Lumber Prices

[SpaceBus]

I talked to a fence builder yesterday. He said they are back down to an increase of 70% from pre pandemic prices. Peaked at about 220%.

Yeah, it's not 220% of pre pandemic ,but it is still pretty high. This week it was trending at $700/mbft, still twice what it was in 2019.

 

[mcdougy]

Currently here in this part of Canada....

2x4x8 = $9.85
4x8x7/16 OSB = $62.00
4x8x3/4 spruce = $104.00

Things have crept back up here and have been holding at these numbers for the last 3+ weeks.
Finishing a basement for a client and a load of material came in at $14g and it used to be a $5g load for many years.

It's not just lumber that's has taken a jump, insulation, drywall, consumables are all up substantially. Our affordable housing shortage will continue for the foreseeable future.

A house we built and owned in a subdivision cost us $214g all in back in 2004, we sold in 2017 for 500g, just resold again last month for 1.1million.
It's hard to get your head around......

 

[ABMax24]

Unfortunately the old saying "a dollar saved is worth 20 cents" is ringing true again with the high rates of inflation.

 

[SpaceBus]

I'm glad I bought my sawmill back before pandemic pricing came into play.

 

[EbS-P]

I'm glad I bought my sawmill back before pandemic pricing came into play.

And subsequent inflation and the Russian invasion effect on prices. Nothing is going back to January 2020 prices for a long time I think.

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[ABMax24]

And subsequent inflation and the Russian invasion effect on prices. Nothing is going back to January 2020 prices for a long time I think.

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I think we can say that prices will never return to 2020 pricing, at least not on a wide scale basis.

Money supplies of Western countries have increased by staggering amounts in the last 2 years, Canada's grew by 30% alone in 2020, and I haven't seen concrete data yet for 2021 but I would assume it's about the same.

With the pandemic global production of goods hasn't increased by anywhere near this amount, and in some cases has decreased.

So we have 60% more dollars chasing the same amount of goods, the laws of supply and demand state that prices should therefore go up about 60% to compensate.

Supply chain issues also play a part, and the media loves to dwell on these topics. I really do find it interesting though as to how few reporters are even looking at money supply as a cause.

In the 1980s Canada experienced the same issues, money supply increased, inflation increased, interest rates increased, the working class effectively got poorer. We are in the beginning stages of this cycle again, except I believe on a far more global, and a far larger scale.

 

[mcdougy]

I think we can say that prices will never return to 2020 pricing, at least not on a wide scale basis.

Money supplies of Western countries have increased by staggering amounts in the last 2 years, Canada's grew by 30% alone in 2020, and I haven't seen concrete data yet for 2021 but I would assume it's about the same.

With the pandemic global production of goods hasn't increased by anywhere near this amount, and in some cases has decreased.

So we have 60% more dollars chasing the same amount of goods, the laws of supply and demand state that prices should therefore go up about 60% to compensate.

Supply chain issues also play a part, and the media loves to dwell on these topics. I really do find it interesting though as to how few reporters are even looking at money supply as a cause.

In the 1980s Canada experienced the same issues, money supply increased, inflation increased, interest rates increased, the working class effectively got poorer. We are in the beginning stages of this cycle again, except I believe on a far more global, and a far larger scale.

I think it has alot more to do with the fact that businesses and corporations have accessed that 60% of new money to significantly Increase their profit margins. Either buying back stock or paying down debts. The corporations have no need currently to drop the price, many of them are swimming in money.
The average person has no where close to 60% more money. I wouldn't say I have lost money during covid but I'm sure not seeing a 60% increase in disposable income.
In the 80's people lined up and trampled each other for a cabbage patch doll and paid ridiculous dollars to own a doll.
The fact that people act/spend ridiculously is what the root problem is and always will be.
I'm guilty often, and doubt I can eliminate some desires.

 

[mcdougy]

What I guess I'm meaning is that I agree there has been a money printer running non stop for the last 2 years, BUT most of it has ended up in the hands of those that won't suffer moving forward.

 

[ABMax24]

I think it has alot more to do with the fact that businesses and corporations have accessed that 60% of new money to significantly Increase their profit margins. Either buying back stock or paying down debts. The corporations have no need currently to drop the price, many of them are swimming in money.
The average person has no where close to 60% more money. I wouldn't say I have lost money during covid but I'm sure not seeing a 60% increase in disposable income.
In the 80's people lined up and trampled each other for a cabbage patch doll and paid ridiculous dollars to own a doll.
The fact that people act/spend ridiculously is what the root problem is and always will be.
I'm guilty often, and doubt I can eliminate some desires.

I think the whole thing was paradoxical, the money given out was supposed to help the working class make it through Covid. Which in the short term seemed to be the case, in the long term though corporations and the wealthy few latched onto that money and pocketed it. Definitely a case of short term gain for long term pain.

What's interesting though is the last 5 years has actually rewarded those that bought large purchases using credit, those that saved money and held cash have lost.

When we bought our house 5 years ago I didn't want to pay $500k for an acreage, so we bought in town, that acreage is now $700k. When I wanted to buy a new truck 4 years ago, I wanted to wait to pay the difference between my current truck and a new one in cash, that $80k truck is now $110k. When I wanted a new boat 3 years ago I also decided to wait, it was $90k then and is $145k today.

In all those cases I would have been better off to buy those items on a wim and pay interest, because the appreciation in value in the last 5 years is far higher than the interest would have been on the borrowed money.

 

[mcdougy]

I think the whole thing was paradoxical, the money given out was supposed to help the working class make it through Covid. Which in the short term seemed to be the case, in the long term though corporations and the wealthy few latched onto that money and pocketed it. Definitely a case of short term gain for long term pain.

What's interesting though is the last 5 years has actually rewarded those that bought large purchases using credit, those that saved money and held cash have lost.

When we bought our house 5 years ago I didn't want to pay $500k for an acreage, so we bought in town, that acreage is now $700k. When I wanted to buy a new truck 4 years ago, I wanted to wait to pay the difference between my current truck and a new one in cash, that $80k truck is now $110k. When I wanted a new boat 3 years ago I also decided to wait, it was $90k then and is $145k today.

In all those cases I would have been better off to buy those items on a wim and pay interest, because the appreciation in value in the last 5 years is far higher than the interest would have been on the borrowed money.

For sure....again that's the problem, people have the asset that's usually attached to debt. Disposable income looks like its on a downward cycle, mix that with rising interest rate and the common person is in a tough spot possibly. Being asset rich and cash poor will be common for some as long as home values stay and they can afford to hang onto them. Pretty sure apartment style living will be a new norm for first time homeowners.

 

[ABMax24]

For sure....again that's the problem, people have the asset that's usually attached to debt. Disposable income looks like its on a downward cycle, mix that with rising interest rate and the common person is in a tough spot possibly. Being asset rich and cash poor will be common for some as long as home values stay and they can afford to hang onto them. Pretty sure apartment style living will be a new norm for first time homeowners.

That's right, our housing market is currently built on a mountain of debt, even those buying investment properties have piled on, and now that prices have risen out of control a landlord that bought a home 5 years ago now has enough "equity" (due to appreciation) in the house to use as collateral against the next house, further driving up demand and prices.

10% of Canada's GDP now comes from the housing market. We are in one of the biggest property bubbles ever seen, only a matter of time until it bursts.

 

[begreen]

That's right, our housing market is currently built on a mountain of debt, even those buying investment properties have piled on, and now that prices have risen out of control a landlord that bought a home 5 years ago now has enough "equity" (due to appreciation) in the house to use as collateral against the next house, further driving up demand and prices.

10% of Canada's GDP now comes from the housing market. We are in one of the biggest property bubbles ever seen, only a matter of time until it bursts.

Seems like 2008 all over again.

 

[ABMax24]

Seems like 2008 all over again.

Yeah, some experts think our housing market is stable and can weather some kind of disturbance and prevent a repeat of 2008.

I'm not convinced this is the case.

 

[EbS-P]

Seems like 2008 all over again.

similar end result but underlying economic drivers are very different. My understanding was poor lending practices drove up sales and resulted in the creation of much riskier financial products which when one bank failed led to a domino effect and the realization of actual risk that banks had taken. (Anyone want to sum it up better please chime in).

2020 markets while speculation exists in the real estate market (it always has) the increased demand due to lack of housing investments going back to 2008 crash. I think the demand is real and being compounded by inflation and a prolonged period of quantitative easing (cheap money), doubly compounded by all the recent Covid related stimulus.

I think the question is what burst the bubble?

 

[begreen]

Yeah, some experts think our housing market is stable and can weather some kind of disturbance and prevent a repeat of 2008.

I'm not convinced this is the case.

We have a lot of housing speculation in the area and it is not just American buyers. They have driven real estate costs astronomically. We're in a situation where returns on low-risk assets are close to nothing, and the cost of borrowing to speculate is next to nothing. As a result, people who play with other people’s money have gone wild. Now market volatility is setting in. China is in the middle of a real-estate crisis and the effects of Russian sanctions are starting to have a ripple effect. Margin calls are coming due and the big players are having to liquidate assets which may crash their prices.

To quote Charles Gave:
"Looking back at 2008, we often think it was a quick crisis. It actually unfolded over months, with long stretches during which the problems seemed solved. They weren’t. This updated version of 2008 may only be beginning."

 

[peakbagger]

The big change on this go around is a lot of the foreclosed homes that were sold in large blocks for 10 cents on dollar during the last crisis were bought by large hedge funds with both US and foreign dollars. This took a lot of housing off the market and turned it into rentals. This has driven rental costs up as entry level homes are just not getting built.

The last go around was fueled by liar loans and other excess's where mortage firms and banks had no skin in the game, they wrote the paper and then the paper was sold to investments firms and banks to be formed into large blocks of loans that were cut up into pieces and sold as high yield safe investments protected by Collateralized Debt Obligations (CDOs) which were guarantees that were not backed up by reserves. There are some checks and balances in place but they just slow down a market crash as at some point the owners cannot make the payments and the intermediate parties reserves run out.

 

[ABMax24]

We have a lot of housing speculation in the area and it is not just American buyers. They have driven real estate costs astronomically. We're in a situation where returns on low-risk assets are close to nothing, and the cost of borrowing to speculate is next to nothing. As a result, people who play with other people’s money have gone wild. Now market volatility is setting in. China is in the middle of a real-estate crisis and the effects of Russian sanctions are starting to have a ripple effect. Margin calls are coming due and the big players are having to liquidate assets which may crash their prices.

To quote Charles Gave:
"Looking back at 2008, we often think it was a quick crisis. It actually unfolded over months, with long stretches during which the problems seemed solved. They weren’t. This updated version of 2008 may only be beginning."

I can see where your area is seeing a lot of housing speculation. We are starting to see more here to, investors are selling off their million dollar homes in Toronto and Vancouver and looking for cheaper investment property to buy elsewhere, Edmonton is seeing a housing rush right now because of this. Many places have seen home prices rise 20% in the last year.

Agricultural land is also being bought up at an alarming rate by investors from China and Hong Kong. A farm will be sold out at auction and one foreign entity will come in and buy the entire lot.

 

[EbS-P]

Kids a getting a Gaga ball pit. Decision was made to use Landscape Timbers instead of dimensional lumber. 25$ an 8 foot side plus screws and eyebolts. 2x6 is 12$ each.

 

[johneh]

Kids a getting a Gaga ball pit. Decision was made to use Landscape Timbers instead of dimensional lumber. 25$ an 8 foot side plus screws and eyebolts. 2x6 is 12$ each.

Now I know I am old
what the f--- is Gaga Ball?

 

[begreen]

Now I know I am old
what the f--- is Gaga Ball?

Somehow I suspect it's not this

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[EbS-P]

Now I know I am old
what the f--- is Gaga Ball?

Gaga - Wikipedia

en.m.wikipedia.org

I like to think of them as kid corrals.

They will sell you brackets. 500$

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Could buy it made out of plastic. 1500$.

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[blades]

back in the day ( eons ago) it was called dodge ball. similar rules . played inthe gym , two teams

 

[EbS-P]

Yep dodge ball in a small confined space where Head and body shots don’t count and you can’t actually pick up the ball. Generation alpha (I had to look that up) is going to be a much gentler kinder generation I’m sure

 

[johneh]

Thanks, guys
New I wasn't too old to learn something

 

[mcdougy]