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Soaring lumber prices add to the cost of a new home

cnbc.com

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Re: Soaring lumber prices add to the cost of a new home

#11

Post by Workaccount2 »

andrewmcwatters wrote: post #4

I don't know what the risk calculus is for these home developers, but I do know that in particular areas of the US, you just straight up cannot afford a home anymore on median income (or even the top 20%ers looking for fair pricing!). I anticipate that mortgages will continue to push past 30 years into a strange 45-year+ territory, and we'll begin to see Japan-like multi-generational mortgages. Actually, in reality t…

The financial/economic forest is way overgrown and no one wants to be the one to set it on fire.

Re: Soaring lumber prices add to the cost of a new home

#12

Post by hippich »

epicureanideal wrote: post #2

So about 0.3% of the price of an SF Bay Area home? At least in this area, the price has a lot more to do with NIMBYism than the cost of materials.

Problem is - lumber prices are about the same across the country. In SF Bay area and some middle of nowhere, where such lumber increase makes a significant difference.

Re: Soaring lumber prices add to the cost of a new home

#13

Post by throwaway5752 »

I wouldn't buy a house now if I could help it. It only seems reasonable because of extremely low rates. That is also the same thing driving equity valuations in our field to historically unusual levels. This is partially driven by market and partially driven by monetary policy, and it really can't go much lower than it is. Rate increases have a large increase on the present value of a mortgage of stock.

Re: Soaring lumber prices add to the cost of a new home

#14

Post by paulpauper »

andrewmcwatters wrote: post #4

I don't know what the risk calculus is for these home developers, but I do know that in particular areas of the US, you just straight up cannot afford a home anymore on median income (or even the top 20%ers looking for fair pricing!). I anticipate that mortgages will continue to push past 30 years into a strange 45-year+ territory, and we'll begin to see Japan-like multi-generational mortgages. Actually, in reality t…

if home prices keep surging on a real basis , a 30-year morttgage becomes attractive proposition, especially given how cheap it is to borrow .

Re: Soaring lumber prices add to the cost of a new home

#15

Post by ttul »

Gen-X: "We've got all this extra cash because we couldn't fly anywhere or go on cruises. Let's build our dream home in the mountains."

Boomer: "Well, the 401-K is up a ton. Can't seem to spend the cash pouring out. Let's upgrade the house and buy a second home somewhere nice."

Millenial: "We still have no savings because rent is insane and incomes have not kept up with inflation for decades as capital has played a larger role in growth than labour. We continue to have no long term security from a pension. I guess we'll just keep slaving away..."

Re: Soaring lumber prices add to the cost of a new home

#16

Post by nradov »

andrewmcwatters wrote: post #4

I don't know what the risk calculus is for these home developers, but I do know that in particular areas of the US, you just straight up cannot afford a home anymore on median income (or even the top 20%ers looking for fair pricing!). I anticipate that mortgages will continue to push past 30 years into a strange 45-year+ territory, and we'll begin to see Japan-like multi-generational mortgages. Actually, in reality t…

Median incomes are irrelevant to housing developers. All that they care about is whether there are enough customers to buy their products. The developers typically don't lend to customers so the only risk is that demand might collapse in the middle of a project. A lot of small developers went bankrupt during the last recession because they had borrowed to build new projects and then couldn't sell the completed homes.

The federal government wouldn't really be able to prevent REITs from buying up homes.

Re: Soaring lumber prices add to the cost of a new home

#18

Post by braunshedd »

epicureanideal wrote: post #2

So about 0.3% of the price of an SF Bay Area home? At least in this area, the price has a lot more to do with NIMBYism than the cost of materials.

There's essentially no new housing being built in the Bay in general, so I suppose the cost of lumber is moot.

Re: Soaring lumber prices add to the cost of a new home

#19

Post by andrewmcwatters »

Workaccount2 wrote: post #11
andrewmcwatters wrote: post #4

I don't know what the risk calculus is for these home developers, but I do know that in particular areas of the US, you just straight up cannot afford a home anymore on median income (or even the top 20%ers looking for fair pricing!). I anticipate that mortgages will continue to push past 30 years into a strange 45-year+ territory, and we'll begin to see Japan-like multi-generational mortgages. Actually, in reality t…

The financial/economic forest is way overgrown and no one wants to be the one to set it on fire.

I agree. Politicians have weak incentive to push back I assume?

If you do, you put average people at REITs out of work. This isn't a terrible thing if you ask me, because not much of it is real estate specific. REIT HR people can find work at other companies, developers and salespeople, too. But it's not a good look, I suppose?

Real estate is a real problem that no one seems to want to touch. "The rent is too d*mn high!"

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