, etc., etc., etc…. where do we start and where do we stop. Let’s do the math for every one of those items. Have you ever questioned or criticize any of those folks? You have to admit that most of those are a waste of money… aka, DEPRECIATED AND WASTED ASSETS!
    FYI, one of my buddies used to spend close to $1k/mo on smokes and booze before his wife kicked him out. You think that is rare?
    None of those above are my cup of tea, but I don’t begrudge anyone for wanting to have large homes. You think I’m wrong? Find anyone who received a large inheritance or lottery and see how their life changes. What’s the first thing they do?… buy a large dream house!
    Let’s be honest… Jealousy and envy is an inherited human condition, and started with Cain and Abel.

    1. exeric | | #6

      I think I have to take issue with your reasoning, Armando. For every three people who are all filthy rich at least one of those people wasn't born with connections and they earned their wealth through sheer hard work, intelligence, and grit. I gather you are probably one of those people, except for the filthy rich part.

      The second person was born with connections, worked hard, and took advantage of the connections that they had and the "luck" those connections provided. They underestimate their luck and overestimate their natural ability.

      The third person is Donald Trump, someone who was born on third base and lies about it, both to himself and to everyone else. According to that everyone who is doing well deserves it and everyone who isn't deserves that also. That's just lazy thinking. Don't get me started. (Oops, you already have.)

      1. DC_Contrarian_ | | #8

        Thomas Picketty estimates that between 55% and 65% of the wealth in the US is inherited. See http://piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2017.pdf

        1. walta100 | | #23

          If you define wealthy as a net worth of over one million dollars.

          This study of 10K such people found 79% did not receive any inheritance at all and most of the others received relatively small amounts after they were millionaires.
          The resalts of this study seem in line with the people I know but I doubt I know any billionaires personally.

          https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research

          Walta

          1. DC_Contrarian_ | | #27

            It can both be true that 79% of people with over a million dollars in wealth inherited nothing, and that 60% or more of all wealth is inherited, because we're looking at two different measures.

            A million dollars is nothing to sneeze at, but it puts you at about the 88th percentile of household wealth in the US. According to the Federal Reserve (https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/ ) 31% of all wealth is held by the top 1% of households, and 68% is held by the top 10%. The threshold to be in the top 1% is about $12 million and the average member of the 1% has a household wealth of $32 million. The top 0.1% -- 129,000 households -- has 13% of the wealth, an average of $132 million per household.

            I would say there is a qualitative difference between a million dollars in wealth and $132 million or even $32 million. It's at those echelons that the inherited wealth dominates.

    2. Expert Member
      ARMANDO COBO | | #7

      "I’m a great believer in luck, and I find the harder I work the more I have of it." Anonymous

      1. DC_Contrarian_ | | #28

        Inheriting wealth is pure luck. I guess you have to avoid annoying your parents enough that they disinherit you, but that's all there is to it.

    3. jimbox | | #48

      Your buddy would need to spend 832 years drinking and smoking to be a valid comparison to this house

  5. walta100 | | #9

    The way I see it the way we have chosen to ration our resources is to put a price tags on them. When the price becomes too high, we find alternative or do without.

    Short of fraud I do not think “private economic waste” exist. People don’t spend their money unless they perceive they are receiving value at the moment of the transaction. Yes, the government can and does waste money simply because the money they are spending was not earn in the market but rather taken by threat of force so the people spending the money have no understanding of its value. The biggest waste of money is when the government decide to force people to spend money on things they don’t want to.

    The people that bought and paid $2000 a square foot feel they got value for their money and your opinion and mine are irrelevant.

    A few years ago, the government decided the large sums of money spent on yachts was waste so they taxed them killing the industry lots of modestly paid workers paid the price by losing their income and had to make a new plan for their lives.

    I say spend your money well and others will do the same.

    Walta

    1. maine_tyler | | #10

      To claim 'private economic waste' does not exist because people get something for their money, and that much of government spending is wasteful because they didn't earn the money in 'the market' has no logic. The concept of waste is not one of private vs government spending.

      If a psychomaniac billionaire saw value in buying all remaining Boeing 747's in service and crashing them into Everest because it's entertaining, that would not be wasteful because the billionaire earned their money in the market?

  6. DavidDrake | | #11

    If "a few years ago" means 30, I suppose the yacht tax story more or less refers to a real thing:

    From Wikipedia, https://en.wikipedia.org/wiki/Luxury_tax:

    "In November 1991, The United States Congress enacted a luxury tax and was signed by President George H. W. Bush. The goal of the tax was to generate additional revenues to reduce the federal budget deficit. This tax was levied on material goods such as watches, expensive furs, boats, yachts, private jet planes, jewelry and expensive cars. Congress enacted a 10 percent luxury surcharge tax on boats over $100,000, cars over $30,000, aircraft over $250,000, and furs and jewelry over $10,000. The federal government estimated that it would raise $9 billion in excess revenues over the following five-year period. However, only two years after its imposition, in August 1993, at the behest of the luxury yacht industry, President Bill Clinton and Congress eliminated the "luxury tax" citing a loss in jobs.[6] The luxury automobile tax remained in effect until 2002.[7]"

    From the evidence of the attached graph, it seems rumors of the death of the luxury yacht industry have been greatly exaggerated.

  7. MartinHolladay | | #12

    David,
    I wrote about this issue back in 2012, in my article called "Who Deserves the Prize for the Greenest Home in the U.S.?"

    1. DavidDrake | | #18

      Thank you, Martin—I appreciate the link, as well as the gentle reminder that none of this is exactly new territory.

      I also appreciate your frequent blog posts and comments (in spite of retirement[?]), and your book, as well. The section on fog machine testing alone is worth the cover price, and you're right: not only is it dramatic, it's also a lot of fun.

  8. BirchwoodBill | | #13

    Some of us on GBA are conservatives or Libertarians. So let people make their own decisions. For myself, I appreciate good design and craftsmanship that uses only materials required to accomplish the objective. Part of the equation is to balance labor costs and material costs, so choose wisely. Don’t judge others — only judge yourself. Look at your own budget not someone else. This can rephrased as live within your means. I can afford a Pretty Good House, so I feel blessed, but I have been working my ass off for 40 years!

    1. maine_tyler | | #16

      >"So let people make their own decisions"

      I think the question is:
      "is there a sense in which use of economic resources should as carefully (and collectively) scrutinized as use of environmental resources?"

      In other words, in the world where 'green credentials' matter, should this receive such a credential. Really not much to do with libertarianism.

    2. DavidDrake | | #19

      I suppose I've also been working my ass off for 40 years, since the first summer I spent driving a flagging truck for my grandfather's aerial spraying service. No license, no insurance, just a 14 year old kid behind the wheel of a Chevy pickup, trying to beat a spray plane flying 90 mph to the field. I don't recall any visits from the EPA or OSHA.

      If 'conservative' means small-c 'conservative', that is, someone who thinks it's wise to consider tradition and approach any change with deliberate caution, I can respect that. More often than not, that's my own approach.

      Libertarianism, on the other hand, is a philosophy or ideology. Like all ideologies, once a person embraces it, they tend to appraise every decision in terms of how it aligns with dogma, regardless of evidence a change of view might be necessary. As Stephen Colbert observed, 'This man believes Thursday exactly what he believed Tuesday. Regardless of what happened on Wednesday.'

      My own ideology is simple: if a person (or other animal, or plant, or ecosystem) is impacted by a decision, they have a reasonable stake in the outcome of that decision. And if they have a reasonable stake in the outcome, they have a right to a voice in the decision-making (or proxy voice, in the case of non-human entities). Put simpler: if something affects you, you've got a dog in the fight, and if you've got a dog in the fight, you deserve a vote on the rules.

      It may be that what others do with their money affects no one but themselves and their creditors: fine—make that argument and bring the evidence.

      It may be (as I suspect) that reckless spending by wealthy individuals impacts all of us—again, that argument should be backed up with evidence.

      And it may be that we simply don't know which of these is the case, and the issue needs more study. But surely, faced with a lack of information, the prudent (conservative) thing to do is to go slowly and take fewer chances, rather than assume blowing millions on 'greener' starter castles will turn out to be consequence-free.

      Of course, a person may happen to believe (as an article of faith) that anyone has an inalienable right to do as they wish with the resources they control—financial or otherwise—regardless of any evidence of the effect (or lack of effect) on others. As with any article of faith, in the US that person has a constitutional right to believe whatever they want to believe, but no reason to expect anyone else to agree.

      I've considered the Libertarian philosophy and its cousin, Objectivism. The motivations for accepting both seem obvious, but not particularly insightful or convincing.

  9. maine_tyler | | #14

    I think one tension is between innovation and efficiency. Not that innovation only comes with exorbitant spending, but I think there are fair arguments that people or agencies being able to pursue costly projects (think the Moonshot for example) breaks certain limits for others to follow. As Michael points out.

    On the other hand, when a goal is communal/global, then there is the question: 'how is everyone doing?' We're only as good as our weakest link. (But also, what is the goal?)

    I think of the analogy of heat loss. If there is a gapping hole in an R-60 wall, the R-60 isn't doing much good. Or rather, the hole is doing so badly that the overall situation would improve if the R-60 was redistributed to cover that weak link. The analogy breaks down when we consider that society is not one contiguous thermal envelope and we can't agree on squat.

    The most wasteful spending out there (i.e. the spending best redirected if the A.I. had its druthers) probably would not be any Net-Zero project regardless of scale. Not by a long shot. So maybe they aren't the low hanging fruit to target if the goal is efficiency of economic resources.

    Side note: economic efficiency could be interpreted to mean that which increases some economic metric the most effectively. But I would assume you would also be interested in accomplishing a goal, like reducing impacts to the climate. That may actually put the former at odds with the latter if the economic metric doesn't include externalities and otherwise account for the specific goal of reducing climate impacts. This is partly why I think some economics get hung up on the 'market' because they see it as the most effective way to increase 'market metrics' but they don't consider how those market metrics actually square with tangible real world goals like feeding and caring for people and the planet.

    1. DavidDrake | | #20

      Thank you, maine-tyler. This is quite insightful. You might be interested in Daly, and some of his fellow travelers, such as Donella Meadows. I first ran into these cats reading Kim Stanley Robinson's Mars trilogy, and wondering if the 'eco-economics' he has some of his characters create had any basis in current economic theory.

      Daly discusses resources in terms of allocation, distribution, and scale. Allocation is basically answering the question: what resources are dedicated to the production of how many widgets, and what is the appropriate cost per widget? This is about efficiency. According to Daly, market forces do a fine job here; indeed, all attempts to control allocation of resources through other means have failed.

      Distribution is basically who gets access to the widgets produced. This is about equity. Market forces (in Daly's analysis) due a terrible job of determining this. Mature economies recognize the destabilizing effects of unequal distribution of resources, and attempt to redistribute resources through tax structure or other means. The PNW first nations' tradition of the potlatch is an example of this.

      Finally, scale is about consumption of resources relative to available stocks of nonrenewable resources, or rate of consumption of renewable stocks, relative to the rate of renewal. In other words, scale is about sustainability. Not only are market forces unable to regulate the scale of resource extraction, they often provide perverse incentives for over-extraction by one party, on the assumption that another party would do the same if given the chance.

      For what it's worth, the idea that (built) architecture is a zero-sum game is my extrapolation from the notion that our economies have reached the boundaries of what the ecosystem can support. If all the resources architecture requires were renewable within some reasonable time span (say, the life of building), I suppose the game would be different.

  10. Deleted | | #15

    Deleted

  11. Robert Opaluch | | #21

    Where I grew up, about half quit school at 16. Only the top 1% of us got into top universities. Almost nobody did much work in high school, the place mostly functioned like a day care center to keep teens off the street. A high school diploma or trade school did help get a somewhat better job, showing you could show up reliably, read and do basic math, and not cause too much trouble. About half the high school grads went on to college, often getting a better white collar job. I didn’t work hard until I went to a great college. Then I became a workaholic, but doing what I wanted, with many excellent professors who were great role models, and often good or excellent teachers.

    I valued my university education highly, and spent over a quarter million putting my son in very good private schools and his chosen baseball programs from pre-K through college. Those schools expected students to do homework, and their work was reviewed and improved by good teachers with far smaller student to teacher ratio. All their high school students could get into good or excellent colleges or universities with the high school’s connections (but yearly tuition was nearly $30k). The rich kids whose parents donated big bucks to the school got into their choice of classes, athletic activities, and the best colleges and universities. And a rich kid who raped another student graduated, despite not attending school for months due to spending too much time in prison temporarily. The victim (and her parents) got paid off to shut up and avoid a nasty trial attacking her character. I knew about similar rapes and a second degree murder at my university that were swept under the rug with money changing hands and no prison time.

    Looks to me that its not all about hard work and good behavior, but I agree that certainly helps a lot too. The deck is stacked by those with money buying the best advantages as well as the best real estate. And when someone gets out of line, a criminal injustice system is locking up those with the least money to defend themselves. Look at bad boy Trump as just one example of those with money not facing prison time very often. Yet our country has a high incarceration rate in the world, including a third of the boys growing up on the street of my childhood.

    Its also better growing up in western Europe, Canada or the USA than most of central America, North Korea, Sudan etc. They can work hard all their lives and it doesn’t help them get a decent house and standard of living, much less a luxury home, car and college education. No surprise they are “invading” our borders for a better life (including two of my grandparents). Many of them working on our farms and willing to do construction work that most younger people here don’t want to do nowadays. We have discussed this labor shortage in construction here on GBA.

    I notice that we are always talking about building single family homes on single family house lots. Wouldn’t multifamily low to mid-rise condos and apartments be far more resource efficient and sustainable? Wouldn’t that also reduce transportation if the ground floor were retail, office and commercial space? Isn’t money the driving force or requirement behind wanting your own private detached home on a nice lot in a low crime area near amenities? And a nice car or two to drive to other amenities?

    1. walta100 | | #24

      Robert will you tell us what you think the moral of your story is?

      In this country hard work and persistence generally wins in the end or the deck is stack against the have-nots and we deserve to live the same lifestyle?

      Walta

      1. Robert Opaluch | | #26

        Walta,
        Note above, DC mentioned "between 55% and 65% of the wealth in the US is inherited." That doesn't sound like hard work is the most important variable in acquiring wealth, does it? It implies that inheriting wealth is the most likely way you become wealthy.

        I noted that my experience is that those from less affluent or poor areas are less likely to get a good education and all that follows, including better jobs and greater wealth. Those who are more affluent can buy a better education (via private schools or living in a more affluent area which often have better schools) and are less likely to end up in prison (partly being in less crime ridden areas, and partly because they can hire good attorneys to win their freedom when caught).

        Are you claiming that inheritance, growing up in a better neighborhood or town or country, or getting a good education isn't related to wealth? My father quit school at 16 and worked a lot of overtime at various jobs but never got wealthy. Lots of people in less affluent countries work hard but live in near poverty conditions, which leads people like my grandparents to relocate here. Working hard might be a necessary but not sufficient condition for acquiring wealth.

        And I said "Looks to me that its not all about hard work and good behavior, but I agree that certainly helps a lot too." Hard work helps a lot, but just part of the story.

        Your statement that "we deserve to live the same lifestyle" is your own fantasy. No one besides you said anything of the sort. I haven't heard anyone here or elsewhere say that the wealthy should live a less affluent lifestyle and just leave their money in a bank unspent.

        1. walta100 | | #29

          “Your statement that "we deserve to live the same lifestyle" is your own fantasy”

          I thought that the sociology goal/ dream is economic equality.
          Marx “From each according to his ability, to each according to his needs”

          “I haven't heard anyone here or elsewhere say that the wealthy should live a less affluent lifestyle and just leave their money in a bank unspent.”

          Seems to me this thread started with the premise that no one should build a house that cost 2k per SQF.

          My question was not meant as a personal attack when I read your story, I can see some of both my extreme statements in your story.

          Walta

          1. DavidDrake | | #30

            Hi Walta,
            I started the thread, and it certainly was not my premise that no one should build a house that cost $2K/SF.

            My question was, if excess spending on a house can be shown to have an impact beyond the homeowner and their creditors (more specifically, an environmental impact) should those of us impacted have a voice in the matter?

            Obviously, my own answer to that question is 'yes'—if someone else's choices impact my ability to choose, I should have a say, because I have a reasonable stake in the outcome.

            Do I think there are negative impacts on the community when a person chooses to build an extravagant house and then defends that choice by claiming the house is 'greener' or 'more sustainable' or net zero or whatever? You bet I do. I also think there are negative impacts on the community when a person uses fossil fuel energy to operate a poorly performing house with major defects in the envelope and HVAC system. As it happens, that last describes my house (1600 sf balloon frame, built 1890). Once again, I think the community has a say, because the community has a stake—in the case of poorly performing existing housing stock, that 'say' might take the form of incentives for performance upgrades, or requirements that renovations comply with current energy code, or something else. If I think I'm being treated unfairly by my community, I have options—I suppose one of those options is to insist I can do whatever I want with my stuff and nobody's the boss of me, but that sounds more like a toddler than an adult participant in a community of other adults.

            The notion that if the community is affected by decisions, community members have a reasonable stake in the outcome of those decisions, and if the community has a stake in the outcome, community members have a voice, is not very radical or especially Marxist—it's just the essence of democracy.

            On the other hand, the notion that owning a piece of property or controlling a chunk of wealth gives a person the right to do anything they like regardless of the effect on others, well, that's truly loopy-loo. A few failed states may be organized that way, but no just society has ever been.

  12. nynick | | #22

    I went to my 50th High School Reunion a few years ago and ran into a guy I literally hadn't seen in 50 years. It was a private Catholic School, so the assumption is/was that most of the families were doing better than average. The guy I ran into was a nice guy back then and still was a nice guy, a retired teacher.

    When I asked him how he was doing, it was a generic question, not necessarily about money. I'll never forget his response:

    "I'm doing fine Nick. I've got all the money I need."

    Not ..."all the money I WANT"!
    "All the money I NEED."

    There's a lesson there for all of us, in more ways than one.

  13. DC_Contrarian_ | | #25

    We don't talk much here about green policy as opposed to applied practice, but perhaps we should discuss it more because it does underlie everything we do.

    When the modern environmental movement was created in the 1960's and 70's, it pretty quickly split into two philosophical camps: those who pushed to use government regulation and incentives to address environmental issues, and those who stressed personal responsibility, that consumers should be educated to make choices that reduce the negative consequences of their lifestyle.

    The personal responsibility approach has always been a dodge, it was invented by polluting industries in the 1970's as a way of diluting the environmental movement. They correctly figured that if you told Americans they had to bike to work or carpool or take public transportation, heat their homes to 65F, compost and recycle, they'd throw up their hands and say, "it's not worth it." But the personal responsibility approach has been quite successfully, it is the mainstream of the environmental movement.

    The problem with personal responsibility is that it falls apart as a guiding philosophy the moment you start asking hard questions. "Do as little harm to the environment" is no more helpful advice for how to live your life than "eat as little as possible" is helpful dieting advice. For dieting, the right advice is "eat no more than appropriate;" what is the analog for environmental impact? If we say "do no more environmental damage than appropriate," what does that even mean?

    We live in a capitalistic society (or approximately). The organizing principle is that within very broad restraints each individual is free to spend his money in the way that brings him the most utility and pleasure. When people who have money choose to spend it in ways that have adverse environment impacts, the problem is not their choice. Nor is the problem that they have too much money (although that's a separate problem). The problem is that the economic price of those environmental impacts is too low.

    Governments are good at using regulation and incentives to encourage behavior that is desirable and discourage behavior that isn't. The organizing principle of our society is that if the right incentives are put in place, if people are allowed to make their own choices the result will be good outcomes.

    In this country we simply don't put a high enough price on the environmental impact of lifestyle. In much of the country water is too cheap. Carbon-based fuels are too cheap. Chemicals with high GWP are too cheap.

    If environmental impacts were fully and fairly priced, it would be hard to object when someone who has $10 million and wants to spend it on a house does so.

  14. Expert Member
    BILL WICHERS | | #31

    >"In this country we simply don't put a high enough price on the environmental impact of lifestyle. In much of the country water is too cheap. Carbon-based fuels are too cheap. Chemicals with high GWP are too cheap."

    For the most part though, those resources are priced relatively in line with where they should be base on their accessibility. The "in some areas, water is too cheap" comment is what I noticed here. If you're out west, you're used to very high water rates, because the entire area is essentially in a constant state of water shortage. I'm in the great lakes region though, where we often think we have too much water (there are erosion issues along the shores of lake Michigan, for example). So you are implying that the water rates here are "too cheap", but why? Because rates in California are much higher? The difference is we have a LOT more water here, so it's cheaper. It's not "too cheap", and there is little reason to try water conservation methods that may be important in areas with water shortages. Water is not a finit resource, it is, and always has been, "recycled" by nature. The difference in some areas is that there is a lack of supply, but conserving water in areas with an abundance of it does nothing for those areas with shortages. It is important to accept that the availability of some resources, notably water, very greatly between different geographic locations.

    Regarding some of the other economic discussions in this thread, I would normally avoid replying, but I think it's important to point out that gov't regulation often is well meaning, but either short sighted or counter productive. Many enviornmental regulations are like this. I work in the commercial world primarily, often with large industrial customers, and I see a lot of this. The problem is that the regulators in many cases are activist minded, but have zero experience or understanding with what they are trying to regulate. These are complex issues, and the answers are not usually simple, and are often not what people would think.

    A simple example: there is a push for electric vehicles, and an 'all-electric' future. That probably is the future, I agree. The issue is where is that electrical power going to come from? Common renewables are under 10% of the electric supply right now. If we go 'all electric', we will approximately double our electricity demand. So if we replace conventional generation with renewables, and we add all that new load, we need around 18 times what we have now in terms of renewable generation, and that doesn't even get into the "solar doesn't work at night" problem of energy storage. Is that even practical, especially in the time frames some are pushing for? Physics has a general rule that infinitely fast changes require infinite input enery, and we can say that in the commercial world, infinitely fast changes require infinity money. Maybe we could actually gain MORE overall with a LONGER transition time? There are no easy and fast answers here.

    Regarding the economic thinking that somehow Marx had some good ideas, it doesn't work. It frustrates me seeing people think it would. My wife and her family grew up under the Soviet system, and I've had a lot of involvement with some of the former satellites and know many others who grew up under that system. That system was in many ways similar to what many have been advocating for here. That system failed miserably. They were not known for being good economic stewards, they were not known for being productive or efficient, and they were not known for having good living conditions for their people. This is an example of the extreme side of too much gov't intervention. They had a few good ideas (district heating was common), but plenty more downside. Gov't regulations are not always the answer.

    Bill

    1. DC_Contrarian_ | | #32

      Bill, I think I mostly agree with you. When I say that "in some areas, water is too cheap" I'm specifically saying that water conservation really only needs to be an issue where water is scarce. But my point is, when water is scarce, don't try to make it a moral issue and shame people into taking shorter showers. And don't pass a bunch of laws where you have to have inspectors going around trying to catch people washing their cars. Price the water at the price point where supply matches demand, and let people figure out their own optimal usage.

      Where I disagree with you is on your comment, "For the most part though, those resources are priced relatively in line with where they should be base on their accessibility." Specifically with the word "should." For basically all of human history we've priced things based on what the cost to extract and create. We need to start taking into consideration the total lifecycle cost of production and disposal. In the production of a lot of things there are costs that are borne by others. The ability to pollute without bearing the cost has historically been a subsidy to manufacturers. Similarly, we need to factor in the cost of disposal, whether it is persistent chemicals or carbon dioxide or other GWP gases being released into the atmosphere.

      1. Expert Member
        BILL WICHERS | | #33

        Supply and demand is a good way to set pricing for things like water. Pricier water will make people question the need for daily car washes, for example. Subsidizing, which usually uses gov't money to keep prices of something artificially low, tends to increase demand.

        The issue I have with trying to price in what are often referred to as "externalities" is that these are usually arbitrary, or impossible to actually define. That's when you end with emotions driving things, and you go too far in the other direction, artificially inflating the cost beyond what it really should be. It has been my experience that many of the gov't regulators, especially in regards to enviornmental regulations, unfortunately, are very activist-minded and generally lack a real understanding based on experience of whatever it is they are trying to regulate. This means you get "feel good", well-intentioned regulations that are often counter productive and are usually also unreasonably burdensome. There has to be a balance. It can't be all fell-good activism, but I agree that a "use it now" free for all isn't a good option, either. As I said before, there are no easy answers here. Bumper stickers and slogans are not a replacement for intelligent debate and reasoned responses.

        Bill

        1. exeric | | #34

          @ Bill, I think I understand where you are coming from. Most of it falls in line with libertarian doctrine that government actions invariably squash individual initiative and freedom. I agree that it can, but it doesn't necessarily do so. Water rules for dry regions shouldn't be applied to wet areas. That's obvious. I disagree that most of regulation is poorly aimed and poorly justified. Perhaps the OP's posed question was too broad and played into your worst fears of an overbearing state. That question played into that Ayn Rand narrative that libertarians take their cues from and plays into their motivations for eliminating government control. But in retrospect it is a cherry-picked question that libertarians enjoy glomming onto. Restricting the ability to buy whatever home you want is never going to happen in this country.

          What you should be concerned about is ignoring the effect on the environment of some of the commercial companies you have worked for. I know it isn't your responsibility to stop those utilities, and utility related companies, from adding to greenhouse gases. However, some of those poor practices have global reach and is eventually going to affect everyone. I see your argument to resist regulation as being mostly about protecting those clients you serve or have served. This is exactly where libertarianism fails. They argue that everything is about individual and corporate freedom. But what if complete freedom of one party eliminates another party's simple ability to survive? That's where the fossil fuel company lobbyists have muddied the water and gotten the planet into the mess we are in.

          So, I'm not going to let the OP's (perhaps) overly aggressive question let you hijack the conversation to your argument that regulation is bad. Some of the utilities you've worked for have had an undeniable horrible impact on the Earth and should be heavily regulated in order to not cause me and billions of other people to suffer. I view your comments on this subject the same as I would view any petrochemical lobbyist regarding the need to cut back on all regulations.

          1. DavidDrake | | #35

            With respect, exeric, which questions from my original post did you find overly aggressive? I'm asking sincerely.

            It's also not clear to me where or how I suggested people should be restricted from buying particular sorts of homes.

          2. Expert Member
            BILL WICHERS | | #38

            Admittedly I do tend to be somewhat libertarian minded, but my view here comes from expierience, not from some blind adherence to any particular idiology. I do NOT think having no regulations is a good idea, because that would enable anarchy, where the tendency is for the nastiest and most brutal people to run the show. I'm not sure if that really has a direct equivalent in the green world, but I think we can agree that there are certainly some number of people who would take advantage of such a situation and abuse it for their own benefit, through poor emissions controls or other such problematic behavior. There are some areas I think MORE regulation, or at least more enforcement, would be a good thing. A specific example that pops to mind is RFI emissions from residential solar systems, which falls under the FCC's "part 15" requirements, which are unforunately only minimally enforced.

            I actually work primarily in the telecom industry, and much of my job involves maximizing the efficiency of the facilities I contract with. Maximizing efficiency directly equates to reducing energy consumption of those facilities to do more with less. Less energy consumption is less emisssions, so a positive I think you'd agree. I don't usually work much with energy producers, power companies and the like, although I have had some involvement with them in the past. Most of them would rather maximize efficiency too, either to do the Right Thing, or just to increase their operational efficiency for maximum profit potential. Either way, less bad stuff out per unit of good stuff out is a good thing, right? I do think some regulatory standards as to what constitutes a maximum amount of "bad stuff" out is a good idea, but that has to be reasonable. At some point, you get into the area of diminishing returns, where the money expended to achieve that next 0.00001% improvement would have achieved a bigger improvement if applied someplace else. That's where we can have problems with well intentioned regulations having unintended negative consequences. That's a problem.

            You'd probably be surprised at some of the things I have advocated for with some of my corporate customers. There are other projects I have tried (or am currently trying) to get to move forward, one of which is a particularly large, and entirely green-targeted, energy project in Southern California that solves two enviornmental problems at once. It is a problem to immediately discount any particular point of view based on a perception of the motives behind the person or group advocating for that view. Some petrochemical firms are likely to want to IMPROVE their enviornmental footprint. They are not all evil money grubbing people. The electrical power industry's product is probably the largest contributor to the general improvement in the quality of life in all of human history, so pinning billions of people's suffering on that industry is probably not fair. That certainly doesn't mean the industry is perfect, but it's not entirely bad, either, and I doubt very much you'll find anyone in any industry that INTENTIONALLY wants to hurt people. If you did, we'd both agree that person is a problem.

            In regards to the thread, efficiency is important, and that's what I advocate for. But there is also an allocation of resources, and money is really just about intelligently (hopefully) allocating those resources. It would make more sense to spend money on upping your wall from R15 to R30, for example, compared with spending that same money to upgrade your attic from R60 to R75. You want to put your money in the place where it will do the most good. I have far too often seen gov't regulations result in the opposite, which is why I tend to take a dim view of many efforts to increase regulations. It's not based on idiology, it's based on experience. A big part of that is because many in gov't somehow believe they better understand complex systems than the people whose job it is to run those systems. How many times on these forums do we hear about inspectors making it difficult to put in cutting edge efficiency enhancements, for example.

            In the end, there needs to be a balance. Not too much regulation, not too little. It needs to be intelligent, and fully thought through. Work together, don't just point fingers. I try to do that as much as I can, both at work, and in places like these forums where I hope I've helped people to improve things for themselves or others, at least a little. We, as you allude to, all in this together, in a way, but it's important to listen to the "other side" too.

            Bill

    2. DC_Contrarian_ | | #41

      I have to disagree with the characterization that "gov't regulation often is well meaning, but either short sighted or counter productive."

      I'm old enough to remember before the Clean Water Act and the Clean Air Act. I can remember when you could tell you were approaching a city -- any city -- on the highway by the cloud of brown smog on the horizon. I can remember when the snowbanks would turn black within a few days of a snowfall. I can remember when anyone who fell in the local river was taken to the hospital as a precaution. As far as I'm concerned those laws have been unequivocal, absolute successes.

      I also remember a lot of gnashing of teeth at the time about the cost of pollution controls. Yeah, there were some teething pains, but it turns out that in the long run, it doesn't really cost any more to build cars with pollution controls than without. I remember people saying the benefit wasn't worth the cost.

      They were dead wrong.

  15. exeric | | #36

    @ddrake,
    I probably should have rephrased it. I was seeing how your original posting would be like setting up a pitch for Bill, a person with a libertarian philosophy, to try to use to hit it out of the park.

    I know for a fact that wasn't your intention at all. I just know what the effect it would have to Bill. I have no beef with you whatsoever and perhaps expressed myself badly.

  16. user-723121 | | #37

    I said on this forum years ago, the only sustainable home is a cave in a mountainside and then only if it is currently unoccupied. For modern day building some semblance of sustainability would be to include in the purchase price, verified carbon offsets for all building materials and related activities. The latter was met with total silence.

    1. DC_Contrarian_ | | #39

      That's why looking at issues in a binary, sustainable vs not-sustainable way just doesn't work. But once you realize that there is a continuous spectrum of sustainability, it raises a much harder question -- where on the sustainability spectrum should you reside? That's a much stickier question, and it really shows why the emphasis on personal responsibility is the wrong approach.

      People should make decisions based on their own self-interest, and society should make decisions based on societal interest. Relying on people to act virtuously is in effect a tax on virtuous behavior. A basic principle of economics and politics is that governments should use incentives to encourage desirable behavior and punish undesirable behavior, a tax on virtue is the exact opposite of what governments should be doing.

      1. Expert Member
        BILL WICHERS | | #40

        >"A basic principle of economics and politics is that governments should use incentives to encourage desirable behavior and punish undesirable behavior, a tax on virtue is the exact opposite of what governments should be doing."

        I agree. There is the old economics saying of "limited resources but unlimited wants". I dislike the concept of carbon=energy, because that's not very accurate, and varies based on region too. Some energy efficiency is in the building code, but there are areas that make sense (more attic insulation is cheap, and beneficial), and some that make less sense (more foundation insulation beyond current code isn't always cost effective).

        I don't see an easy way to try to build 'sustainability' into the purchase price though, because it's difficult to define, and where is the sweet spot? It's a very complex process to build a structure, and there are a lot of tradeoffs, so the tricky part is making the RIGHT tradeoffs -- which might not always be "right" in all situations, geographic areas, or climate zones. Wood foundations don't need concrete, but they're also much less durable, so is that an option for longevity? What about in a seismic zone? Termite area? There are lots of variables to consider. My thinking is usually to allow more flexibility here, and less mandates, in the hope it will help to make more stuctures better overall. Some will probably end up worse, but you'll never achieve perfection, and usually attempts to reach perfection fail and make everyone worse off (excessively stringent building codes can drive up the cost of housing, for example).

        The tricky part is finding the right balance. I think GBA helps to educate more builders and buyers of what is possible, which is a good start. As more builders start to at least incorporate the low hanging fruit (like better air sealing), we start to see overall efficiency levels improve. Some people will still push the limits of what is achievable, but we have to be careful with determining what is justified and what is really too much, and just drives up costs with little real benefit.

        Bill

  17. DavidDrake | | #42

    Hi Bill,

    "My thinking is usually to allow more flexibility here, and less mandates, in the hope it will help to make more structures better overall."

    It seems to me this is more or less what happens when states and municipalities set performance standards rather than (or in addition to) prescriptive standards. Prescriptive standards are probably an expedient way for builders and developers to check the boxes and get stuff done, and maybe avoid the expense of engaging an architect or engineer (not that what an architect or PE brings to a project isn't valuable). On the other hand, performance standards set a target, and give designers, builders, and clients the flexibility to figure out the most effective and efficient way to hit the target. This seems to be the way more advanced energy codes are going.

    I guess any code, especially energy code, might be seen by some as intrusive government mandates. But there's so many opportunities for everyone with a stake in the outcome to get involved with writing or commenting on proposed code, (or for towns and counties to opt out of codes altogether), it looks to me like democracy in action, rather than faceless bureaucracy telling folks what to do. Maybe that's naive, but I think the evidence is that building codes, on balance, have done far more good than harm.

    I think you're absolutely right that if more builders and buyers go for the low-hanging fruit, it will be a real improvement. Especially if it's lower-cost, high-volume housing. If better performing homes are only for the 1%, it's only going to affect 1% of the housing. Which is bad for all of us.

    It may not have been clear in my original post (my fault, obviously), and you and I probably have reasonable disagreement about some details, but my central concern is that focusing too much on expensive projects that push the limit comes at the expense of more affordable projects that achieve nearly the same performance goals. As you say, there's little real benefit to that (I guess it makes some architects and clients feel good). And yes, GBA and the Pretty Good House movement are way ahead of the curve (and way ahead of me) in pointing this out.

    I do think throwing money at a project beyond the point of practical returns actually winds up wasting more resources than are conserved. If there's evidence that's the case, I think it's enough to present the evidence—no mandates will be needed. Nobody needs regulations to tell them to spend $10 M on a sustainability showcase, and I'm sure they won't need regulations to tell them that isn't the best way to achieve their goals.

    1. Expert Member
      BILL WICHERS | | #43

      You need those cutting edge projects as "experiments" to try out new concepts though. I don't fault the Passivhaus guys for pushing the limits, for example. I would just take issue with attempts to use the code to mandate we have Passivhaus-level requirements for regular construction. Some of those cutting edge projects come up with some good ideas that can be incorporated into more conventional projects too, but sometimes those cutting edge projects find out that something that looked great on paper wasn't so great in practice. That's how we learn. We need people trying new things to prove what works and what doesn't.

      I absolutely agree the code has done more good than bad. Without any building code, there would be a LOT more corner cutting, and people would die in some cases from structural failure. We still have some corner cutting and some failures, but for the most part, most structures are pretty safe. The energy code does have some drawbacks, a notable one is that in some areas it's very difficult to use refurbished equipment because it might be a few percentage points behind the current model stuff. But there is an "energy saving" reusing equipment too, which isn't accounted for in the code. That's why I like to say these are complex issues without easy answers, because the intent of the code here to increase efficiency is obviously a Good Thing, but there are some unintended consequences such as making it more likely that perfectly workable, slightly older, equipment will go to scrap instead of getting repurposed into a new facility. I run into that issue periodically because I try to use refurbished equipment when I can, both to save my customers money but also to keep perfectly good equipment from being scrapped.

      There is no reason we all have to agree on everything all the time. I think that intelligent discussion helps us all to zero in on what is hopefully the best overall solution to any given problem. We need that discussion to be able to solve complex problems.

      Bill

  18. Robert Opaluch | | #44

    I agree with DC’s comment #41 about smog and polluted rivers, and the resistance of business to regulations to reduce pollution. And I agree with Bill “There is no reason we all have to agree on everything all the time. I think that intelligent discussion helps us all to zero in on what is hopefully the best overall solution to any given problem. We need that discussion to be able to solve complex problems.” Unfortunately that “discussion” often doesn’t happen, even when problems are evident.

    I’ve lived in quite a few places, and in ALL of them, the results of businesses dumping wastes into the environment and causing health hazards to people and animals were obvious. It was cheaper for businesses (more profitable for a business) to dump pollutants in the river or air, or bury them than to control emissions or pollution or properly dispose of wastes. And businesses or industry typically would resist regulation, arguing about the effects on profitability, “efficiency” and disagreeing about the health hazards. These cases eventually resulted in expensive government cleanup efforts that we all paid for in taxes, as well as health effects for those living there, or in lower residential property valuations. The businesses who contributed to this mess could not afford to pay for the cleanup. Its often cheaper to avoid creating a mess than cleaning it up afterwards. These need government regulations, if not criminal penalties, to address them effectively. It also would have been far cheaper for governments to provide or subsidize facilities for more conscientious disposal or to avoid creating the pollution, than to clean up the mess after it became notoriously dangerous. So government has a role in supporting businesses, not just restricted them with regulations. This is done more effectively in Germany and probably most of Europe than here. No doubt most of you could note serious problems in places you have lived, that need government or industry regulation, and maybe government support of industry.
    • Where I grew up in RI half a mile from a river, the air occasionally stunk like rotten eggs at night when businesses dumped chemicals into the river. Cleaned up at government expense (along with many other rivers), but I’d never swim or boat there.
    • Auto manufacturers resisted reducing vehicle emissions, and the LA skies were yellow-brown when you looked at the horizon in the 1970’s when I lived there six years. LA air quality is much better now despite much higher population. Auto (and other industry) emissions regulations were needed and effective.
    • New Jersey had problems with people finding drums of hazardous waste buried in rural areas rather than properly disposed of. The Three Mile Island nuclear generating station cost over $1.5 billion to build and $1 billion and 12 years to clean up the damaged reactor.
    • Radioactive contamination from the Rocky Flats nuclear weapons production between Denver and Boulder was cleaned up, and lower value residential subdivisions now occupy that land. I was involved in efforts to close that facility when I built a house in Boulder.
    • In Germany in the 1980’s (and worse now), the forests were dying from auto emissions, and resulting insect infestations.
    • Boston harbor was notoriously polluted when Bush made it an election talking point, and has been cleaned up.
    • I didn’t live there but visited extended family many times in Buffalo, NY. One of my cousins lived in property in the infamous Love Canal neighborhood, which was previously a landfill site environmental disaster there in the 1970’s. Property values there were cheap.

    There’s plenty of other examples where regulations save lives and try to curb questionable business practices.
    • You could add the tobacco companies to this list of polluting companies that contributed to a lot of deaths, despite their denials and failed efforts to blame “Type A personalities” instead. I’m convinced smoking is the main cause of my father’s premature death (although you could blame some of his chemical company or other jobs, or WW2 as contributors).
    • One of my grandfathers was killed along with 54 others in a ship steam engine explosion, when my mother was a newborn. The ferry owner was charged with negligent homicide for not making steam engine repairs, but acquitted at trial. Another business avoiding expenses, to improve their own profitability, at others’ expense.
    • You could add structural engineering standards and regulations with saving countless lives. FEMA studies damages from environmental disasters to improve government standards and promote better building practices. We all know these and many other standards (regulations) and follow them, despite it costing us more when we build and renovate homes. In most places, inspectors check our work because otherwise there is noncompliance, not always due to ignorance.

    Lots of other countries have even worse environmental disasters. Lots of businesses act responsibly. Some businesses are promoting better practices and developing innovative products to improve our quality of life in many ways. But regulation, government subsidized efforts to help businesses, and legal action against offenders are sorely needed IMHO. Not that regulations are all perfect, need no improvements, or no process for a variance.

    Normally US government regulations are done with the involvement of the industries involved, not done solely by politicians with no understanding of the subject matter. And one of the criticisms of government regulations is that insurance and other companies write the drafts of the bills under consideration. As we know from participating in standards bodies, we can’t all agree on what we should adopt in our own standards. Some advocate “Pretty Good House” guidelines, and others more strict or detailed LEED, Passivhaus, PHIUS, Living Building Challenge and other standards. Even Passivhaus and its US offshoot PHIUS have intense arguments about modifications for climate and cost variation. So in any industry, its natural to expect some conflict between those creating and enforcing regulations, standards or guidelines, and the affected businesses. And some who violate them for their own benefit.

  19. plumb_bob | | #45

    Lots to chew on here. Short answer- yes, the size of a building should be part of the equation regarding environmental sustainability. In a world with limited resources the amount of resources consumed by each individual is relevant. When somebody builds an enormous house that is quite energy efficient, I think they are partially deluding themselves.

    And to wade in on the "American Dream" discussion (from Canada)- wealth begets wealth, plain and simple. Yes, it is possible to work hard and raise yourself out of poverty, but the deck is stacked against you. Wealthy peoples kids generally end up wealthy, and poor peoples kids generally end up poor. It seems crazy to argue otherwise.

    Cheers

  20. KevinS.Cabrera | | #50

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  21. artisanfarms | | #51

    I think you're ignoring the elephants in the room, namely our fetish for treating housing as an investment and our use of zoning codes in many areas to prop up home values.

    If you want truly affordable housing, focusing a lot of energy on convincing rich people building their dream houses to fund affordable housing projects instead will accomplish a lot less than educating a larger number of people that for most of them, absent good luck, their home will not be a good investment. Changing zoning codes to allow for increasing residential density in areas of high demand could result in construction of more affordable housing where it is wanted and needed.

    Let's start to recognize, that like a car, housing for most of us is an expense. Sure, a few people will end up buying the right car and making money when they sell it, just like a few will make money because they live in an area that experienced rapid growth while at the same time zoning prevented additional construction, but for most of us, our houses will at best have kept up with inflation considering all of the costs associated with owning a home.

    1. maine_tyler | | #53

      Can't the investment question be answered in terms of a comparison to renting, since we all presumably have to choose between one of those two options? And thus it's not only about appreciation?

      If monthly mortgage payments are lower than monthly rent payments, doesn't that alone imply it is a good investment? And then, when you sell a house you own, whether or not the prices have gone up beyond inflation, you get that money in pocket. With renting, that money leaves your pockets for good.

      The only example I have seen where renting is a 'better investment' than buying is if it's actually cheaper to rent, in which case you could invest the difference in a higher returns portfolio. But is it ever cheaper to rent (a comparable house) than to buy? How would that be possible, seeing as the landlord has to pay the overhead.*
      * I guess if interest rates are terrible and the landlord owns outright, maybe they could charge enough less to make it cheaper...?

      1. artisanfarms | | #54

        The question has been answered many times and the answer for most areas of the country is that buying a house is a good forced savings program, but when all of the costs of home ownership are factored in and compared to renting, renting and investing in a basket of market following mutual funds is a better investment. The problem is that most people won't invest. Additionally, other than borrowing against your home, there is no way to realize the benefit of that "investment" unless you sell it. Another thing to remember is that the typical rule of thumb is that given transaction and financing costs, it often takes at least seven years of ownership before you're not underwater if you have to sell your home. https://www.cnbc.com/2019/04/18/wealth-manager-buying-a-home-is-usually-a-terrible-investment.html

  22. walta100 | | #52

    “absent good luck, their home will not be a good investment.”

    This is a false premise! Time has proven real estate to be a sound investment most people do sell their home for more than they paid for it. It seems with a little effort one can conclude what areas are of the upswing and do better than average.

    Without the zoning codes the wealthy are unlikely to build homes on small lot as you imagine. Without the assurance that zoning provides. IE The neighboring homes will be of similar sizes and quality more or less ensuring the neighbors will be from a similar economic status. The wealthy will look for increasingly larger property to give them control of their surroundings. Sure, you can end zoning once leading the wealthy to flee flooding the marker starting the downward spiral.

    Walta

    1. artisanfarms | | #55

      You completely miss my point regarding changing zoning codes. I have zero expectation that the wealthy will live on a smaller lot. The direction I am going in is that if zoning codes could evolve to reflect the changing market demands in an area, rather than being hostage to NIMBY pressures, more affordable housing could be built. Not changing zoning codes, prevents additional housing from being built in an area and artificially drives up the value of the existing stock of housing and forces sprawl upon communities.

  23. mikeolder | | #56

    Interesting read. The rich get richer and the poor, you guessed it. But that's capitalism which drives progress. IMO a flat tax rate would distribute wealth more evenly.

    Why are the wealthy building netzero homes when they are the last ones who should be concerned with high utility bills? I was told "comfort" but I feel it's bragging rights. "Look at my new passive home and tesla, I'm saving the world.." That's fine for people who can afford it, but what's ironic is that the "lower utilities" sales pitch attracts people who cant.

    People living month to month need a shorter payback period than 30+ years as the average time most own a home is 12.

    I plan on having my new home dried in, then air sealing and insulating it myself. I may even do the mechanical's since I used to work hvac. Many new home owners are perfectly capable and would be willing, knowing the utility savings potential, to do this time intensive step if they had good proven instructions.

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