We adjust.
Posted on 01/02/2022 7:26:07 PM PST by blam
Looking to build a house? Lumber prices tell you what direction prices are headed.
After hitting record highs near $1700 the price of lumber crashed below $500.
The respite didn't last long. Lumber closed December at $1127.70.
Historically, the normal price would be in the range $250 to $400. That makes lumber about 3 times higher than what builders are used to paying.
Builders will pass on these hikes as well as the price of labor and other materials. And land prices are out of sight in many areas.
Not Inflation
Economists say this isn't inflation. And none of it is in the CPI.
But if it's not inflation, what is it?
Of course it's inflation, just not consumer inflation. That makes the CPI and PCE numbers less than useless measures of inflation.
As noted on December 29, Every Measure of Real Interest Rates Shows the Fed is Out of Control.
Two of those measures, especially PCE, the Fed's preferred measure are ridiculous.
My alternate measure, a housing-adjusted CPI, is at -9.31% making real interest rates -9.23%
After hitting record highs near $1700 the price of lumber crashed below $500.
The respite didn’t last long. Lumber closed December at $1127.70.
you will see this quite often.
Bidenflation.
“But if it’s not inflation, what is it?”
Increase in the price of a certain commodity is not inflation. Inflation is the decrease in the value of the dollar usually due to an excessive increase in the amount of dollars printed.
do some of those in the middle of construction when prices rise have to refi/adjust their loans?
I’ve read that the Biden requirement that non-US citizen truck drivers coming across the border to be vaccinated is preventing lumber supply in Canada from reaching the US. They refuse to comply.
Might be one of a myriad of reasons.
Also,
The Biden administration is recommending doubling tariffs on Canadian lumber despite the current skyrocketing prices for the materials for U.S. consumers. From 8.99% to 18.32%.
Those poor people in CO who lost their homes 🏠 in the 🔥 😔
As fast as they are building houses in this area I can understand the price! I am two miles outside of town. Now the town has come out, absorbed me and a subdivision is going in within 1/8 mile of my place.
Next they will be complaining about my dogs barking, guns shooting, and me taking a leak of the back porch.
Got rid of the hogs years ago.
Cost Of Building A Home Headed Back Up
As the Biden and stooge media call it contractors receive pay increase bla bla bla............................
It depends on how the contract with the builder was written. Some contracts are fixed cost--meaning the builder is on the hook for any changes in costs of supplies; other contracts have supply variables built into them. In those cases, usually the buyer is on the hook for rising costs.
As for construction loans, it's very possible that you'd need to make some adjustments with your lender and loan. Lenders are aware that these are challenging times, and they're evaluating loans differently.
My wife and I went through this last year--there was a $30k+ difference in the price of lumber of what our builder estimated (and his supplier agreed to at the time) and the cost of lumber at its peak last May-June. We had a fixed-price contract, but our builder was a little squeamish about it until we talked to a lawyer.
thank you, that was my exact question answered
We adjust.
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