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Lumber crash leads to 'blowout' sales as prices crater

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Re: Lumber crash leads to 'blowout' sales as prices crater

#21

Post by rtkwe »

llbeansandrice wrote: post #7
reilly3000 wrote: post #4

If the price keeps dropping at this rate lumber will be free by December! /s Seriously, this is a welcome correction, and another sign that runaway inflation fears were based on hyperbole.

Wait, people were saying/thought that this was runaway inflation and not a result of supply chain issues because of COVID and tons of people suddenly having to spend way more time in their house because of COVID? Maybe I'm ignorant of the inflation argument more than anything else but it doesn't even pass the sniff test in my opinion.

Reminds me of an article recently about how the nominal inflation 'target' was actually treated and executed in a way that made it a ceiling because the Fed and all the monetary policy wonk tweaks always missed low and if it did briefly exceed the target it was considered a reason to start tweaking things.

Re: Lumber crash leads to 'blowout' sales as prices crater

#22

Post by ghshephard »

bandyaboot wrote: post #8

I’ve been following these prices closely for most of the year and what’s striking to me is just how wrong nearly all the industry experts were throughout the year. I don’t recall reading a single opinion that was anything other than “prices will remain very high for the foreseeable future.”

100% of the analysts that I read, and, if I'm not mistaken, close to 100% of the mill owners recognized that this was a temporary blip, and that lumber would fall back into the $500sh range (There is a natural floor - that's the price at which BC mills no longer make money and start shutting down/curtailing capacity.)

None of the mills started expanding or engaging in capital programs to try and take advantage of the increased prices.

Re: Lumber crash leads to 'blowout' sales as prices crater

#23

Post by throwdecro »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

Watch out for HELOCs in what sense? Who would loan money to a homeowner with an underwater house, not matter how much they clamor?

Re: Lumber crash leads to 'blowout' sales as prices crater

#25

Post by tayo42 »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

who has all this money to spend? everywhere everything is so expensive. i make a ton, and this doesn't add up. nothing about home prices seems to add up.

Re: Lumber crash leads to 'blowout' sales as prices crater

#26

Post by Nbox9 »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

Everything has skyrocketed. Specifically when you are in the middle of a construction project you need to get all of your materials to a worksite at a specific time, there’s very little schedule flexibility. This means they are outbidding people that do have schedule flexibility.

The housing market has cooled and you can get some good deals now, but in 60months we’ll back in a growth market. There simply isn’t enough supply to keep up with demand. People keep having kids, cities keep limiting housing density, suburbs can only sprawl so far.

Re: Lumber crash leads to 'blowout' sales as prices crater

#27

Post by ryan93 »

tayo42 wrote: post #25
mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

who has all this money to spend? everywhere everything is so expensive. i make a ton, and this doesn't add up. nothing about home prices seems to add up.

I think people have just increased the fraction of their income they are willing to spend. If people in Austin will spend 50% of income instead of a third prices can go up a lot

Re: Lumber crash leads to 'blowout' sales as prices crater

#28

Post by robomartin »

nradov wrote: post #11
reilly3000 wrote: post #4

If the price keeps dropping at this rate lumber will be free by December! /s Seriously, this is a welcome correction, and another sign that runaway inflation fears were based on hyperbole.

The new runaway inflation is in steel prices. https://www.wsj.com/articles/high-steel-prices-have-manufact...

About a year ago wee started design on a large project for one of our clients . Think in terms of something like a full size passenger aircraft motion simulator...so, something 100 feet long and 21 feet wide. Well, needless to say, lots of metal makes-up the entire structure.

We had to design this thing twice due to fluctuations in metal pricing. The original design was all aluminum. Then came all steel, because aluminum became far more expensive than steel. Then a hybrid and now steel only. There are other factors, such as the relative cost of TIG vs. MIG welding, yet, when your material costs increase nearly four-fold you can't ignore it.

By the time we finished a reduced scope prototype materials pricing and availability was just insane. This has affected other components, like fasteners.

At this time, any quote we provide for product development --be it electronics, mechanical or both-- includes language to say that we cannot hold pricing on anything for more than one week. It's got to be that crazy. If you are not very careful you can easily end-up being very busy while losing money.

Re: Lumber crash leads to 'blowout' sales as prices crater

#29

Post by PragmaticPulp »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

Common practice in construction industry is to overcommit to too many projects, then raise prices until the most cost-conscious customers drop out. Now you’re only left with the customers willing to pay the highest prices.

It’s not really about lumber prices. It’s about finding the highest construction prices that the market will bear. Can’t find the limit until you push so hard that some customers start dropping out.

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