Soaring lumber prices add to the cost of a new home • Hacker News Board

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

#111

Post by jdhn » Fri, Apr 30, 2021, 10:44 PM UTC

ortusdux wrote: post #50

omgwtfbyobbq wrote: post #27

From what I've heard, this is mostly a function of... 1) Lumber mills shutting down because of weak demand and tariffs. https://www.woodworkingnetwork.com/news/woodworking-industry... 2) Curtailment of remaining production because of coronavirus https://www.woodworkingnetwork.com/news/canadian-news/corona... 3) The housing market going a little nutty https://www.vox.com/22264268/covid-19-housing-insecurity-hou... 4)…

Also: - WFH people fleeing high COL cities, buying fixer-uppers, and paying whatever to renovate - Rolling covid shut-downs of companies that make wood products like OSB glue or treated wood chemicals - Freight costs - Trailing effects from a bad fire season and the Texas ice storm repairs - Tariff repercussions - Russia is planning to stop exporting raw logs next year. They are about 12% of the worlds supply. - Spec…

>- Russia is planning to stop exporting raw logs next year. They are about 12% of the worlds supply.

Why would they do this? Is this a way of getting back at the US for sanctions? Seems like they're shooting themselves in the foot.

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

#112

Post by andrewmcwatters » Fri, Apr 30, 2021, 10:48 PM UTC

croutonwagon wrote: post #83

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 Federal government has a TON of subsidies for first time buyes and even more for veterans. The issue is part land scarcity driving up the cost of land and part the transition of our economy out of production and into consumerism. Building has never been cheaper, and even quality has improved, including working through some pretty bad materials changes (like PEX plumbing, or chinese drywall). We no longer really d…

Total building costs are more expensive than ever. Regulations, IBC, and consumer feature demand dictate it to be so. I don't know what you're talking about. Quality also hasn't improved, only marginal cost of production of materials has dropped. The actually structural integrity of those materials has worsened over time.

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

#113

Post by dragonwriter » Fri, Apr 30, 2021, 10:50 PM UTC

jdhn wrote: post #111

ortusdux wrote: post #50

Earlier quoted context omitted.

Also: - WFH people fleeing high COL cities, buying fixer-uppers, and paying whatever to renovate - Rolling covid shut-downs of companies that make wood products like OSB glue or treated wood chemicals - Freight costs - Trailing effects from a bad fire season and the Texas ice storm repairs - Tariff repercussions - Russia is planning to stop exporting raw logs next year. They are about 12% of the worlds supply. - Spec…

>- Russia is planning to stop exporting raw logs next year. They are about 12% of the worlds supply. Why would they do this? Is this a way of getting back at the US for sanctions? Seems like they're shooting themselves in the foot.

> Why would they do this?

Raw logs are an input; it drives up the price for external industries dependent on lumber and drives them down for domestic industries, sacrificing raw material exports for more competitive intermediate and finished goods exports.

Since for the most part economic development depends on having exports as far toward the finished goods end of the raw material to finished goods spectrum, its not an insane strategy if you can deal with the short-term dislocations.

Shifting competitive advantage is harder than leaning in to your existing competitive advantage, but sometimes your existing competitive advantage is a long-term loser.

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

#114

Post by tgb » Fri, Apr 30, 2021, 10:53 PM UTC

dcolkitt wrote: post #72

A lot more builders should be looking into steel framing. Light gauge steel has also gone up, but nowhere near as much as lumber. For the typical project, it's probably cheaper now than wood framing. Especially when you take into account that steel framing can be pre-cut at a factory with CAD software, requiring much less skilled labor onsite. And steel makes a much better frame. Fire resistant, termite free, mold fr…

I see this in new construction in my area and have wondered about having a electrically conductive frame. Any danger there? Also how do you mount anything if you don't have wood studs?

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

#115

Post by busterarm » Fri, Apr 30, 2021, 10:57 PM UTC

ineedasername wrote: post #104

busterarm wrote: post #65

Earlier quoted context omitted.

You should never buy a home that costs more than 2x your yearly income. So yeah, you should make at least $137,500 if you want to buy a $275k house.

You can easily spend more than the equivalent of 2x your annual income by renting, in terms of higher monthly cost, than by purchasing a home. Take for example a $300,000 house w/ 4% mortgage. That works out to roughly $1,400/month. Even if you only make $75,000/year, it makes perfect sense to buy that house even if rents are a little lower than $1,400/month. (and current 30yr average rates bring that down to about $…

Home ownership is more than just the cost of your mortgage.

And in many markets, especially in big expensive cities like NY & SF, it costs more money to buy than to rent.

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

#116

Post by busterarm » Fri, Apr 30, 2021, 10:58 PM UTC

Ancalagon wrote: post #101

busterarm wrote: post #65

Earlier quoted context omitted.

You should never buy a home that costs more than 2x your yearly income. So yeah, you should make at least $137,500 if you want to buy a $275k house.

by this logic like 99% of people would be priced out of purchasing houses in most of california...

Yes, exactly.

California has the 10th highest foreclosure rate out of 50 states and Los Angeles is 5th for cities with a population over 1 million. NYC is in first.

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

#117

Post by cma » Fri, Apr 30, 2021, 11:16 PM UTC

kokanator wrote: post #91

omgwtfbyobbq wrote: post #27

From what I've heard, this is mostly a function of... 1) Lumber mills shutting down because of weak demand and tariffs. https://www.woodworkingnetwork.com/news/woodworking-industry... 2) Curtailment of remaining production because of coronavirus https://www.woodworkingnetwork.com/news/canadian-news/corona... 3) The housing market going a little nutty https://www.vox.com/22264268/covid-19-housing-insecurity-hou... 4)…

Does it feel like we have squeezed a critical part of our infrastructure here allowing it to close down or go bankrupt? This could have lasting affects for decades.

When something goes bankrupt they don't necessarily send in the prohibition-like police with axes to bust up all the machines and stuff or something.

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

#118

Post by cma » Fri, Apr 30, 2021, 11:18 PM UTC

kokanator wrote: post #89

vkou wrote: post #7

Earlier quoted context omitted.

Marginally profitable mills shut down/go bankrupt when tariffs are introduced, and unlike AWS instances cannot be spun up on demand.

Does it feel like we have squeezed a critical part of our infrastructure here allowing it to go bankrupt? This could have lasting affects for decades.

They don't necessarily melt down the machines and recast them as ingots in a bankruptcy.

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

#119

Post by ineedasername » Fri, Apr 30, 2021, 11:28 PM UTC

MeinBlutIstBlau wrote: post #108

ineedasername wrote: post #106

Earlier quoted context omitted.

Precisely... my loan was actually too small to qualify for the lowest rates, according to research & some friends in the business, rates like 1.75% were mostly for $250k+ loans, but I was still able to refinance a line of credit we'd used to expand out house years earlier to such a lower interest rate that we're saving more than 20% off our previous monthly payment & about $50k off the total life of the loan (assumin…

Line of Credits typically go off of prime which is why you didn't get the lowest rate. Most institutions do something like prime + x%. If it was a 15 year fixed or 3 year ARM, then you most likely would've gotten an awesome rate.

We were refinancing a currently open (and fixed rate) line of credit we no longer needed into a lower interest traditional mortgage.

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

#120

Post by ineedasername » Fri, Apr 30, 2021, 11:42 PM UTC

busterarm wrote: post #115

ineedasername wrote: post #104

Earlier quoted context omitted.

You can easily spend more than the equivalent of 2x your annual income by renting, in terms of higher monthly cost, than by purchasing a home. Take for example a $300,000 house w/ 4% mortgage. That works out to roughly $1,400/month. Even if you only make $75,000/year, it makes perfect sense to buy that house even if rents are a little lower than $1,400/month. (and current 30yr average rates bring that down to about $…

Home ownership is more than just the cost of your mortgage. And in many markets, especially in big expensive cities like NY & SF, it costs more money to buy than to rent.

Precisely, which is why the "don't buy a home more than 2x annual salary" doesn't seem like a good rule: there are too many variables. Where I am, total cost of ownership for a small two bedroom house is generally slightly less than the cost of 2 bedroom apartment that is also smaller, and comes with the benefit of building equity. A clear advantage (in my mind) if you're going to stay there for a few years because you'll build at least a little equity and average property values will increase at least a little bit. In my case I have a moderate sized home and pay about than 70% of the rent rates for anything nearby with the same # of bedrooms & about 500sqft smaller, even after property taxes, utilities, and average monthly maintenance costs.

On the other hand I have family that live in an area where apartment rents are much cheaper than the monthly TCO for buying, and even if you can afford to buy renting makes more sense (unless you need 3-4 bedrooms for a family) because rents are so much cheaper & it is better to put the difference between monthly costs into an index fund and build equity that way.