OT: House Offer Accepted. What A Crazy Market!

[krw]

Your whining? Not too much, considering the source.

[Leon]

Yes, I was only talking about the framing lumber and roof decking. Those items are the ones that have gone up the most, percentage wise.

Premade components, cabinets, plumbing fixtures, have always been too expensive for what you are getting.

[Leon]

That is today, not 7 months ago when we were told this.

[DerbyDad03]

Does this particular instance *really* trouble me? No. However, there is a bigger point.

As I mentioned in a previous post, sloppy trimming can cause a post to credit one person with saying something that they did not say.

This is a benign instance, as was the case when I was credited with something that I didn't say due to sloppy trimming.. The problem is, the next time it may not be as benign.

I'm sure that you would not be pleased if I, due to sloppy trimming (as I assume was the case in this instance) made it look like you said something inflammatory, bigoted, hurtful or completely false, i.e. If I put someone else's words in your mouth.

I'm not saying that trimming is a bad thing in general, just that it's not as simple as you make it sound - and have proven. Trim away. I do it every now and then. However, I take the time to ensure that my trimming doesn't change the context or ownership of what was originally posted.

On the other hand, if I don't trim, there is no danger of any mistakes being made.

[Bill]

Don't be lazy. As far as mistakes go, the history inherent in the newsgroups speaks for itself. Things have often been incorrectly attributed to me in various newsgroups, and in the twenty-something years I have been using them, nothing nefarious has ever resulted from it. On the other hand, it bugs me when folks are too lazy to try to trim at all. Especially, when it results in a subsequent message which is nothing more than "Oh, me too".

[DerbyDad03]

Well, we all have things that bug us in one way or another.

As I'm sure you know, you can continue to be bugged by something pretty minor in the grand scheme of things, and that is out of your control (except to mention it) or you can accept what's happening - and has been happening for the 40+ years that usenet has been around - and allow yourself room to be bugged by something more substantial.

Think "Serenity Prayer"

Moving on...

[Bill]

No, I do not accept that I can't help change this. There was one particular "offender" whose name I won't mention except to say that it was not you (so I was surprised that you got involved at all).

[Leon]

If you don't have to lower your price..... Lumber prices are still high but do not need to be. There is no shortage, just a killing to be made.

In our area and ins San Antonio Tx I cannot agree. Homes being build by the thousands are not presold, builders are only selling spec homes after completion now.

I just got an industry newsletter today indicating that wholesale inventories are growing.

In college economics we were taught several aspects that drive prices up. Supply and demand. The one every one thinks is the only reason. But having run businesses since I was 21, I can assure the other practice that drives prices up is "What the market will bear." A great example of this is different pricing on the same goods at different stores, gas stations, etc.

Fake news is behind the times on what is going on so the public is conditioned to believe the "salesmans" excuse for higher home prices. Demand is there but the cost should be returning to normal. BUT as long as people are willing to pay out the nose for a product that is no better than one built a year ago why not charge more.

Another example, waaaay back when I managed the parts departments for a couple of car dealerships. I bought freon 12 a hundred cases at a time. Through GM the cost was $1.57 per pound. I bought freon with out the GM label, but the same product, for $0.38 per pound. When I bought I immediately marked my cost up to $1.57 per pound and added $1400 to my monthly profit.

Nope. My builder canceled my contract along with all other, to be built homes under contract. He wanted to pocket the price increases between contract time and when he could sell the home for after it was built.

Can these people afford these homes? Right now they can because interest rates are sooooo low. Without low interest rates, not a chance so many would. And you might say well the interest rates are probably locked and if they can afford the home now they can later on. Maybe not. Inceased assessed tax value alone may place a hardship on new home buyers. The home we were going to build and not gone up much in the previous year. In one month, from the time we started talking to the builder, to the time we went into contract, there was a couple of price increases, they both totaled $2K. Since the contract was canceled 7 months ago the price of the house has gone up $70K. So when we were buying the pricing was going up at a normal rate. Now the builders are simply going up in price because the market is willing to paying high prices. So they are following suit.

In this area people tend to buy as much house as they can eek out of their income. Buyers qualify for loans at todays prices and assessed values of the home. So they have to be able to afford P&I, insurance and property taxes, and if they don't put 20% down you and PMI to that monthly payment.

Builders are mostly only selling spec homes because the buyer qualifies to move in right now. If the buyer is having a home built, as we were, he may no longer qualify to buy the home after it increases in value/equity just from a property tax standpoint. Then the builder has to sell a home built to what ever specs the previous buyer wanted.

So lets say the buyer eeks in to be able to afford to build a home with payments of $2500. If prices go up like they have in the last 7 months that home owner, on a $400K home can expect his property taxes to go up about $200 per month over the next 7 months and even more until prices stabilize.

Then as demand subsides,,,,, he finds can get into another home equal home for less.... But he is likely going to be upside down and will not be able to sell the house for that fluke inflated price... Buyer beware.

I am glad our builder canceled our contract, given the absurd price increases. I am not willing to pay an additional $2000 per year in taxes for price increases over a 7 month period.

As along as there is high demand the sellers and product suppliers will charge what the market will bare.

Again, in this area builders are no longer having an issue with finding a supplier.

And FWIW you have to remember with anything manufactured, LABOR is the overwhelming cost of the good. You might be very surprised what the total materials cost to build a home is, compared to the the price charged and or the materials and labor cost.

A 25% increase in materials cost should not result in a 25% price increase under normal circumstances. But these are unusual times where the new to the game are willing to pay the price and unfortunately likely to pay the consequence when home values go back to what they should be.

[Leon]

On 5/6/2021 12:00 PM, [e-mail] wrote: Snip

Yes! The new neighborhood that we were going to build in the residents looked like they were in their mid to late 20's. And if you can believe the news, this market is being driven by young home buyers.

This high priced market is likely not going to last. Those that have not seen the housing market come and go will likely suffer the consequences of buying high and probably not gain any equity for a very long time.

[Leon]

EXACTLY! The time to have bought was about 18 months ago.

My wife and I bought when I was 26 she was 23. We were inexperienced and got in at the beginning of interest rates going up and a year too late. Homes in our price range went up 33% in one year. We could have bought a slightly bigger home a hear prior for $45K, we got a smaller home for an inflated $60K. And over 30 years the house went up 35% in value.

Well at least the taxes were pretty good. ;~)

[Leon]

On 5/6/2021 12:02 PM, [e-mail] wroteSnip

No, there is plenty of everything relatively near by.

[Leon]

Sooo Billlll. Did you have anything to add to the actual discussion or did you just want to add noise.

[krw]

You can help change this by not posting anymore.

[DerbyDad03]

I've read everything you've said (above and below) and it is noteworthy.

However, that "inventory" statement doesn't mean very much without some numbers behind it.

Let's say I'm a wholesaler.

Let's say my inventory historically averaged 4000 sheets of OSB per month for the 5 years prior to the pandemic. That average always kept pace with my demand (orders from builders). Then over the past year, it sold down to averaging 2000 sheets per month due to the inability to purchase as much as I sold.

Now, over the past 2 months, I've been able to get a few more sheets, so now I'm averaging 2500 sheets in inventory per month.

Relatively speaking, it's true that my "inventories are growing", but only when compared to the trailing 12 months. They are still down compared to historic norms and I still cannot keep up with my demand.

I'm not saying that the shortage is or isn't over nor am I disputing the fact that "inventories are growing". All I'm saying is that without seeing the numbers behind that statement I have no way of knowing if it's equivalent to "The problem has been eliminated" or "Things are getting better, but we are not out of the woods yet."

[Leon]

So this is not complicated..... Normally a supplier keeps "x" days of supply on hand. This practice is to insure coverage in the event of a shortage of availability. That has always happened and is not unique to the times we are in. Computers sure mad this easier to calculate 40+ years ago in the automotive industry.

Anyway. Last year suppliers were running out completely. That was the issue with the builders paying top dollar for the materials that they were buying. And because suppliers had "X" days of supply this is why the shortage did not show up until about mid year.

But now, in this general region of Texas there is no shortage of supplies, it's just that the consumer and contractor costs have not yet gone back to what they should. The only thing that will encourage prices to go back down is for consumers to stop paying these inflated prices and or more suppliers to come back on line to compete, some went out of business. Remember, competition keeps prices in check for the consumer.

You really don't need to see numbers, If a suppliers inventory is growing, he is selling less than he can provide, plain and simple. A growing inventory is typically one measured over several months, not a spot check of dollar value today compared to yesterday or the week before. I would suggest that once the supplier gets back to his normal days of supply he will begin to lower his prices because too much inventory is costly to the supplier. There is a delicate balance between too much money sitting on the shelves and not generating money because the shelf is empty.

[Bill]

Ha, You recognized yourself! But, if you desire, I'll block/filter you. And if you keep it up, even if you don't.

[Bill]

I think I was one of the first to reply to this new thread. I do have a question I wanted to ask about assessments, since that topic arose, but I was waiting for the right time.

[Bill]

I made my first reply to the thread when it was 54 minutes old (or "new"). Are you going to play "instigator"?

[DerbyDad03]

We are looking at inventory growth from 2 different view points, so let's just move on.

If you're convinced that that there is no shortage and that prices are only up because consumers are willing to pay whatever the builder asks, we can just leave it there.

Good talk.

[Bill]

Thank you for bringing this to my attention! I wasn't aware that my virus detection software started appending this message, and I apologize for any inconvenience it may have caused others. I fully agree that such a message just clutters up the forum, and I have taken the necessary steps to re-configure the software. That's just the way I am.