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How much do construction costs matter to the price of housing?

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Re: How much do construction costs matter to the price of housing?

#151

Post by byw »

brimble wrote: post #134
zizee wrote: post #130

Earlier quoted context omitted.

I'm really curious to know why, in our hyper-industrialized world of today, is lumber so expensive when compared to yesteryear? Is it cost of land on which it grows? Is it increased demand because of population growth? Increased demand because of new uses? Increased demand because of global markets? Is it because lumbar prices were artificially depressed because the cost of growing new trees was not included (because…

My dad, born in toward the end of WWII, has complained for at least the last three decades that it keeps getting harder every year to find usable boards at lumber yards. Tons of them warped, damaged, way too many knots or other problems, and so on, and that's when you are shopping a couple tiers up from the worst stock. I don't know why that is, but that seems to be the trend he's seen over his life. Makes sense, if…

My guess is growing use of new growth forests and ever-increasing harvesting of younger trees to squeeze profit.

Re: How much do construction costs matter to the price of housing?

#152

Post by brimble »

zizee wrote: post #148
brimble wrote: post #134

Earlier quoted context omitted.

My dad, born in toward the end of WWII, has complained for at least the last three decades that it keeps getting harder every year to find usable boards at lumber yards. Tons of them warped, damaged, way too many knots or other problems, and so on, and that's when you are shopping a couple tiers up from the worst stock. I don't know why that is, but that seems to be the trend he's seen over his life. Makes sense, if…

Interesting. This might be explained by the switch from old growth to new growth^. Older trees would be larger, and have more core to work with (I think knots are mostly from the outer layers of the tree). ^ this is pure speculation

That would be my guess for at least part of the reason, too, but it'd only be a guess. I also wouldn't be surprised to find out that tree species plays a role, and that we plant species for harvest that simply produce worse lumber than what used to be widely available (as old growth).

Re: How much do construction costs matter to the price of housing?

#153

Post by mistrial9 »

throwaway19423 wrote: post #129
brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I live in Canada, where we are swimming in lumber (in theory). I just don't understand why it is so expensive. I know the processing and treatment is very sophisticated but there is so much automation throughout the whole chain. My only explanation is that lumber is a globally traded commodity .. price isn't determined by just Canadian demand for lumber but the global demand. It makes me wonder .. if the US shutdown…

my un-schooled guess is simple - the rest of the industrialized world has benefited from profit markups in real dollars of today - that fun book or skateboard was priced in modern terms.. while lumber is a commodity from the previous century or three.. their dollars and costs were low to start with, and were pressed down by commodity markets.

I once asked a recent undergrad in Economics graduate, at a party, why one pound of bread costs more than one pound of meat (the inputs and processing costs are vastly different, through the life of the animal, the meat should be way, way more) but, blank stare, more beer.

I for one believe that most of the markets, most of the time, make no sense at all from the perspective of the real natural inputs, and all the sense in the world from the point of view of one human group selling things to another human group, any way they can; old timber included.

Re: How much do construction costs matter to the price of housing?

#154

Post by RosanaAnaDana »

zizee wrote: post #130
brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I'm really curious to know why, in our hyper-industrialized world of today, is lumber so expensive when compared to yesteryear? Is it cost of land on which it grows? Is it increased demand because of population growth? Increased demand because of new uses? Increased demand because of global markets? Is it because lumbar prices were artificially depressed because the cost of growing new trees was not included (because…

We mined the forests, and they've long run dry.

The wood used to built those houses was the old growth timber of the western united states. Its basically gone now. As well as the second, third and fourth growth.

Wood of sufficient quality to do the things we used to do with it simply doesn't come from industrial forests.

Re: How much do construction costs matter to the price of housing?

#155

Post by senectus1 »

jzwinck wrote: post #78
whoisburbansky wrote: post #71

Earlier quoted context omitted.

It's odd, don't you think, that an "artisan" of some kind, with a "specialist" product, would only make about 10% more per annum, adjusted for inflation, than a generalist churning out a staple food by hand?

Modern bakers are competing in a market dominated by extremely cheap mass production. The economy of scale has moved out of the local bakery and into the regional bread factory. People are willing to pay double or triple for artisanal bread compared with mass produced bread. But are they willing to pay 10-20x? If not, and the extreme cost efficiency of modern food factories inexorably lowers prices, the market cleari…

Ex-Baker by Trade here. yes even the little shops are effectively mass production factories. Buy the ingredients in big pre-mixed sacks. add the right temp water and yeast into a big mixer and press go. drop that into a machine that cuts the right mass chunks out and shapes it ready for production line style dropping into tins and mounting in the proofer then into the oven.

Typically they only have one actual baker, a few apprentices and often just unskilled laborers.

actual "Artisan" bakeries are very rare and not terribly profitable unless in highly affluent areas.

Re: How much do construction costs matter to the price of housing?

#156

Post by lurgburg »

giantg2 wrote: post #117
pydry wrote: post #114

Earlier quoted context omitted.

>As for rent, the property owners just pass the cost on to the tenants by increasing rent Rents would either remain unchanged or go down. I dont magic myself a raise because income tax goes up. It works the same for landlords. If supply and demand remains unchanged, prices remain unchanged. The only change I could forsee to affect either is previously empty properties being put up for rent in order to cover tax payme…

"I dont magic myself a raise because income tax goes up. It works the same for landlords. If supply and demand remains unchanged, prices remain unchanged." What you're missing is that the market floor get universally pushed up. There's no competition from cheaper places because they all increased their rent to cover the new coat so they can still make their same margin. The demand is still there because people still…

> they all increased their rent

Why would they not have done this before, if they could? Landlords aren't trying to maintain some fixed margin, they want as much as possible, always.

Re: How much do construction costs matter to the price of housing?

#157

Post by germinalphrase »

zizee wrote: post #130
brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I'm really curious to know why, in our hyper-industrialized world of today, is lumber so expensive when compared to yesteryear? Is it cost of land on which it grows? Is it increased demand because of population growth? Increased demand because of new uses? Increased demand because of global markets? Is it because lumbar prices were artificially depressed because the cost of growing new trees was not included (because…

Travel to logging country and you’ll see a lot of photos like this hanging on the walls of stores, bars, etc:

https://miro.medium.com/max/2976/1*zUezbWclc1bubBJOS0qiew.jp...

Old growth trees aren’t exactly growing back on a timeline that matters to you and me.

Re: How much do construction costs matter to the price of housing?

#158

Post by lurgburg »

giantg2 wrote: post #111
pydry wrote: post #58

Earlier quoted context omitted.

Land value tax. It could be made palatable to regular people by making a high tax free threshold. Most homeowners could be left unaffected. That leaves 50% of land owned by the 1%. A fair chunk. Additionally the money could be funneled initially into pensions for the impoverished elderly. Capital/billionaires would fight back by arguing that it would hit the elderly the hardest just as the howard jarvis taxpayers fou…

"That leaves 50% of land owned by the 1%." Is a lot of that farm land, like with Gates? I thought a lot of the investors are involved with apartments, which don't take up much land?

LVT is generally conceptualised as proportional to the value of the land, not it's area.

Re: How much do construction costs matter to the price of housing?

#159

Post by irrational »

zizee wrote: post #130
brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I'm really curious to know why, in our hyper-industrialized world of today, is lumber so expensive when compared to yesteryear? Is it cost of land on which it grows? Is it increased demand because of population growth? Increased demand because of new uses? Increased demand because of global markets? Is it because lumbar prices were artificially depressed because the cost of growing new trees was not included (because…

My understanding is that the trees no longer exist. We cut down ancient hardwood forests that took hundreds and thousands of years to grow. All of that is gone now except in a few places like national parks and monuments. In its place are tree farms that are harvested after growing for a few years. Instead of cutting down trees that are 4 feet across with beautiful straight grain knot free lumber, we get crap heartwood with knots that bows and warps.

To get that beautiful wood again, we would have to plant the forests, let them grow for hundreds of years, then harvest the wood. Well, that's not going to happen, so we end up in the situation we are in of having to use a very poor substitute.

Re: How much do construction costs matter to the price of housing?

#160

Post by downrightmike »

throwaway19423 wrote: post #129
brimble wrote: post #127

Earlier quoted context omitted.

Quality lumber is incredibly expensive now compared with 1914. I owned a 1910s-construction house for a while, and they used huge, thick wooden boards around the foundation where the structure met the stone-and-mortar basement walls, and in the floor joists (visible in the basement), and in the diagonally-run underfloor boards (used where we'd use plywood, today). Nearly knot-free, perfectly straight, that stuff woul…

I live in Canada, where we are swimming in lumber (in theory). I just don't understand why it is so expensive. I know the processing and treatment is very sophisticated but there is so much automation throughout the whole chain. My only explanation is that lumber is a globally traded commodity .. price isn't determined by just Canadian demand for lumber but the global demand. It makes me wonder .. if the US shutdown…

Why chop down 100 trees for $1/tree when you can chop down one tree at $100/tree?
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