OT: House Offer Accepted. What A Crazy Market!

[krw]

Please do. You haven't had anything interesting to say for a long time anyway. Only whining, lately.

Bye.

[krw]

Idiot. I didn't say anything about your shilling. You can't even keep your replies straight, much less attributions.

Give it up, Bill. You're owned.

[Clare Snyder]

The builder cancelled all contracts to protect his ass as he had NO IDEA what his costs would be - and at this point he still really does not know what his costs will be next month

SNIPP

The material cost increase is one heck of a lot more than 25%

[Clare Snyder]

On Fri, 7 May 2021 15:17:35 -0700 (PDT), DerbyDad03 [e-mail] wrote: y.

A friend had to replace a 5550 sq ft deck. Couldn't do it last summer/fall because there was no lumber available. He priced lumber early this spring - it was high - and he wasn't sure whether to start the job. The supplier said he had 21 to 30 days supply in stock - get the old deck off and get the job done while there was guaranteen availability - he anticipates supply getting tighter as the summer approaches. - not as bad as last year because the price has tamped down supply.

[Leon]

Well that is the excuse that he used but he was willing to sell me the same home 3 weeks later for and additional $16K. And the builder was Century Homes. A relative large builder that I am certain had locked in material pricing in advance.

Not in this circumstance. Again, as I stated above. Large builders agree to buy "X" amount of materials from a supplier at a locked in price. A very common practice by suppliers to guarantee inventory turn over and to get discounts them selves from the mill.

[DerbyDad03]

Maybe he had locked in material pricing in advance, just like you locked in price on a new built in adavnce.

See below...

I know I said that I was moving on, but sometimes I just can't help myself. ;-)

Your builder gave you a price and then cancelled, claiming material shortages. Whether you believe that excuse or not, the bottom line was that your contract was cancelled.

Would you be willing to the entertain the possibility that as you work your way up the supply chain the same thing was going on?

Builder/Buyer contracts were cancelled. That's a fact you can't dispute because it happened to you.

Perhaps Mill/Builder contracts were also cancelled. You are certain that Century Homes locked in a price in advance but do you know - for certain - that that contract was honored? Do you know - for certain - that Century Homes was actually able to obtain the material at the locked in price?

Perhaps Logger/Mill contacts were cancelled. The Mill could be telling the Builder the same thing that the Builder told the Buyer (you): "Sorry, the loggers have raised our prices and we can't honor your contract because we just can't supply the material at that price and stay in business."

Perhaps the Logger is telling the Mill "Sorry we can't supply the logs at that price and stay in business. Sue me if you want, one way or the other I'm going to lose money so I'll take my chances in court."

(Feel free to shorten the supply chain and assume that the Logger and Mill s the same company. That won't really change anything.)

[Spalted Walt]

- May 7, 2021 -

3:30 - "Since last year the price of dimensional lumber has gone up by almost 300%."

[Clare Snyder]

"locking in" price doesn't guarantee supply and VERY FEW were able to lock in enough to build like you claim your builder was building.

[Bill]

When I was a little boy, my dad told me it was okay to use the tools, but to put them away when I was done with them. I think that it is evident who got a lesson like that in simple courtesy from the way that they post. Anyhow, that's the part of the story that this thread rekindled in my mind. Carry on...

Bill (just 2 "els")

[dpb]

Huh?

We're withdrawing from the "stable" buckets either way...

In the current interest climate, there's essentially no "stable bucket" that even makes the current (relatively) low inflation rate so you're losing ground in purchasing power besides.

[DerbyDad03]

Yes, that's because many people simply set up a monthly "paycheck" from the same fund every month. Then every few months or maybe annually they refill from the equities - assuming that they are up. If not, then wait. We're talking about not selling equities for income in times like early 2020 or during the 2007 - 2008 reversal when they tanked. It's a process. Of course, if you need a big chunk and equities are up, there nothing saying you can't sell and withdraw directly from the equities. I'm talking about long term portfolio management.

That is not true. There are indeed bond funds that are still making more than inflation. If you look hard enough or have a financial advisor that knows where to look, there is still money that can be made in bonds. Managed products, not index funds.

Are you suggesting that you should have no "stable assets" in your portfolio and rely solely on the equity market for all withdrawals?

[krw]

Draw down from the inflated buckets? If they're at, or near, the top now, they're likely to be at the bottom tomorrow. Getting the investments that are out-of-phase is the trick.

[krw]

Evidently he didn't teach you _how_ to put them away.

OK, ll

[dpb]

My "stable assets" substitute for bonds in the current market climate is a selection of dividend-paying stocks. I don't care what the market price does (within some reason, of course), but their return beats virtually anything now other than junk bonds.

The RMD is more than what additional income I need annually by quite a bit; I try to time market retractions specifically to get more shares out at a given required $$ amount.

--

[Bill]

I filtered/blocked you yesterday, but I thought I would see if you replied. Sort of sadly, at the very least, I learned I did the right thing. I guess there's no reason for drama; consider yourself blocked.

[Leon]

Well very few must be the condition of east Texas and central Texas. There are no shortages of supplies or new home going up. Literally multiple hundreds of spec homes are going up.

[Scott Lurndal]

Even Municipal Bonds. My collection thereof returned slightly over 4% last year. Tax free.

If you're not confortable buying them individually, use a muni bond fund (e.g. ABTHX).

[DerbyDad03]

I'm not a fan of individual bonds. I prefer a managed product where the manager can get the best deals and I can buy and sell in whatever dollar amount I want at any time.

Since bond funds come in all sorts of flavors (munis, HY, international, IG, govt, etc.) I can be just as diversified on the bond side as I can on the equity side and freely readjust as I see fit.

[Leon]

All of my bond funds are currently averaging 3.5%, not great but better than any bank.

[dpb]

My dividend-paying stocks portfolio is 5.65% average dividend plus the composite annualized capital gain since purchase is 7.76% or 13.4% total.

I shouldn't leave impression I have zero conventional bonds/bond funds/other fixed income assets, but am still 80:20 equities:fixed at the moment. This drives the brokerage-programmed "advice to the lovelorn" algorithm bonkers in nagging me to rebalance to their age-suggested guidelines for the annual mandated fiduciary responsibility reports. :)

I could/would change overnight if think/thought it wise/time to rearrange, but have been in this position for about 15 years now. Rode out the end 2019 correction but figured were in trouble in late

2007/early 2008 and parked about 65% in CDs/MM funds through the worst of 2008. Moved back into market over about 18 months beginning roughly mid 2009. I'll gladly trade some of the total growth from trying to time absolute bottoms in trade to avoid the entire meltdown.

It's the inverse ratio rule; a retraction of 1/3rd requires a subsequent gain of 50% to recover. (1-1/3) --> 2/3 * 3/2 = 1)