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Lumber crash leads to 'blowout' sales as prices crater

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Re: Lumber crash leads to 'blowout' sales as prices crater

#261

Post by popcube »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

price never lower, even when the reason that raised price did not exist, they just find a reason to earn more money

Re: Lumber crash leads to 'blowout' sales as prices crater

#262

Post by lotsofcows »

sgt wrote: post #250
ButterWashed wrote: post #233

Earlier quoted context omitted.

I know people living in London where prices are insane who secure a mortgage without ever intending to pay the full term. They buy a property, live very conservatively in the hope the prices go up and use that extra boost to move out of the city. If prices on an investment rise more than inflation 90% of the time why wouldn't you buy it?

I feel bad for the people renting in London. Most people I know there simply can't afford buying as it is prohibitively expensive (>300k pounds I think?)

That's for England. London is more like >GBP500k.

https://lginform.local.gov.uk/reports/lgastandard?mod-metric...

Re: Lumber crash leads to 'blowout' sales as prices crater

#263

Post by JumpCrisscross »

mgkimsal wrote: post #13

"If high prices held you back from building, you are in luck, as the tables have now turned" Except... many builders will find some other reason/excuse where prices are high to keep prices high. We were looking at building a house - talked to builder last November and... looking at $470-$480k range (ballpark estimate). Lumber was going higher, but we'd reduced the house plan size. Lumber kept going up... and up... Th…

> I'm not seeing any 'blowout' prices on new construction in the short term

We are in a housing shortage [1] which is driving a home-construction boom [2] powering a construction-labor shortage [3].

Until that labor shortage is resolved, via higher pay (which, depending on the rate of new entrants, will either reduce margins or be permanently passed along to consumers) or via new recruits, raw-materials cost advantages aren't going to be passed along to consumers.

[1] https://www.federalreserve.gov/econres/notes/feds-notes/hous...

[2] https://fred.stlouisfed.org/series/PERMIT

[3] https://fred.stlouisfed.org/series/JTS2300JOL

Re: Lumber crash leads to 'blowout' sales as prices crater

#264

Post by blitzar »

edrxty wrote: post #64
nradov wrote: post #11

Earlier quoted context omitted.

The new runaway inflation is in steel prices. https://www.wsj.com/articles/high-steel-prices-have-manufact...

Better link: https://tradingeconomics.com/commodity/steel Tl;dr...Meh? It's up but historically it's not that high, it just cratered for most of the teens.

Steel is much more political with dumping of production in foreign countries, tarrifs, national security etc.

Re: Lumber crash leads to 'blowout' sales as prices crater

#265

Post by sneak »

llbeansandrice wrote: post #7
reilly3000 wrote: post #4

If the price keeps dropping at this rate lumber will be free by December! /s Seriously, this is a welcome correction, and another sign that runaway inflation fears were based on hyperbole.

Wait, people were saying/thought that this was runaway inflation and not a result of supply chain issues because of COVID and tons of people suddenly having to spend way more time in their house because of COVID? Maybe I'm ignorant of the inflation argument more than anything else but it doesn't even pass the sniff test in my opinion.

Grocery prices still haven't come down.

Re: Lumber crash leads to 'blowout' sales as prices crater

#266

Post by dubberx »

karolist wrote: post #252
hellbannedguy wrote: post #37

Earlier quoted context omitted.

I would wait. I'm an licensed inactive General Contractor. If 14 months ago, they were building them for $450,000, I'd wait. I'd shop around for another contractor too. A young guy starting out, might save you a lot. (There's no way to verify he knows what he's doing though.) If you are some what handy, it's not that difficult to owner build your own house. That is if you get the blueprints past the town's council. G…

I know a person who built his aerated concrete house working a day job over 3 years, he did 98% of the tasks himself and probably 95% of those alone whilst maintaining a full-time day job. He has a non-english blog with many pictures and process documentation and was a huge inspiration to me whilst I DIY'd my new 2 bdr apartment from this https://imgur.com/a/UXfmx0Y to this https://imgur.com/a/vGntuhJ in the span of…

Would you consider sharing an url to the blog you mentioned? Planning to DIY myself a tinyhouse so I’d love to read a blog like that.

(Contact info in my profile if you don’t want to post it publicly)

Re: Lumber crash leads to 'blowout' sales as prices crater

#267

Post by JumpCrisscross »

oceanghost wrote: post #175
Dylan16807 wrote: post #120

Earlier quoted context omitted.

Low interest rates don't increase inflation do they? And rocketing stock prices are definitely not a part of inflation. QE and stimulus can certainly contribute , but "as much" is a pretty big overstatement. If anyone thinks inflation was a notable fraction of the price quadrupling, they're being ridiculous. Even a huge amount of inflation would only be 2-4% of the lumber price increase.

Actually low interest rates are one of the primary causes of monetary inflation due to how fractional reserve banking works. The TLDR is this. I borrow a million dollars, and give it to you for a house. You deposit it, and your bank loans 97% of it to someone else. They deposit that, and loan 97% of that out again... ad infinitum. Commonly this is called the "money multiplier."

> I borrow a million dollars, and give it to you for a house. You deposit it, and your bank loans 97% of it to someone else. They deposit that, and loan 97% of that out again... ad infinitum.

This is how it's taught in school. The more-accurate version is that "whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money" [1].

Interest rates make borrowing cheaper. That spurs demand for loans which lets banks create deposits. To have the capacity to make those loans, the banks need sufficient reserve margin to meet the reserve requirement. This is usually a non-issue. They also need enough risk-adjusted capital. This is usually the issue. But if a bank needs more of this, and interest rates are low, it can buy the reserves through borrowing or equity issuance. Lower interest rates make both cheaper.

[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Re: Lumber crash leads to 'blowout' sales as prices crater

#268

Post by ventidesigns »

pjc50 wrote: post #221
hellbannedguy wrote: post #37

Earlier quoted context omitted.

I would wait. I'm an licensed inactive General Contractor. If 14 months ago, they were building them for $450,000, I'd wait. I'd shop around for another contractor too. A young guy starting out, might save you a lot. (There's no way to verify he knows what he's doing though.) If you are some what handy, it's not that difficult to owner build your own house. That is if you get the blueprints past the town's council. G…

> I just pictured a typical computer developer in a wet lot, with an unhappy wife. Have you heard of the TV programme Grand Designs ? It's just this over and over again. Sometimes the wife is pregnant, sometimes they're living in a caravan on site. https://www.channel4.com/programmes/grand-designs They're not trying to build anything as simple as a house, either, the "grand" part implies some mad architectural vision…

There’s some successful projects though! There’s a good range, I like the variety, from spectacular ego-driven marriage-ending failures (…the lighthouse[1]) to some beautiful labours of love (the tree house[2]).

Grand Designs is as much a monument to human achievement as it is failure!

[1] https://youtube.com/watch?v=3AlsMEiAMvM [2] https://youtube.com/watch?v=CBpRLzbrCa8

Re: Lumber crash leads to 'blowout' sales as prices crater

#269

Post by christophilus »

cryptoquick wrote: post #235

> "Builders still have to clear their inventories of having purchased higher-priced lumber. It takes a while to clear the system," Lee said. "Yes, lumber prices from the mills came down dramatically over the summer, but that's unfortunately taken a while to reach the rest of the industry and consumers." > Lee said when it comes to new home construction, pricing is being complicated by ongoing pandemic-related supply…

I believe it. By “transitory”, he doesn’t mean “heading back to 2019 prices”. He means, “no longer inflating at these rates”. Thats almost certainly true.

The “Making Sense” podcast [0] covers the deflation / inflation debate in detail and is a great listen.

[0] https://podcasts.apple.com/us/podcast/making-sense/id1506469...

Re: Lumber crash leads to 'blowout' sales as prices crater

#270

Post by sgt101 »

Spare_account wrote: post #220
the-dude wrote: post #182

Earlier quoted context omitted.

> that they would have spotted this upfront Of course they say that. What would you think if they said the opposite?

> What would you think if they said the opposite? Not the same guy, but I might start to trust them more

I get the point(s) here, but I think that my error was very much a rookies, and that one of the first things that good builders think is "where is the water going"?
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