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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

#351

Post by Tyr42 »

titzer wrote: post #346
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…

> If you are some what handy, it's not that difficult to owner build your own house. I'm not sure what you have in mind here, but my brother did an "owner build" in the true sense of the word and sunk every nail into every piece of wood, every pipe, every wire, every window, floor, staircase, insulation, lighting, built all the cabinets, everything. That was 8 years of his life. Two of those years he literally quit h…

I thought you were saying he sunk a nail into every pipe, and damn wouldn't that just suck.

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

#352

Post by imtringued »

llbeansandrice wrote: post #158
gassius wrote: post #153

Earlier quoted context omitted.

I don't know anything about lumber market and it's transitory conditions and fluctuations (other than a last week news where I live, northern Spain, that said that woods price are at all time high supposedly because demand is also at records high, from international markets including japan) so it may very well be a transitory price fluctuation because WFH or whatever. That being said, taking out the "runaway" adjecti…

I'm more than onboard with the idea that recent monetary policies have put pressure on prices, I just don't see how anyone can sanely say that a 4x price increase is (was) "caused by inflation". Of course implying that all or the vast majority of the increase is directly attributable to inflation, adding "runaway" back into the discussion.

It wasn't monetary policy that drove inflation. It was the fiscal stimulus. It didn't cause lumber prices to go up by much though, that was just a basic supply shock. I doubt that fiscal stimulus did raised lumber prices by more than 10-20%.

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

#353

Post by blacktriangle »

orthoxerox wrote: post #271
blitzar wrote: post #245

Earlier quoted context omitted.

> Sometimes the wife is pregnant The mid project reveal is always "surprise we are pregnant". It brings me great added joy when they are building a 'dream' 3 bedroom house and it is the 3rd kid that they are pregnant with.

One bedroom for the parents, two bedrooms for the kids. As long as all kids conform to the gender binary, two bedrooms should be enough.

You mean as long as the kids' parents aren't mentally abusing their children to score points with their woke friends.

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

#354

Post by snarf21 »

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…

This is the same thing happening with cars. There isn't enough new car inventory so used cars are going higher and higher. Dealers are buying used cars for MORE than people paid new. As already built houses for sale continues to rise, new construction and rents will rise too. The market is adjusting to make all choices equally bad.

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

#355

Post by ceejayoz »

gadders wrote: post #237
bandyaboot wrote: post #8

I’ve been following these prices closely for most of the year and what’s striking to me is just how wrong nearly all the industry experts were throughout the year. I don’t recall reading a single opinion that was anything other than “prices will remain very high for the foreseeable future.”

I heard an economist once say that "The best cure for high prices is high prices." i.e. - when prices get that high, new people enter the market and the price drops. Or people lower their prices to try and capture market share.

Unless, of course, you've got a monopoly/oligopoly and a bunch of barriers to entry.

I'm under little illusion my cell phone bill is ever going to go down.

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

#356

Post by saalweachter »

throwaway316943 wrote: post #331
edrxty wrote: post #57

Earlier quoted context omitted.

Assuming you are very mechanically inclined but not particularly well versed to traditional construction, what does one do to learn more about this process?

Build a shed first. There are lots of free designs online. Choose one with a window so you’ll know how to frame openings and fit windows and doors. Put the type of siding you’d want for the house on it. Then build a detached garage, get experience with pouring a slab, attaching walls to a foundation, trusses, more practice with exterior doors and windows, insulation, wiring. If you’re really feeling confident you cou…

For TV viewing, try to watch the "fixing the stuff that went wrong" style TV/YouTube shows, where a builder is going around going, "Oh god, you can't do that that way, do that this way".

Part of learning is learning from mistakes -- you learn which parts of the "correct" way to do something are essential, and you learn why the correct way is correct, when the incorrect way fails. Ideally, that's the part you want to outsource as much as possible; if you were working with an experienced builder, they'd be correcting you constantly to keep the mistakes from affecting the build, but hopefully YouTube can at least show you the big "don't"s.

Pro-tip: most fasteners (nails and screws) are not "structural"; they hold wood in place, but they don't support weight. That's why eg windows are framed the way they are, instead of just nailing a 2x4 between two others; it allows each piece of wood to be supported directly by another.

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

#357

Post by imtringued »

Dylan16807 wrote: post #120
xfhgjxcfgh wrote: post #99

Earlier quoted context omitted.

Low interest rates, QE, stimulus, and rocketing stock prices facilitated the hot real estate market as much as proximate covid policies. You are correct to guess there is a substantial discussion that you're ignorant of.

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.

Technically low interest rates are a response to low inflation. The point is that the interest rate moderates saving (in the general sense of deferred consumption) and investment.

If there are plenty of investments then limited resources won't allow you to do all of them, otherwise we would have grown our economy all at once in a single year. The interest rate is compensation for deferring consumption. i.e. you are being compensated for the opportunity cost of not spending money on consumption. The interest rate goes up in response to the profitability of investments. If I can earn a 8% every year then I am willing to take a 5% loan. Inflation makes investments appear more profitable than they are so the interest rate has to be raised according to inflation.

Well, ignoring 2020 and 2021 inflation was really really low to begin with. It's been at 2% at most. When inflation is low, interest rates can't go much higher. The fact that interest rates have gone down all the way to 0% (especially in Europe and Japan) without causing any meaningful inflation tells us that the interest rate is still too high to attract borrowers.

If one really wants to know whether interest rates drive inflation one must precisely define the term "low interest rate" because it's all relative. It's relative to inflation, it's relative to investment profitability and relative to how many people are deferring consumption (aka saving). Just because 0% is a really low number doesn't mean it's low enough to cause inflation.

From what I have heard (i.e. I don't know if it's true), large businesses are being overfunded and small businesses underfunded with loans. It's entirely possible that some structural reason is preventing lending that is completely inelastic to the interest rate.

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

#358

Post by thrwyoilarticle »

RobertKerans wrote: post #342
thrwyoilarticle wrote: post #329

Earlier quoted context omitted.

Being valued at £2M doesn't mean you could sell all of them for that price or that the people living in them paid £2M for them. The sort of person who could afford a nice house 3+ decades ago and spent the intervening years living in London isn't likely to move to somewhere more rural just because they can realise an investment.

> Being valued at £2M doesn't mean you could sell all of them for that price or that the people living in them paid £2M for them But in London these houses do sell, normally very quickly (and bullshit apartments in shiny new blocks that are in same price bracket I guess same, generally they do seem to sell, but I assume that's just parking money for tax purposes so not quite same thing).

That's exactly my point. The demand is far higher than the supply.

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

#359

Post by imtringued »

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."

Low interest rates increase the attractiveness of loans, they don't actually force people to borrow money.

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

#360

Post by Robotbeat »

orthoxerox wrote: post #271
blitzar wrote: post #245

Earlier quoted context omitted.

> Sometimes the wife is pregnant The mid project reveal is always "surprise we are pregnant". It brings me great added joy when they are building a 'dream' 3 bedroom house and it is the 3rd kid that they are pregnant with.

One bedroom for the parents, two bedrooms for the kids. As long as all kids conform to the gender binary, two bedrooms should be enough.

And when they’re young, a boy and girl in the same room is absolutely fine.
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