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  #11  
Old 05-13-2021, 11:43 AM
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Originally Posted by djyas View Post
Iím hearing stories just like this. Prices are going up for everything.


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Exactly, it's just a period of rapid inflation that we're seeing across industries.
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  #12  
Old 05-13-2021, 11:53 AM
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When writing all my subcontracts (I am a commercial construction PM) I explicitly put a note in about locking in prices once the subcontract is executed.


My brother builds mcmansions and had to sue a lumber company as they tried to adjust the price when they dropped his lumber off. Insane times.
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  #13  
Old 05-13-2021, 12:19 PM
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When Is the next economic correction happening?

I keep understanding, and reading about the current situation vs the financial crash of 08.
08 was all about too much supply, no demand.
Currently, it is just the opposite. Demand beyond supply.
I believe things will level out, the instant gratification cost/bonus (depending on which side you are on) will most likely go away and see a level. But I doubt a crash.
There is a lot of real money flying around right now. Shuffling and looking for any type of yield, growth, or equity in this environment. Many at almost nothing returns/cap rates.

As for home prices, we know that price only comes down when supply exceeds demand.
According to some fancy charts and people with much more powerful software than I, we are experiencing a large home deficit never before seen.

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  #14  
Old 05-13-2021, 12:27 PM
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You also have to consider that most just spent a year hiding in their homes doing nothing. Now it’s back to normal life, and supply shifted to Covid standards (lower), and now demand is back up.
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  #15  
Old 05-13-2021, 12:44 PM
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Originally Posted by MC25 View Post
Now it’s back to normal life, and supply shifted to Covid standards (lower), and now demand is back up.
this

the lumber stuff will stabilize, the chip shortage will stabilize as post-covid production ramps back, and this crazy surge in post-covid demand for-all-the-things will stabilize too.

for what its worth my employer is telling shareholders that we should be out of the chip supply crunch by q3/4.

i think a year from now things will likely look a lot more normal.


on the lumber front - interesting overview of how this was more or less predicted due to the pine beetles that kill bc forests surviving through warmer winters, but forest fires, mill closings and the lopsided demand during covid kicked the shortage into overdrive.

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Looking ahead, British Columbia foresaw a production gap, a decades-long span when it would have no trees to harvest. That shortfall was predicted to begin about now.

“That was all fine. Salvage was going along,” Cooke said. “And then we had the forest fires.”

In 2017, British Columbia recorded the worst wildfire season in its history. Fires cleared 1.2 million hectares of land, or more than 1 percent of the province’s area, and forced 65,000 people to evacuate. That record was surpassed the following year, when 1.3 million hectares burned. Worst of all, the fires struck with awful efficiency, consuming exactly the forest that the salvage plan had saved for last. They “burnt the last-standing dead supply,” Cooke said. British Columbia’s lean time had arrived early.


Quote:
Originally Posted by j.mo View Post
I keep understanding, and reading about the current situation vs the financial crash of 08.
08 was all about too much supply, no demand.
Currently, it is just the opposite. Demand beyond supply.
I believe things will level out, the instant gratification cost/bonus (depending on which side you are on) will most likely go away and see a level. But I doubt a crash.
There is a lot of real money flying around right now. Shuffling and looking for any type of yield, growth, or equity in this environment. Many at almost nothing returns/cap rates.

As for home prices, we know that price only comes down when supply exceeds demand.
According to some fancy charts and people with much more powerful software than I, we are experiencing a large home deficit never before seen.
that seems like a fair summary.
things will cool off... we just had a once in a generation overlapping series of events during an already record low era for interest rates. but a cooling off /= a crash.


if youre curious to poke around various economic data - the st louis fed runs a great database "FRED" that has all kinds of econ data where most of those "people with more powerful software and charts" pull their pretty pictures from. the data typically has additional context with each chart, and includes thousands of different aspects of the economy. vehicle sales, all sorts of inflation/pricing data, home sales, etc etc etc

https://fred.stlouisfed.org/


ie: federal funds rate


consumer price index of softwood lumber

Last edited by ValveCoverGasket; 05-13-2021 at 01:03 PM.
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  #16  
Old 05-13-2021, 12:55 PM
H2ORidr H2ORidr is offline
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Quote:
Originally Posted by MC25 View Post
When writing all my subcontracts (I am a commercial construction PM) I explicitly put a note in about locking in prices once the subcontract is executed.

My brother builds mcmansions and had to sue a lumber company as they tried to adjust the price when they dropped his lumber off. Insane times.
Around here it seems to be a chance for the contractors and lumber yards to stick it to people. My neighbor was told price is not guaranteed until lumber was paid for a delivered on site. He finally got pizzed and told the contractor and the lumber yard here is a check to pay for the lumber now deliver the darn lumber NOW! They bawked that the lot was not cleared and did not have an access driveway but he demanded they deliver it and they did. He got a friend to use his telehandler to move it off the road and onto the back of the property.
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  #17  
Old 05-13-2021, 02:29 PM
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Originally Posted by H2ORidr View Post
Well as history has shown the next recession will hit when an R is in the White House again <grinning, ducking and running for cover>

That said prices for some raw materials are going through the roof but many others are not budging. I got a quote for work for 5000 steel bars to be used for testing. I had my minion put in a P.O. to purchase them and the PO took 2 days to process and hit the company selling me the bars. Price already had jumped 15% and we had to adjust the P.O.

People all up and down the hallways at work are grumbling about material costs going up, not by a lot but we only adjust prices once per year unless we get clobbered on raw material cost increases. So there is a LOT work being put in to guess what is going to happen but that is all above my pay grade.

A neighbor signed a contract to build a McMansion house back in November. They just broke ground this week for it and his lumber costs are up close to $85,000. To stop the price increases he paid the lumber bill and had the lumber dumped on his vacant lot about a month ago to stop the increase in his price gain pain.

I have a massive blueberry patch and so we sort of track blueberry prices at the stores and last week my wife saw blueberries for $1.00 per ounce!
I'm certain your employees must love being referred to as a "Minion".
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  #18  
Old 05-13-2021, 02:35 PM
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Quote:
Originally Posted by H2ORidr View Post
Around here it seems to be a chance for the contractors and lumber yards to stick it to people. My neighbor was told price is not guaranteed until lumber was paid for a delivered on site. He finally got pizzed and told the contractor and the lumber yard here is a check to pay for the lumber now deliver the darn lumber NOW! They bawked that the lot was not cleared and did not have an access driveway but he demanded they deliver it and they did. He got a friend to use his telehandler to move it off the road and onto the back of the property.
As a general contractor, we are getting bent from every direction. However obviously we have to pass these costs onto the owner.
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  #19  
Old 05-13-2021, 03:16 PM
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Quote:
Originally Posted by djyas View Post
I believe the next big economic correction (stocks are obviously not the whole economy) is years out but inflation is happening now and will continue.
I agree with your first sentiment. I'm in restaurant/food service sector. For those of us who's businesses were decimated by the pandemic will see a multiple year ramp up when people start coming back. This past year, spending habits have shifted to building, remodeling, and home buying. It makes sense considering everyone spent the past year at home. When they get back to dining and entertainment, those above mentioned things will cool while dining and entertainment will grow.

In terms of inflation, I raised prices because I'm relying on less people to keep me in business. Ultimately, my customers didn't care...They would rather see my little shop survive than go out of business. I think the inflationary concerns are due to re-opening and getting back to business. I believe it will stabilize and not run out of control.
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  #20  
Old 05-13-2021, 03:39 PM
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Quote:
Originally Posted by jbmccul View Post
Exactly, it's just a period of rapid inflation that we're seeing across industries.
Medicine would like to see some of that please.
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