Not that I’m complaining or anything, but…
As an avid watcher of HD and Menard’s (Minnesota) ads and a DIY’er for whom materials prices = project costs, I’m stunned at what’s been happening to lumber prices lately. Here are some examples:
2×12, 16′ = $14.99
2×8, 10′ = $5.09
24′ 4:12 truss = $27.99!!
11 7/8″ I-joist, 2 1/2″ flange = $1.19/ft
Non-wood products are on the low end of the pricing curve, too, but these are the lowest prices for lumber I’ve seen in at least 12 years. I’m driving myself crazy not having any major projects in the hopper and no place to store large quantities for later. I doubt that when the next project comes up, prices will be this low.
How does this compare with other parts of the country?
Replies
The prices you quoted seem to be in line with what stuff is selling for around here.
It concerns me a little - Right now, with material prices and interest rates so low, we're busier 'n heck. But what's gonna happen when interest rates and material costs go up?
I generally hate dire "chicken litle" predictions. But it seem to me that interest rates are too low, and we're setting ourselves up for a hit in the housing market.
Let's let the anti-gun people fight the next war.
"Right now, with material prices and interest rates so low, we're busier 'n heck. But what's gonna happen when interest rates and material costs go up?"
No question, the pendulum is going to swing the other way. IMO, it's not going to happen so much because of interest rates or materials costs, but rather because after 5-7 years of everybody moving up in the housing market, a lot of folks are going to be content sitting still for a while.
If you are in a position to save up to 50% of your net income for the future, I would do it.
You could be right about people staying put after a move up, but if I remember correctly, Americans typically own a home less than four years on average. You'd be surprised how fast people can change their minds (I'm in the real estate biz).
Any jackass can kick down a barn, but it takes a carpenter to build one.
Edited 4/17/2003 3:51:47 PM ET by Hasbeen
That's just the kind of "chicken little" thinking I was trying to avoid.
While a significant slowdown wouldn't surprise me, I don't think it's any reason to put away half your income. Just because the housing industry slows down doesn't mean the whole economy is going south.I decided to get in shape, and the shape I chose was a sphere.
going?
I was gonna answer your post with just the word "going", but I figured it would be less than 30 seconds before someone added another post with only the word "Gone".Where are we going, and what am I doing in this handbasket?
Like in "Gone with the wind"?
or gone fishing?
or gonner as in gonneria?
like "Gonnarea book later!"
If at first you don't succeed...try again! After that quit! No sense being a dam fool about it! W.C.Fields
I think chicken little said "the sky IS falling", not "the sky might be falling"
It would be smart to put as much of your income away as you can no matter what the economy. I simply said 50% because after that, you can go ahead and buy a humvee if you want.
It's entirely possibly that the US economy will return to reasonable strength within a few months to a year. It's also entirely possible that it will take several years. remember, just about every state is in dire financial straits right now - slashing services and laying people off like mad. Airlines are dying. Every big company is laying off. Tech is on life support.
The DOW was at 11,750 in Jan. 2000. It was at 11,400 in March, 2001 (after GW was in office) It was at 10,200 in Jan, 2002 (after the twin towers) and it's been floating around 8000 now for over 8 months with no real sign of improvement in sight. whatever boom in investment people expected after the war isn't happening yet. The DOW is almost even over the last three weeks.
Anyone want to guess what year it will be when the DOW reaches 11,750 again? I'll guess 2006 - that's six years with no net investment gain.
It could easily take a while to get out of this.
Housing is the only area that has seen constant gain in investment. But that can't go on forever, either. I fully expect the resale value of our current home to be flat for the next 2-3 years.
The exact words chicken little said don't matter to me - The point is still the same.
I think we've simply gone from an amazingly hot economy to a moderate one. I know the airlines are in trouble - But that doesn't mean the whole economy is going belly up.
I hope YOU make enough money to be able to put 50% of your income away - I don't believe I know more than 5 people in that situation.
I always get annoyed with threads like this, as I've had people tell me the housing industry and/or the whole economy were on the verge of collapse since 1994. Being as they've been more or less wrong for 18 years, why should I listen to that crap now?Your ridiculous little opinion has been noted.
Roar! The idea of modern fiscal matters has always been built on a house of cards.
Who's to say that a new deck can't be opened and put into play to continue with the appearence of a stabilized economy. Thing is it's still a house of cards that falls every so often.
Fishing? Somebody say fishing?
Rez,
Holy Halibut!!! , some big asz fish, gona have some of that stuff for Good Friday.
Personally, I think a family of four "needs" about 60K net. We actually get by on quite a bit less because we have no mortgage. But I know of many families that net more than 120K and if they don't think they can put 50% away then that's because they are living larger than they need to be. But none of that really has anything to do with the housing market...
I don't know who told you things were going to tank in '94 but but obviously, they were idiots since that's precisely the point at which things started going nuts around here. Real estate prices have tripled since then and if that continues, I'll be a millionaire in another 10 years. I'm not counting on it.
That said, I doubt housing values will drop (except in a few exceptional markets), so it may very well remain a better investment than the stock market.
"Personally, I think a family of four "needs" about 60K net."
DW and I don't even gross 60K, and we have 2 mortgages.
"I don't know who told you things were going to tank in '94 but but obviously, they were idiots..."
Well, let's see - They said we'd never have another year like 1994, we'd been spoiled too long and had it too easy, the stock market was gonna crash, etc. Kinda like what you're saying now.
Nobody has a crystal ball. You have no more of an idea what will happen over the next year or years than anyone else. Last night I played a blank audio tape at full blast. The mime next door went nuts.
Last night I played a blank audio tape at full blast. The mime next door went nuts.
Well thats one thing most Americans can agree on anyway
A universal hatred of mimesView ImageGo Jayhawks..............Next Year and daaa. Blues View Image
I doubt housing values will drop (except in a few exceptional markets), so it may very well remain a better investment than the stock market
Real estate prices almost never go to zero! Quite a few companies that issue stock do go to zero. Neither investment is an absolute, but unless the population of the country starts to drop substantially I doubt that an investment in a decent home will ever come out too badly. That said, there are market bubbles that burst and people do get "upside down" with their mortgages. In my experience that most typically happens to those who borrow foolishly to begin with: Such as taking a high interest and fee "No Doc" loan of 95% LTV on a new modular in a rural area with little employment opportunity. We've seen it happen, but fortunately most lenders are more cautious now.
For those of you who have ever been turned down for a mortgage: It may have seemed bad at the time, but was it really?Any jackass can kick down a barn, but it takes a carpenter to build one.
I have to relate our experience three years ago:
We decided to relocate to an area we liked better & sold our house I built and netted about 150K profit.
The DOW then was at 11,500 with folks guessing it would be at 15,000 in a year or two.
Our intention was to put 30K down on an 8% 30-year mortgage on the new house and then invest the rest in a moderately safe set of stocks until it came time for the next building project (vacation property). that 8% mortgage sure would look stupid now, wouldn't it.
Problem was, the housing market was so insane at the time that there would be 5 offers the day BEFORE it went on the market. The only way to get preference for our bid was to offer cash. So we wound up putting every cent of equity into the new house.
In three years, the value of the house has increased about 40% and the stock market has fallen about 30%. Some times things just work out for the best.
Congratulations! That is fantastic! One lucky break like that can ease up the rest of your life.......
We (DW and I) have a client who was heavily invested in stocks. She had bought a certain stock for $27 in Jan 99. When the next winter arrived she was, quote, "getting a funny feeling about stocks" so she sold that stock for an incredible $525 per share! She'd held it 11 months. She kept a percentage of what she'd bought and sold it a month later for $800! Her friends told her to keep playing the stocks, but she said no it just seemed to good to be true. At the time the opportunity came up to make a mortgage loan to a reputable party who was about to pay 10.5% for a biz loan. She loaned her profits for the mortgage at 8.5% - terrific deal for borrower! That was Feb 2000...... Anybody remember when the market started down big time? Although she was very lucky, she is still one savvy gal!Any jackass can kick down a barn, but it takes a carpenter to build one.
Great story about your stock picking client. I could never do that. It would drive me crazy picking one stock. I can't stand to lose money. I've never even been to a casino. I'll do a mutual fund, figuring that it'll only go down if everyone is suffering. But I'll never buy a specific stock!
I'll just build & sell when I get the urge.
Av' have ALWAYS found it very easy to buy high and sell low <G>, or maybe <ugh?>
Your $60k figure is very dependent on regional prices. Some things are mostly the same no matter where you live (health insurance and vehicles, those two seem to be the biggest), but real estate and other living costs can vary greatly. Ask Tim Mooney about the cost of roofing in the NE (or ask him about the cost of Tea in China, either way) and I think that would illustrate my point very well.
Jon Blakemore
You are correct. In central Kansas, that number would be 40K
From what I have read, one of the big factors in the lowered lumber prices over the past year or so was a direct "backfire" from the Bush administration's attempt to force up lumber prices by levying high duties on Canadian lumber producers.
from:
http://www.bearcreeklumber.com/timberline/2003/jan03/jan03timb.html#Anchor-Tariff-40119 :
In an Econ 101 scenario, the tariff should have reduced the amount of Canadian lumber flowing into U.S. markets, raising prices through the laws of supply and demand. But nothing has gone by the book since the U.S government slapped a 27 percent tariff on Canadian lumber imports on May 22. British Columbia sawmills - direct competitors of American mills - actually increased production by more than 6 percent. U.S. production and European imports are also up slightly, sending the composite price for framing lumber into a all-time slump. "There's too much lumber on the market for even a robust housing market to absorb," said Kevin Binam, director of economic services for the Western Wood Products Association.
You may also want to look at:
http://www.statcan.ca/Daily/English/030307/d030307c.htm
http://www.bclumbertrade.com/_images/february_2003.pdf
The last figures I saw from mid-March said that lumber prices had gone up 8%, but I don't remember from when. This rise may well be affected by the latest news that I have seen regarding the Bush Interior Department's new regulations on thinning and pronouncements from the Forest Service that they would soon have cutting levels back up to "where is should have been under the agreements made in the Clinton Administration". Not exactly the moves likely to raise lumber prices, particularly when many feel that the "thinning" will primarily be in the cutting of big trees (which generally don't contribute to the fire risk) to pay for the cutting of some of the smaller ones that do provide excess fuel load (which probably won't be nearly enough to reduce the fuel load enough).
In our town a small but decently liveable two bedroom just sold for $35K. There's a 3,000 sqr ft, 5 bed, 4 ba, double garage, recently remodeled and very nice home listed for $175K. No takers yet, but our county is growing. 100 miles to the north it would have already sold for $250K plus.
Lots of towns in the rural midwest are actually shrinking. Every place is different, for sure!
Any jackass can kick down a barn, but it takes a carpenter to build one.
In our town, that two bedroom would go somewhere in the $225 - 300k range, and the 5 Br. $700k into the millions. It's up about 35% in less than two years.
-- J.S.
Bigger stakes suit players who are more ambitious than me!
Our county has a total population of about 8,500. Our town about 4,500. Our biggest employer has about 200 employees.
As has been noted here, some things cost the same everywhere. Here, things that rely on labor are generally less expensive than in more urban areas. (Lunch for one in our one truly excellent cafe is about $7. I had 8-10' aspen trees delivered to our lot; seller provided the trees, dug the holes, planted the trees, built little dams around them for irrigation and charged $20 each! Good seasoned firewood costs about $110 per cord, delivered. etc.)
That said, rural areas are definately not for everyone! Seems odd to me, but one of the complaints that we hear from some people who move here from more urban areas is that "things move to slow". Any jackass can kick down a barn, but it takes a carpenter to build one.
homes in my zip code average over a million.. so a small three bedroom with a small lot would be....$850,000 maybe more if it's on the lake..
With all the inflation that's going on with my home, I feel like a rocket scientist. Untill I realize that I could no longer qualify to live in the house that I live in..
Here in one of the softwood lumber producing areas of the PNW, log prices regionally started dropping about 3 years ago and have been flat for the past two.
Lots of factors involved....timber from wildfires not a significant one...the big fire that consumed hundreds of thousands of acres in SW Oregon last summer, while burning through some forestland, spread mostly through dry slopes of greasewood and other noncommercial species (news media forgot to mention that part).
The Asian export market that was once so lucrative has been nonexistent for quite awhile.
Most of the dimensional lumber being manufactured out here is comming from young, small stemmed timber (and the quality is lower) and the processing is more efficient.
And there's a lot of supply.
Steel framing has continued to grow. Engineered wood products are less labor intensive and physically easier to deal with and thus, are becoming much more cost effective.
Concrete has begun to have more of an influence for more than just foundations and sidewalks.
No big hurricanes or other major disasters in the past couple of years (watch plywood prices skyrocket when a big hurricane blows in!)
And I don't see any appreciable effect on prices by the Canadian tariff...it certainly hasn't slowed the import volume...I was commenting to one of my carpenters today that it seemed like every piece of material we were using came from Canada...he turned to me and said, "Well, hell! Even my pickup was built in Canada!"
So there's a lot of supply.
Boss,
I can only tell you what I see in my day to day experiance. I vist new homesites all day long every day of the week.. I have never seen such low levels of activity. Normally this time of year framers are building like gang busters. parade of homes is a big deal and in order to have homes ready the foundations should be going in before now. Instead I see developers equipment sitting. framers seem to have this one house to do and then maybe another but absolutely no back log..
In the last few years Mpls. has been one of the faster growing communities in the nation (I heard at one point we were number three) due to our diverse economy and steady low unemployment rates..
New homes sales are now over 60 days and high end homes has been taking over 120 days.. At the union hall carpenters are sitting for several days in row before finding evan tempory work.. (where previously the only ones on the bench were those who didn't want to work)...
My sister just lost her job with the airlines. she survived 5 previous cut backs only to fall victum at this point.. Other industries are hurting as much manufacturing has slowed down to the point where a guy can get an appointment with anyone.. The buyers all want to look like they are busy, although none of them are buying.. As for Ag, that's been dead for so long that the impliment dealers have equipment on hand that is celebrating three birthdays with out a dance.
I'm normally a very positive guy but instead of a tax break I wish the president would work for full employment..
I guess I have to respond to you again as I have to agree with you.
There are ways of doing business in hard times and it changes in good times . A lot of people listen to the crap on tv and believe it. They are however in the bad news business. They talk about unemployment all the time. Most of us are not in that group of people. Some busineses are getting fat off the defense budget right now . I just mentioned the Gov shutting down explosives . Get a lisense and take advantage if thats something a person would like to do. If a person reads the paper he can learn where the money is being spent and who has some of it. Here in the South we do a little of every thing to make a living and change with the wind and the crops . I think the economy bull is bull for predicting. There is normally an up side to every down side. Of course if a person continues to pan for gold when the mine has played out , yes hes goning to starve , but he has a choice.
Tim Mooney
I thought I would chime in here .
Their are busineses that do better when the lumber is high and the interrest is high. At least one being residential rentals . If you bought them in high interrest times when they were cheap , refinance now or a month ago , you are set up for higher prices. Sell a house now and buy them in hard times and rent them . They cycle around just like crops.
Tim Mooney
Tim Mooney.... Rental Guru extraordinar
Call now folks to get your very own cassette tape instructional on how to make millions*G*
Also featuring the fine art of blow'n da well. *G*
View ImageGo Jayhawks..............Next Year and daaa. Blues View Image
Same here for the pricing. Central CO.
Read an article about how much lumber is hitting the market. All / most of the timber that was affected by the forest fires is now being made into lumber. The BF numbers were mind bogeling. Something like the lower 12 digits. Can't remember exactly.
Law of supply and demand.