Economy: These housing numbers must be wrong.
Day 878, 20:07
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Published in Canada 
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by
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by Alias Vision
(Side note: apparently this article did not want to be published. First I lost internet connection, then my keyboard died. Either it is because it is very bad or very good... up to you loyal readers to tell me which)
Having received some very positive feedback on earnings and cost of living, I have decided to continue the economic analysis.
We already know that Canadian workers live and are paid handsomely but what about the health of the industries that employ them. The first one I decided to look at is housing.
Housing is the most labour and resource intensive industry a prospective owner can launch himself into (based on the fact that hospital and defense systems tend to be under the control of governments). The delays in producing houses increases the risks to the owners and the market can be hyper competitive due to the presence of the black market.
A note on the black market. It can't be controlled and it can't be eliminated. This is unfortunate as it tends to create a single, globe spanning, market for luxury items and high quality items. Pushed to extremes it means that any company that happens to operate in a less productive or higher production cost country will invariably fail long term. Eventually the black market swallows whatever share is available to the domestic producer.
For housing, I am assuming peak productivity of 20 workers with wellness at 90. In fact, wellness should be higher and if it is lower, then owners should spend their energies on educating their workers on how to raise and maintain their wellness.
Data sample for the morning of Day 878 of the New World.
First we must look at the wage structure of the construction companies. From $1.90 for entry level going up to $21.37 for level 7 workers. The point of the exercise is to see how much margins can be maximized and what the final cost would be if you did so. Based on this mornings salary offers, the best bang for your buck is a skill 3 worker making $4.10 a day. That represents an investment of $0.33 per productivity point generated.
So a team of twenty skill 3 workers, working at 90 wellness would produce one Q1 level house every day at a cost of 3.43 gold to the company. That is an all Canadian product, no foreign wood import. The rest of the breakdown is as follows:
Q2 would take the same workers two days and cost 5.51 gold.
Q3 would take three days and cost 7.59 gold.
Q4 would take four days and cost 9.67 gold.
Q5 would take five days and cost 11.73 gold.
Can that be right? Well based on the productivity formula it is. So why are houses so expensive? For one thing, skill 3 workers do not generally work at Q5 companies. At $4.10 a day, those workers would be hard pressed to maintain their wellness.
So let's recalculate based on skill 6 workers in Canada (slightly more productive than 7 at current wage levels). The new numbers look like this:
Q1 - 5.87 gold, one day.
Q2 - 10.4 gold, one day.
Q3 - 14.92 gold, two days.
Q4 - 19.45 gold, two days.
Q5 - 23.97 gold, two days.
Based on market prices of this morning, the lower level housing companies could not compete but already starting at Q3 the profits start showing up again.
One of the most common black market listing I have seen the past few days has houses priced as follows:
Q1 - 2.9 gold.
Q2 - 7 gold.
Q3 - 15 gold.
Q4 - 24.8 gold.
Q5 - 35.5 gold.
Even here, if a Canadian company sold to a black marketers, even allowing for the commission, a healthy profit is possible. Especially if you maximize your production.
Think my numbers are off? They might be, I will admit that I'm not an expert in higher level manufacturing and construction. However when I ran my numbers against this company, giving salaries starting at $9 for the lower skills all the way to $62 for the highest levels, and selling the house for 35.2 gold... the company still showed a profit of 3.66 gold.
There are some factors that affect the bottom line. Wellness is not guaranteed. Many times neither is the raw material costs. Finally, hiring and maintaining twenty workers is a very big challenge as anyone who tries to maintain even ten workers could attest.
Are there issues with my numbers? I'm wondering because they certainly appear rosy...
Having received some very positive feedback on earnings and cost of living, I have decided to continue the economic analysis.
We already know that Canadian workers live and are paid handsomely but what about the health of the industries that employ them. The first one I decided to look at is housing.
Housing is the most labour and resource intensive industry a prospective owner can launch himself into (based on the fact that hospital and defense systems tend to be under the control of governments). The delays in producing houses increases the risks to the owners and the market can be hyper competitive due to the presence of the black market.
A note on the black market. It can't be controlled and it can't be eliminated. This is unfortunate as it tends to create a single, globe spanning, market for luxury items and high quality items. Pushed to extremes it means that any company that happens to operate in a less productive or higher production cost country will invariably fail long term. Eventually the black market swallows whatever share is available to the domestic producer.
For housing, I am assuming peak productivity of 20 workers with wellness at 90. In fact, wellness should be higher and if it is lower, then owners should spend their energies on educating their workers on how to raise and maintain their wellness.
Data sample for the morning of Day 878 of the New World.
First we must look at the wage structure of the construction companies. From $1.90 for entry level going up to $21.37 for level 7 workers. The point of the exercise is to see how much margins can be maximized and what the final cost would be if you did so. Based on this mornings salary offers, the best bang for your buck is a skill 3 worker making $4.10 a day. That represents an investment of $0.33 per productivity point generated.
So a team of twenty skill 3 workers, working at 90 wellness would produce one Q1 level house every day at a cost of 3.43 gold to the company. That is an all Canadian product, no foreign wood import. The rest of the breakdown is as follows:
Q2 would take the same workers two days and cost 5.51 gold.
Q3 would take three days and cost 7.59 gold.
Q4 would take four days and cost 9.67 gold.
Q5 would take five days and cost 11.73 gold.
Can that be right? Well based on the productivity formula it is. So why are houses so expensive? For one thing, skill 3 workers do not generally work at Q5 companies. At $4.10 a day, those workers would be hard pressed to maintain their wellness.
So let's recalculate based on skill 6 workers in Canada (slightly more productive than 7 at current wage levels). The new numbers look like this:
Q1 - 5.87 gold, one day.
Q2 - 10.4 gold, one day.
Q3 - 14.92 gold, two days.
Q4 - 19.45 gold, two days.
Q5 - 23.97 gold, two days.
Based on market prices of this morning, the lower level housing companies could not compete but already starting at Q3 the profits start showing up again.
One of the most common black market listing I have seen the past few days has houses priced as follows:
Q1 - 2.9 gold.
Q2 - 7 gold.
Q3 - 15 gold.
Q4 - 24.8 gold.
Q5 - 35.5 gold.
Even here, if a Canadian company sold to a black marketers, even allowing for the commission, a healthy profit is possible. Especially if you maximize your production.
Think my numbers are off? They might be, I will admit that I'm not an expert in higher level manufacturing and construction. However when I ran my numbers against this company, giving salaries starting at $9 for the lower skills all the way to $62 for the highest levels, and selling the house for 35.2 gold... the company still showed a profit of 3.66 gold.
There are some factors that affect the bottom line. Wellness is not guaranteed. Many times neither is the raw material costs. Finally, hiring and maintaining twenty workers is a very big challenge as anyone who tries to maintain even ten workers could attest.
Are there issues with my numbers? I'm wondering because they certainly appear rosy...
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Naaa ... BUY HOUSES FROM PANDA!
<3 😉
AB Can Into CP!
On a side note Alias Vision, most of these housing companies employ Zombies, which as we all know will be obsolete in V2.
Unless of course you want those who buy your homes to have their walls cave in a week after they buy it.
\o/
That will be a big improvement for sure (the no zombies part).
The methodology is just excellent!
The no zombies thing is going to put many many many many owners out of business unless the number of people in a company changes.
Gotta say that I love these articles and the way you write them. Totally useful info here.
But I don’t really agree with your dislike of black markets or underground economies. They exist in all RW societies from Nigeria (75% of GDP) to the US and Canada (8-10% of GDP) They exist for a reason. When a society at large feels that their government is doing a good job in representing them, economically speaking, the Black markets will always struggle. In unstable nations where the people have little trust in their economies the black markets can almost overtake the GDP numbers.
In fact some people believe black markets to be the only true free trade systems, like Agorists. They call it the "counter economy." And believe that as the counter economy expands, it challenges the authority of the state, stripping the very richest in society of some of its power and redistributing it to the poorest. The size of a black market is usually a great indicator for the health of the economy and how it effects people at low income levels and for that reason alone they can be very valuable.
Canada has an unemployment rate of 35%-40% pretty much consistently.
With these Zombies getting fired to make way for workers with a pulse - you're gonna see a LOT of Construction companies either enter into wage offer wars or just shut down completely.
Would YOU pay 25-35 gold for a Q5 house built by Zombies?
I wouldn't.
More important to the price of housing will be the factor that houses will degrade. Would you pay 25-35 gold for a house that lasts a month? (month is pure speculation)
Zombies mean nothing and will continue to exist within companies, especially construction companies who have 20 employees. You will simply need to have 3 active workers within the company, one for each specialization. That does not change the game terribly much. Your thoughts on zombies being a thing of the past are wrong Tyler.
That remains to be proven Etemenaki.
We'll see in V2.
😉
Zombies may be useful, but not the ones that are dead right now. They won't be able to choose a new trade unless they are dead in a land company.
You all will probably have to go out and kill some new citizens to keep your productivity up 🙂
To suggest that zombies will make a house fall down? LOL. The only thing that will affect that is the durability that the builder chooses.
A 30-40% unemplyment rate? Ya right. If you are including all the dead people, which we have plenty of. There are close to 800 jobs available which haven't been filled if you include the MOI jobs for those with damaged health (470 (47 pages) + 130 in the MOI q1 housing company, 130 Canada Wheat board, 57 lumber company).
great job!!
"One of the most common black market listing I have seen the past few days has houses priced as follows:
Q1 - 2.9 gold.
Q2 - 7 gold.
Q3 - 15 gold.
Q4 - 24.8 gold.
Q5 - 35.5 gold."
Its phony.
Couple of problems with housing. First, its almost impossible to find 20 workers with 90 plus wellness, unless you hire skill 5-7 only. If you are running Q4 or Q5, then it is basically impossible as very few keep their wellness up consistently in such high Q companies. And if you want workers like this, you have to pay them big bucks. More than your assessment.
Why are prices 'so high'? (Not that I think they are that high.) The answer is always the same, regardless of any industry and regardless of any other factors: supply and demand.
If there were no demand at those prices; prices would come down. So, Canadian companies are indeed selling houses at those prices. And Canadians, who earn some of the highest salaries in the world, and have perhaps the highest purchasing power in the world, can afford them and are buying. (Previous analyses show Canadians being able to afford Canadian houses by working less time than citizens in other countries.)
Citizen B