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Thread: Construction costs are out of control

  1. #91
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    Quote Originally Posted by Cory View Post
    I'm not sure prices will ever come down.

    With my state (FL) voting to move to $15 minimum wage in the next few years, a price increase is expected anyway. But now the folks selling lumber can see that people really need it, and that demand will support plywood at an enourmous markup. Does anyone really think prices will come down when availability comes back? Those companies can pocket the extra profit and leave pricing where it is.

    I honestly don't see a way out of this rabbit hole. And it isn't just construction material.
    I hope you're wrong, and I hope the reason is because individual companies are greedy and won't work together to artificially fix prices. So the ones who are able to slightly lower their prices sell more volume, increasing total profits until a new equilibrium is reached. For that to happen, the mills have to catch up, which will take time. My money is staying in the bank and out of the lumberyards until then. Time will tell if I'm being smart or idiotic.

  2. #92
    Site Supporter OlongJohnson's Avatar
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    It was mentioned much earlier in the thread, but here is a WSJ article about timber owners taking money to not cut it:

    https://www.wsj.com/articles/investo...et-11622021400

    The offer—$17 an offset—caught the attention of Southern timber growers. A surfeit of mature pine has crushed log prices in the region despite soaring prices for finished wood products, like lumber and pulp.
    I haven't explored all the links, but it's interesting that this says supply of raw logs isn't a problem. That implies that either milling or distribution is choking the supply or gouging its markup.
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  3. #93
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    Quote Originally Posted by OlongJohnson View Post
    Was speaking with a local yesterday, and they said the mill a little north of @Borderland has more raw logs, in-process, and finished, wrapped lumber ready to ship than they've ever seen on location since it opened. Wondering whether it's a transportation shortage or what.
    I can't imagine fuel prices, the general lack of labor (to load, unload, slot, etc), and overall shortage of CDL drivers aren't contributing at least to some degree.

  4. #94
    Quote Originally Posted by rob_s View Post
    Also, having built said two decks, I won’t surface a deck with natural wood ever again. I’d do composite every time, even at 2x the cost.
    Aluminum is starting to look like a viable alternative. My tig skills are coming along.

  5. #95
    Quote Originally Posted by rd62 View Post
    I can't imagine fuel prices, the general lack of labor (to load, unload, slot, etc), and overall shortage of CDL drivers aren't contributing at least to some degree.
    This whole labor thing is REALLY tightening things up. I know of dozens of decent paying jobs unfilled right now. Alaska and several other states are ending their Federal $300 a week unemployment boost to help push labor back into the market.

  6. #96
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    Lumber Wipes Out 2021 Gain With Demand Ebbing After Record Boom



    Prices at Monday’s close are now down 0.6% for the year as demand eases and supply expands in response to earlier gains. The rally turned a common building product into a social media sensation and a flash point in the debate over U.S. monetary policy. At one point, lumber futures were trading as high as $1,733.50 per thousand board feet, more than quadruple the level of a year earlier.

    ..........

    Lumber for September delivery fell 5.6% Monday to $712.90 per thousand board feet on the CME
    "No free man shall ever be debarred the use of arms." - Thomas Jefferson, Virginia Constitution, Draft 1, 1776

  7. #97
    Gucci gear, Walmart skill Darth_Uno's Avatar
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    Which is exactly what I said was going to happen. They overplayed their hand, and too many people bowed out. Custom builds were dead, because nobody wants to sign a cost plus contract.

  8. #98
    Futures are one thing, but the wholesale price is another. We've seen a 50% drop in lumber prices at the mill in the last 3 weeks. Since most yards, including myself carry a large amount of inventory, there will be a short time period of trying to flush the overpriced product out of our system. It's not going to work and we'll end up lowering our prices to compete and attract customers. I'm a small fry, but my losses will be in the $100K range over the next 90 days. I bought while prices were rising, but not at the top; but when you have a precipitous drop like this there is no way to sell fast enough to keep up. I'm not whining about it as a made a little money on the way up as well, but the loss will more than wipe out any gains this year. It's capitalism and I'm ok with it. I don't really care where lumber prices end up as long as they stay relatively flat over time so my risk is less.

    On a side note, the big lumber producers made a killing on this thing. It was part COVID demand and a whole bunch of profiteering and price control by the mills to drive up the price. Don't be surprised if there was some sort of price fixing investigation forthcoming.

    The new-norm will be higher lumber prices compared to 2019 and it will likely stay that way for a long time. Much like when gas went up to $5 and then down to $2.50 and we were happy.. yet the prices were $1.25 a short time period before that.

  9. #99
    Site Supporter OlongJohnson's Avatar
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    Quote Originally Posted by AKDoug View Post
    The new-norm will be higher lumber prices compared to 2019 and it will likely stay that way for a long time. Much like when gas went up to $5 and then down to $2.50 and we were happy.. yet the prices were $1.25 a short time period before that.
    People don't use lumber to get to work, but I've never seen what appeared to be a reasonable analysis of that fuel price spike on the 2008 disaster. I remember I was getting serious about shopping for a vehicle that got in the low teens MPG and in one month, gas went from $2.40 to $4.80/gal. I stopped shopping. It was pure speculation and a trading-driven bubble. But that caused SUV and truck sales to plummet. People who drove large SUVs and trucks because those were reasonable ways to transport their family suddenly had their commuting costs doubled. That could be hundreds of dollars a month. People working for auto manufacturers and dealerships lost hours and wages/commissions. Depending on how close the household finances were running, all that could mean not being able to make the mortgage payment. The mortgage disaster was a bubble on its own, but something pricked it.
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    Not another dime.

  10. #100
    Quote Originally Posted by AKDoug View Post
    Futures are one thing, but the wholesale price is another. We've seen a 50% drop in lumber prices at the mill in the last 3 weeks. Since most yards, including myself carry a large amount of inventory, there will be a short time period of trying to flush the overpriced product out of our system. It's not going to work and we'll end up lowering our prices to compete and attract customers. I'm a small fry, but my losses will be in the $100K range over the next 90 days. I bought while prices were rising, but not at the top; but when you have a precipitous drop like this there is no way to sell fast enough to keep up. I'm not whining about it as a made a little money on the way up as well, but the loss will more than wipe out any gains this year. It's capitalism and I'm ok with it. I don't really care where lumber prices end up as long as they stay relatively flat over time so my risk is less.

    On a side note, the big lumber producers made a killing on this thing. It was part COVID demand and a whole bunch of profiteering and price control by the mills to drive up the price. Don't be surprised if there was some sort of price fixing investigation forthcoming.

    The new-norm will be higher lumber prices compared to 2019 and it will likely stay that way for a long time. Much like when gas went up to $5 and then down to $2.50 and we were happy.. yet the prices were $1.25 a short time period before that.
    It sucks to be whipsawed like this, but you seem to have a very good attitude, hopefully things will settle down a bit now.

    No doubt there were some shenanigans going on to maximize profits, but I will be surprised if there are any significant consequences. The energy fiasco in February was similar (huge profits in a mostly unregulated market) and despite a lot of backlash and accusations as far as I have read there haven't been any real consequences.

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