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Soaring lumber prices add to the cost of a new home

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

#131

Post by croutonwagon »

andrewmcwatters wrote: post #112
croutonwagon wrote: post #83

Earlier quoted context omitted.

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.

I’m sorry I’m gonna disagree.

Structure designs have improved allowing cheaper/more sustainable framing to be used that are stronger. Allowing a range of materials from simple pine framing, to block etc. modern wood framing designs can withstand a lot better storm ratings than even 20 years ago. Especially when you add things like hurricane straps in the south etc.

Roofing materials last longer and are cheaper and more sustainable able than old cedar shingles etc. modern sheathing instea of using massive 2x6 or 2x8, asphaul shingles instead of cedar etc. both better, cheaper and more sustainable.

Siding is better and cheaper and last longer. Again comparing any wood siding to hardy board over time. Vinyl in the right climate as well.

Electrical the same. Proper sheathed copper wire over shit like knob and tube or cloth insulated wire is cheaper AND a whole lot safer. Same with modern breakers, including afci and gfci.

Plumbing? Modern shchedule 40 pvc is a lot cheaper, and more flexible than copper. And even modern pex (when done right)can be even better and allow a single plumber to hump hundreds of yards of the stuff with one arm.

Drywall is better than that old plaster lathe stuff in most cases.

Insulation? Spray in cellulose and foam is infinitely better and cheaper, allowing much higher r values and a single guy to install over even the common fiberglass batten stuff of 20 years ago that was awful if you breathed it in or got direct skin contact.

Windows? Double pane vinyl with gas insulation is worse than the single pane blown glass? Come on.

Sure. Regulations and codes are higher and more strict. But that comes with the cost of most of the materials being better and easier to handle.

The fact that it’s cheaper is a testament to how houses in general are much bigger than they were in the 50s. But anything you build will always need maintenance.

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

#132

Post by [deleted] »

epicureanideal wrote: post #94
almost_usual wrote: post #60

Earlier quoted context omitted.

Condo prices have gone down in the Bay Area since COVID. The problem is everyone wants a SFH suburban lifestyle in the Peninsula, Marin, or East Bay hills. That’s a luxury and you’re going to pay a premium for it.

But are still EXTREMELY expensive relative to most of the US, not because of materials costs.

[deleted]

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

#133

Post by [deleted] »

epicureanideal wrote: post #94
almost_usual wrote: post #60

Earlier quoted context omitted.

Condo prices have gone down in the Bay Area since COVID. The problem is everyone wants a SFH suburban lifestyle in the Peninsula, Marin, or East Bay hills. That’s a luxury and you’re going to pay a premium for it.

But are still EXTREMELY expensive relative to most of the US, not because of materials costs.

[deleted]

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

#134

Post by almost_usual »

epicureanideal wrote: post #94
almost_usual wrote: post #60

Earlier quoted context omitted.

Condo prices have gone down in the Bay Area since COVID. The problem is everyone wants a SFH suburban lifestyle in the Peninsula, Marin, or East Bay hills. That’s a luxury and you’re going to pay a premium for it.

But are still EXTREMELY expensive relative to most of the US, not because of materials costs.

If you had the money and power to solve this problem how much housing would you build in the Bay Area?

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

#135

Post by [deleted] »

dragonwriter wrote: post #124
busterarm wrote: post #123

Earlier quoted context omitted.

It's not even my rule. The 2x rule is older than shit...Just as time has gone up people are stretching it to 2.5x and 3x. Another rule you can go with is the Rule of 28 if you prefer. These guidelines exist for a reason. Ignore at your own peril. Lenders look at these things when considering giving you money. Using more leverage usually gives the bank a better deal than you.

> These guidelines exist for a reason. They exist because of the economic context at the time and place that they were generated, which may not have been valid for much more than that immediate context. If you can find and examine the mathematical assumptions about cost and risk that justify the rule of thumb against current conditions, then you can make an informed evaluation of whether or not it applies to the curr…

[deleted]

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

#136

Post by busterarm »

dragonwriter wrote: post #124
busterarm wrote: post #123

Earlier quoted context omitted.

It's not even my rule. The 2x rule is older than shit...Just as time has gone up people are stretching it to 2.5x and 3x. Another rule you can go with is the Rule of 28 if you prefer. These guidelines exist for a reason. Ignore at your own peril. Lenders look at these things when considering giving you money. Using more leverage usually gives the bank a better deal than you.

> These guidelines exist for a reason. They exist because of the economic context at the time and place that they were generated, which may not have been valid for much more than that immediate context. If you can find and examine the mathematical assumptions about cost and risk that justify the rule of thumb against current conditions, then you can make an informed evaluation of whether or not it applies to the curr…

Hey, what do I know?

I'm just debt-free millennial with a fully paid off house and car looking to purchase investment property #2 on another 15-year mortgage while renting an apartment in Manhattan.

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

#137

Post by jjtheblunt »

teoruiz wrote: post #59

Honest question: why are houses in the US primarily built with wood? Is it just because it’s cheaper? Even if it’s cheaper, is it worth to have a cheaper but obviously less durable building when compared to brick and mortar? It’s always been baffling for my southern European mind.

I'm from the suburbs of Chicago and brick and mortar are very very normal there.

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

#138

Post by ineedasername »

busterarm wrote: post #123
ineedasername wrote: post #120

Earlier quoted context omitted.

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 y…

It's not even my rule. The 2x rule is older than shit...Just as time has gone up people are stretching it to 2.5x and 3x. Another rule you can go with is the Rule of 28 if you prefer. These guidelines exist for a reason. Ignore at your own peril. Lenders look at these things when considering giving you money. Using more leverage usually gives the bank a better deal than you.

There is no one size fits all, there is no inherent peril in ignoring these general rules. The age of the rules are irrelevant, whether you use expletives to describe them or not.

There is peril in ignoring the specifics of your own individual economic circumstances. If you make $300,000/year and aren't carrying significant other debt then you can afford 4x salary for a $1.2 million house because the ratio of your non-housing expenses do not have to scale upwards with your salary. At 4% interest that's $72k/year, leaving ample room for spending on a comfortable life style while still saving 20% of your salary. In fact that is actually less than your Rule of 28. Alternatively, if you make $300k/year but have $80k in credit card debt and additional business debt made on a personal guarantee then even a 2x house may be too expensive.

Situations vary based on much more complex factors than the salary:$home ratio. Simplistic rules are a greater peril than individual analysis.

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

#139

Post by forrestthewoods »

busterarm wrote: post #136
dragonwriter wrote: post #124

Earlier quoted context omitted.

> These guidelines exist for a reason. They exist because of the economic context at the time and place that they were generated, which may not have been valid for much more than that immediate context. If you can find and examine the mathematical assumptions about cost and risk that justify the rule of thumb against current conditions, then you can make an informed evaluation of whether or not it applies to the curr…

Hey, what do I know? I'm just debt-free millennial with a fully paid off house and car looking to purchase investment property #2 on another 15-year mortgage while renting an apartment in Manhattan.

This is just math. You don’t have to earn $200,000/year to afford a $400,000 property. Borrowing $400k costs about $2000/mo. Call it $2500 with taxes and maybe an HOA. That’s about $30,000/year, or 15% of $200,000. Take home on 200 will be north of $150.

Mortgage rates are sub 3% today. That rule of thumb that’s “been around forever” existed when rates were 10%. Such a rule can not possibly be the same when the rate changes so dramatically.

The consistent rule is what percent of your take home you’re comfortable spending. Not many people - owners or renters - spend under 15% on housing.

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

#140

Post by ineedasername »

busterarm wrote: post #136
dragonwriter wrote: post #124

Earlier quoted context omitted.

> These guidelines exist for a reason. They exist because of the economic context at the time and place that they were generated, which may not have been valid for much more than that immediate context. If you can find and examine the mathematical assumptions about cost and risk that justify the rule of thumb against current conditions, then you can make an informed evaluation of whether or not it applies to the curr…

Hey, what do I know? I'm just debt-free millennial with a fully paid off house and car looking to purchase investment property #2 on another 15-year mortgage while renting an apartment in Manhattan.

Okay, that's fantastic. I am honestly glad that you are doing well, there's no reason that many more people couldn't also have that financial security. But your personal anecdotal experience does not demonstrate that 2x should be the universal rule.

I am also a millennial, but I spent 4x for my house but now have a fully paid-off investment home and a 10% equity mortgage on my primary residence only because of recent home improvements and the fact that the low interest rates mean my excess money is much better used investing in an index fund instead of paying that 10% out of pocket by cashing out the investments. I have zero other debt, not a dime, not on credit cards, not on anything.

There are multiple paths to financial stability that do not have to involve a single rule. I'm glad it worked for you, but circumstances differ greatly between people.

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