Lumber crash leads to 'blowout' sales as prices crater

Post by bequanna » Thu, Sep 16, 2021, 5:59 PM UTC

JumpCrisscross wrote: post #263

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 advantag…

Post by snarf21 » Thu, Sep 16, 2021, 6:02 PM UTC

zdragnar wrote: post #462

snarf21 wrote: post #354

Earlier quoted context omitted.

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.

I'm starting to see dealers sell at, and in some cases above, the cars MSRP. The value proposition of buying new is shaky enough during good years, I cannot imagine buying a new car above MSRP.

Post by sizzle » Thu, Sep 16, 2021, 6:12 PM UTC

wycy wrote: post #366

ryanackley wrote: post #274

Earlier quoted context omitted.

The biggest problem with being an owner builder is you don't have an ongoing relationship with sub-contractors. Which means that for any subs you hire, you will be their lowest priority and their smallest concern. Also, you don't really know what you're doing so you will think they made a mistake when they didn't and you won't always recognize real mistakes. I did this for my new house that was being built before, du…

Properly waterproofing the shower is a major one that can be easily overlooked and won't typically manifest in a major way until years down the road. Hope your contractors used appropriate waterproof Kerdi board or cement board + roll-on membrane.

Post by oceanghost » Thu, Sep 16, 2021, 6:24 PM UTC

JumpCrisscross wrote: post #267

oceanghost wrote: post #175

Earlier quoted context omitted.

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 mak…

Post by BizarroLand » Thu, Sep 16, 2021, 6:36 PM UTC

bandyaboot wrote: post #435

ghshephard wrote: post #22

Earlier quoted context omitted.

100% of the analysts that I read, and, if I'm not mistaken, close to 100% of the mill owners recognized that this was a temporary blip, and that lumber would fall back into the $500sh range (There is a natural floor - that's the price at which BC mills no longer make money and start shutting down/curtailing capacity.) None of the mills started expanding or engaging in capital programs to try and take advantage of the…

That's interesting. The things I was reading before the prices started coming down in earnest were all noting what you're saying here--that mills weren't expanding capacity. But they were using that fact as justification for their belief that prices would remain high since there was no reason to expect supply pressure to ease.