Page 12 RAIN March/April 1984 Hidden Costs of Housing Bergen, Norway by Tom Bender Tom Bender's offhand mention in our OctoberINovember 1983 issue that we could reduce housing costs by 90% raised many eyebrows. Possible? A pipe dream ? We asked for more details, which follow. We learned also that these ideas had already won a $15,000 top award in California's Affordable Housing Competition two years ago. Let's get some action on this, and more of this kind of rethinking of hoxv we do things! — TK Most home purchases are financed. Yet few buyers could tell you what their total purchase cost will be by the time their house is paid for. They don't know because they don't want to face the fact that they may have to spend all their next 10 years' income/wsf to pay the finance charges. What makes up our housing expenditures? Let's look first at the financial costs that add up over a person's 50- year "housing lifetime" with our present patterns (see Figure 1). These costs add up to quite a bundle out of our pockets, and the labor and materials cost of constructing the house is only a small piece of the overall cost. As we look at the separate categories of expenditures, we need to make a distinction between economic and financial costs, realize the pivotal role that durability plays in housing "costs," and see how housing scarcity masks a basic cost difference between new and used housing. Economic vs. Monetary Costs Making a distinction between the economic and monetary dimensions of housing is essential to seeing how decisions affecting the flow of work and money have interacted to build up today's excessive costs. The economic cost of a house consists of the work, materials, energy, and land employed in its construction. Once the house is built, that economic cost has been fully paid. If built correctly, the house has no further economic cost to its next several centuries of users, except for maintenance and operation. The economic costs deal with all the real, objective, and physical costs of a project—no matter who incurs them. By contrast, monetary costs stem from the rules a society sets up for distributing the benefits of economic work. Interest rates, tax laws, loan maturities, government subsidies, and the prices that Housing that lasts 400 years costs only a fraction more to build. In addition to dramatically lowering economic costs, its long life makes feasible the generosity of design that separates our shabby "low-cost" housing from ample, comfortable, and livable homes. different trades and professions can convince others their time is worth all alter monetary costs. As a result, they alter the final price that must be paid for economic work, who has to pay it, and who profits from it. Monetary structures often obscure the real economic work and come to seem like some immutable natural law. In reality, they are constantly changing public policies that help shape the nature of a society—the equality or inequality of wealth, the concentration of economic and political power, and the ends to which
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