On 5/6/2021 12:12 PM, DerbyDad03 wrote:
On Thursday, May 6, 2021 at 10:37:28 AM UTC-4, Leon wrote:
On 5/5/2021 10:03 AM, DerbyDad03 wrote:
On Wednesday, May 5, 2021 at 10:45:46 AM UTC-4, Leon wrote:
On 5/5/2021 8:57 AM, Scott Lurndal wrote:
Leon lcb11211@swbelldotnet writes:
On 5/4/2021 9:48 PM, DerbyDad03 wrote:
On Tuesday, May 4, 2021 at 6:30:47 PM UTC-4, Leon wrote:
On 5/4/2021 10:09 AM, Scott Lurndal wrote:
Leon lcb11211@swbelldotnet writes:
On 5/3/2021 8:52 PM, wrote:
On Mon, 3 May 2021 18:10:26 -0500, Leon lcb11211@swbelldotnet wrote:
On 5/2/2021 2:43 PM, DerbyDad03 wrote:
What a crazy housing market this is! My #1 son and his GF just
found out that their offer has been accepted.
Here is how houses are being bought these days€¦
If the house appraises at the $410K level, they will end up paying $55K
(15%) over the listing price. Holy crap!
Not a good idea to buy a home for the time being. Prices are going
crazy and for no good reason. It is a fluke.
I thought you were.
Yes we were. No longer. The home we went into contract for in late
September, $365K is not welling for $430K. Almost 10K per month price
increases in the last 7 months.
Our home went up in value, in the past 7 months, from $232K to $274K.
There is a "reason". Whether it is good or not depends on whether you
are buying or selling.
Lack of supply, high demand.
Lack of supply was a temporary fluke. Building supplies are readily
available. Homes are being built at a record rate in my area. Demand
is up but supply has not been an issue since summer of last year.
While economics has a theory for supply and demand, this ain't that. It
is greed and demand. The builders are saying, lets see how much these
people will pay.
What's going on in your area might not be the norm.
The lack of supply appears to relate to both existing homes and building
supplies.
My son is a RE agent in Las Vegas. He tells me that they usually have a 6
month of supply of houses in their listings. Currently, it's less than a month.
He, my daughter and my other son have all been on the buying side of the
market in the last 6 months. NY, NV and IN. Finding a house wasn't easy in
any of those areas. They all paid a lot more than they would have just a few
years ago due to the lack of supply.
Now, as to building new, these articles were written in March 2021. They both
discuss a shortage of wood and the associated price increase of (and delay in)
getting a house built.
https://www.businessinsider.com/real...ruction-2021-3
https://www.wmbfnews.com/2021/03/29/...ces-skyrocket/
Well I am certain different locations will be different but in San
Antonio and Houston, there is no shortage of building materials. Never
really was except for a brief period last year, just like groceries were.
New homes/new neighborhoods are going up at a shocking rate. There is a
new neighborhood, being built by Meritage homes, across the street from
our subdivision. This was in the plans a couple of years ago, a 130
home community, buy there was just an empty field of grass in December.
Now there are streets and a model is going up along with 6 spec homes.
Another near by neighborhood that will likely have a thousand homes
started a couple of months earlier in October, also in a grass covered
field. The are probably 40 or 50 new homes in that location now. And
the one we were going to have a home built in has probably built 50
homes since October.
50 homes in the Houston metro area isn't even in the noise....
No kidding, the real number is probably 100 times that. I was just
talking about within a 5 minute drive from our home. You cannot drive
any where, in only the west Houston area, with out seeing 5~10 new
neighborhoods that were not there a year ago.
And I am not saying that our market for new homes is the hottest, just
that there is no shortage of materials to build these homes.
Record low inventory:
https://www.noradarealestate.com/blo...estate-market/
https://www.houstonchronicle.com/bus...p-15852599.php
"\u201cI\u2019ve got more buyers than I have homes to sell them,\u201d said Shad Bogany, a
broker associate with Better Homes and Gardens Real Estate Gary Greene in Houston. \u201cWe just don\u2019t have the inventory.\u201d"
Supply and Demand indeed.
Supply of new homes yes, supply of materials NO. So there is really no
reason for material prices to be as high as they are.
I curious as to why you continue to say that there is no shortage of materials,
when it's really easy to find current articles (like as of last week) that say that
there is. I'm asking, not arguing.
Articles are, well, are probably out dated before they are published.
Granted, many informational type articles may be outdated, but how about
the comments of industry professionals e.,g. purchasing managers and
builders associations? This information was published in April 2021 and
both claim that the shortages continue.
https://shepleywood.com/news/lumber-...pdate-may-2021
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.
"The record rally continues, with lumber and plywood pricing climbing to new
heights. Despite the soaring prices, demand continues to outpace supply
and shortages in just about every building material category have created
an abundance of delays for contractors. With the exception of a few brief
pauses, prices have been slowly escalating into record territory for more
than six months now, begging the question of when it will end. The answer
is when demand tapers off, but no one sees an end coming any time soon."
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.
And a letter from the National Association of Home Builders, written in April 2021.
https://www.woodworkingnetwork.com/n...e-misleadingly
"The primary reason why lumber prices have tripled over the past 12 months --
going from roughly $350 per thousand board feet to nearly $1,200, according
to Random Lengths €“ is due to insufficient production. Moreover, supply
shortages have caused the price of other building materials to rise over
the last year as well; OSB prices are up more than 400 percent since last
April. ... But the action that will have the greatest impact by far is for
domestic lumber producers and sawmills to take immediate steps to
boost production and end supply-side bottlenecks that are harming
American home buyers, home builders, and the many other industries
that rely on lumber products."
I just got an industry newsletter today indicating that wholesale
inventories are growing.
More houses, new starts and actual neighborhoods, are being built near
me than in the past 10 years. Builders for a short, period of time last
year, had difficulty in getting materials. That was over in a matter of
weeks. I see no shortages of any building materials including hardwood
materials at all.
As has been reported to my by a contractor friend in SA, Tx his friends
in the suppliers end of the construction business have admitted that
materials are readily available and they are making a killing as their
cost's have gone back down but their prices have not.
I'm not in the middle of it, so I only know what I read, which seems to dispute
your claim. What are you seeing/hearing/reading that indicates that there is
no shortage?
Articles are always insignificant history reports.
e.g. https://investorplace.com/2021/04/lu...s-are-soaring/
In addition, while new homes are certainly being built, how much has the price
increased due to reported lumber shortages? I've seen numbers that range from
$16K to $24K on average.
Millennials and first time home buyers are pushing the new home market
in the Houston area and apparently through out the country.
We were in contract to build a new home in September of last year. We
locked in a price of $365K for a 3800 sq ft home. We would have been
closing right about now on the home and would have gained $70K equity.
The builder canceled all contracts on "to be built homes", claiming
material shortages.
That neighborhood is now about 2 years old, just over 18 months old
when we went into contract. There are double to triple the amount of
homes in that neighborhood in the last 6 months as the first 18 months.
So we were going to be buying a home that is now selling for $70K more
than what we went into contract for. Obviously there is no materials
shortages. And it appears obvious that the builder wanted to make and
sell the home for $70K extra himself.
We looked at 5 different local neighborhoods and the same story holds.
Houses are going up at an alarming rate.
I might be recalling this incorrectly, but weren't you going to build but changed your
mind due to the increased cost? (It may have been someone else)
It was me, and we were in contract to build but the builder canceled the
contract on us so that he could make more on the sale. There is in fact
a completed home on the lot we chose now along with a that street being
full of finished homes. That street was empty 5 months ago.
Because new homes are literally increasing in price as often as twice a
week we decided to wait until this crap goes back to normal.
And it's your belief/understanding that the only reason that the prices have
skyrocketed is because the builders are greedy?
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.
Are you willing to entertain the possibility that what is happening in your
area is happening because people can afford to and are willing to pay the
higher the cost of lumber and that the higher cost isn't due to greed but due
to material shortages?
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.
Money can often overcome even the most arduous obstacles, including
lumber shortages. As long as buyers are willing to pay the higher cost,
the builder can probably find a supplier. The builder may or may not make
a higher profit, depending on their pricing model.
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.