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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Don Earl who wrote (58854)	8/2/2006 11:36:39 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

RE:"I have yet to see a single analyst remark on skyrocketing building material costs being a factor in driving up housing prices. Most of the white collar analysts wouldn't know oriented strand board from a checker board. In 2003, OSB went from $4.99 a sheet to $21.99 a sheet, and has more or less stabilized in the $15 area since then. On average, building materials are up around 50% in the past 3 years> Not to mention labor. But these tend to follow up housing prices, whatever the market will bare. OTOH, why was he govie telling us there was no inflation? Certainly not deflation, my gawd.

To: Don Earl who wrote (58854)	8/2/2006 11:43:51 AM
From: ChanceIs	Read Replies (2) \| Respond to of 306849

>>>Get a clue. Until and unless, costs come down, prices will stay up.<<< What you say is true, and untrue at the same time. Consider a brand new automobile. If you drive it off the lot, and decide to sell it next week, take 10% off and don't even think twice about it. Your car is now used. OK for a Mercedes, its preowned. The new automobile price is directly tied to its component costs and what the other new car manufacturers offer. Once it is in the secondary market, its a new ball game. So it is with housing. If we have a recession, then material and labor prices will drop, and therefore any new house price will also be offered at less, based both on direct costs and the changed market for new houses. If salaries are down, then the price of used houses will drop.

To: Don Earl who wrote (58854)	8/2/2006 12:36:34 PM
From: John Vosilla	Read Replies (3) \| Respond to of 306849

'If the cost goes up, the price goes up. The story is the same for land. The turn key parcels with all utilities are gone. The cost to develop raw land is high. The cost goes up, the price goes up.' There are so many factors in this mix. A lot depends on the area. Shacks on 60 foot lots in LA for $700k or new condos in Miami at $450 psf aren't supported by cost nor the modest cash flow these assets generate. The speculative mania boosted land values 10-20 fold in some areas since 2001. Biggest bubble we'll ever see in our lifetimes IMHO. Then you have exhurbs in markets with very strong population and job growth like Houston or Dallas where you can buy a brand new 3500 sf home with all the infrastructure in place for $170k. That is where there will be the support for the rising costs you are referring to.

To: Don Earl who wrote (58854)	8/2/2006 3:21:11 PM
From: mishedlo	Read Replies (1) \| Respond to of 306849

The math is simple for anyone except Wall Street analysts. If the cost goes up, the price goes up. The math is simple If supply goes up and demand goes down prices fall regardless of what the input costs are It is that simple. Costs may be up but prices fell. It happened and is still happening. Mish

To: Don Earl who wrote (58854)	8/4/2006 1:13:27 PM
From: Incitatus	Respond to of 306849

The math is simple for anyone except Wall Street analysts. If the cost goes up, the price goes up. The story is the same for land. The turn key parcels with all utilities are gone. The cost to develop raw land is high. The cost goes up, the price goes up. Often when the costs go up, the prices go down. When an industry requires a huge initial committment in order to make its product (eg, auto union workers and their contracts), it makes sense to build at a loss than to sit idle. That's why the auto companies continued building through the recession but kept lowering prices - they'd lose more if the union workers were paid to twiddle their thumbs. The homebubblers have land that will sit there unused, and it's cheaper to build and sell it - especially before its value drops further - than to stop building and continue holding unused land and buildings. If you can show me a country where the builders don't purchase or contract for real estate until the moment they begin building, not just one local builder but builders nationally, you might be on to something.

To: Don Earl who wrote (58854)	8/10/2006 11:25:41 PM
From: Tradelite	Read Replies (3) \| Respond to of 306849

<<I have yet to see a single analyst remark on skyrocketing building material costs being a factor in driving up housing prices. Most of the white collar analysts wouldn't know oriented strand board from a checker board. In 2003, OSB went from $4.99 a sheet to $21.99 a sheet, and has more or less stabilized in the $15 area since then. On average, building materials are up around 50% in the past 3 years. >> Been waiting for someone on this thread to say something like this about the future of home prices. I have personally been in the market in recent months for such simple items as cans of paint (prices for which have gone up a couple times in the last 90 days) and carpet and carpet padding. Foam padding has gone thru the roof in price and has been hard to keep in stock, according to a local carpet dealer. Petroleum costs are a primary culprit. Just paid a guy more than $5K to tear down and rebuild a brick retaining wall. Wonder how much gas it took to haul the load of new brick and haul away the old ones. Paint and carpet aren't lightweight items that ship cheaply either, when gasoline prices are going up. Anyone who thinks prices of lumber, copper pipes, roofing shingles, aluminum windows, concrete or asphalt driveways and drywall are going to drop and make houses less expensive in the future might well be dreaming. And in the meantime, builders are adept at cutting back on little items to bring down the price they have to charge for a house, hoping consumers won't notice. Don't believe everything you see about those so-called builder incentives offered to buyers......they probably cost the builder very little in the end and do nothing more than make the buyer think he's getting a good deal.