by John Egan
Over the past 30 years, home values and home construction costs have been on parallel paths in the Houston, TX, metro area.
A new LawnStarter analysis of data compiled by the Lincoln Institute of Land Policy shows the value of an average single-family home in the Houston area jumped 173 percent from 1986 to 2016 -- going from $91,747 to $250,745. During the same period, home construction costs (not including land) for an average single-family home climbed 160 percent, from $72,382 to $187,835.
Architect Bill Hirsch, author of “Designing Your Perfect House,” says that aside from inflation, one of the key factors behind the increase in home values and home construction costs has been continuous advancement in the quality of building materials and techniques.
“New home prices keep rising for the same reason car prices have increased. Cars are far better built and have many more features than they did in the recent past,” Hirsch says. “Obviously, this costs money.”
In late February 2017, this Houston home was on the market for $330,000.
Photo: Redfin
Today, new homes boast better materials, finishes, fixtures, insulation, appliances and other components than their counterparts built in the 1980s, according to Hirsch. For example, modern-day HVAC systems are much more sophisticated and energy-efficient than the ones installed in homes 30 years ago, he says, and those improved systems come at a higher price.
“I often say that they don’t build them like they used to, and that’s a good thing,” he says.
“Basically, building with old materials was like driving a Ford Pinto, compared to building with new materials, which would be like driving a Ford Fusion. It’s like comparing apples and oranges,” Hirsch adds. “New houses are more expensive because they keep getting better and better.”
In the graphic below, see how home values and home construction costs in the Houston area have gone up over the past 30 years.
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