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

#21

Post by ericmay » Fri, Apr 30, 2021, 6:01 PM UTC

nradov wrote: post #16

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.

Why wouldn't it? If this was bad enough the government could just pass limitations on it. Hell, the government could probably ban REITs overnight if that was wildly popular.

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

#22

Post by aazaa » Fri, Apr 30, 2021, 6:02 PM UTC

> Some builders have said they are slowing production in the face of exorbitant costs, but single-family housing starts were up 41% in March year over year, according to the U.S. Census. Builders are clearly trying to ramp up production as fast as they can to meet soaring demand.

For the next several months we'll be in a period of base effects. That means that year over year comparisons are going to look alarming.

Think back to what was happening one year ago. The economy almost completely shut down. Return to "normal" is going to give a lot of weird readings.

Articles like this should point this out, but don't. They should note, for example, the % drop in single-family housing starts YoY for 2020 for comparison.

The article hints at the phenomenon, but fails to actually quantify it. This leads to a more sensationalistic article that might attract eyeballs, but does a poor job of informing.

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

#23

Post by gnopgnip » Fri, Apr 30, 2021, 6:03 PM UTC

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…

High prices in some areas is about the price of land and not about construction prices.

Residential REITs need to profit when they buy a house. An individiual homeowner doesn't, they can pay more if they want to. And individual homeowners get subsidized loans, and in many states subsidized property taxes, they can have a much lower monthly payment, and afford to offer a higher sale price. So for move in ready homes, the seller will almost always go with an owner occupant.

The real problem is with investors buying homes that aren't move in ready. Rehab loans are expensive and risky, individual buyers can't compete with investors, and the sellers are the ones with the short end of the stick.

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

#24

Post by nfRfqX5n » Fri, Apr 30, 2021, 6:04 PM UTC

skit wrote: post #8

What's even crazier is that the builders are identifying that even with the increased price for lumber, demand is still there—people are willing to eat the cost. I don't imagine builders will be decreasing their prices after there being plenty of lumber supply.

it's likely still cheaper than buying into the overpriced housing market right now

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

#25

Post by spamizbad » Fri, Apr 30, 2021, 6:04 PM UTC

colinchartier wrote: post #5

> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back. How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply…

My understanding is the Canadian government put limits last year on how much timber could be cut. So their prices were going up no matter what.

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

#26

Post by aazaa » Fri, Apr 30, 2021, 6:06 PM UTC

paulpauper wrote: post #17

BitwiseFool wrote: post #6

The universe is determined to keep as many millennials from buying homes as it can.

millennial home ownership rates is only slightly below boomers when matched for age

Where do you get that, because this article says otherwise:

> Millennials are less likely to be homeowners than baby boomers and Gen Xers. The homeownership rate among millennials ages 25 to 34 is 8 percentage points lower than baby boomers and 8.4 percentage points lower than Gen Xers in the same age group.

https://www.urban.org/sites/default/files/publication/98729/...

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

#27

Post by omgwtfbyobbq » Fri, Apr 30, 2021, 6:06 PM UTC

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) I imagine record low interest rates also contributed

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

#28

Post by omgwtfbyobbq » Fri, Apr 30, 2021, 6:07 PM UTC

braunshedd wrote: post #20

tamaharbor wrote: post #3

Sheet of plywood last year = $8, this year = $54.

If we're using anecdata, I've seen $20 plywood sheets going for $40 which is double the normal price, but not 7x.

I think it depends on region. I've heard of $20 sheets going to $70+ in California, and I could see someone who is close to production in Oregon seeing an increase from $50.

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

#29

Post by antisthenes » Fri, Apr 30, 2021, 6:08 PM UTC

I wonder how these prices factor into the regular inflation calculation.

Even last year, when I was buying lumber from Home Depot, they cancelled parts of my order, raised the price on certain items by almost 20% and never added them back.

I had to fight them for a week and it took over a month just to get a fairly modest amount of lumber delivered.

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

#30

Post by adrr » Fri, Apr 30, 2021, 6:09 PM UTC

Has anyone looked at the cost of food or gas lately? Interest rates need to go up. It is beyond stupid that I was able to refinance my house at 1.75% on 15 year loan in December. My previous loan was 4% on a 30 which already was extremely low. It’s giving people free money who don’t need it. Side effect is the inflation that punishes the poor even more.