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Ah yes, the dilemma with tariffs. Despite all the claims to the contrary, tariffs are paid by consumers and those producers whose profits are being protected by them take advantage. Witness beer tariffs in the Bahamas. There is a duty of about $1 per bottle on imported beer. The local brewers wholesale locally brewed Bahamian beer for the same price as the imported beer after the $1, effectively making $1 extra profit per bottle, an undisguised gift from the government to the owners of the breweries. Crony capitalism takes many forms.
It's worse than that. Kalik beer for a specific example is not only overpriced via the mechanisms you noted it's just as crappy as it was pre-price increase.
ETA - although I must say I'm not seeing a strong connection(s) between tariffs and current building input price increases.
I work in the metals industry. Yesterday we received pricing on steel plate at a record high, surpassing that of 2008. It has almost doubled since August of 2020. We have had 3 major projects postponed/cancelled due to material escalation pushing them out of budget. 2 of these were residential towers which means those units won't be coming available, worsening an already tight housing market.
Lumber is also at a record high, one 2x6 stud is $9.31 today. A sheet of 15/32 plywood sheathing $56 (our local HD has over 1200 sheets on hand). 23/32 OSB subfloor $58, 1-1/8 plywood subfloor $108!!! Yet one can drive by the lumber or plywood mill and there is plenty of logs in the yard. Log prices aren't up anything closely relative to the record high prices we are seeing.
To me, it smells of greed. Furthermore, there is no better way to ensure that the tariffs put in place to protect domestic production could be reduced or removed than to continue to gouge for materials to the point that the construction industry, it's jobs, and new home starts are stalled. It's pretty obvious we need a lot more housing in many areas across the country and this is not the way to let it all falter.
This is what concerns me. I need to replace my roof in the next year or two (no leaks yet, but over 20 years old asphalt shingles). I'm thinking about getting quotes, but the sky-high material costs means that I will be taken to the cleaners and back if I go ahead and do it now. However, if I don't do it on my timeline, I could risk leaks, damage, and still paying sky-high material costs. I'm also thinking about a metal roof, but if metal prices are similarly high, there's no good option.
You can thank resource depletion and inflation for that. We're all getting poorer, while being given the illusion that we're getting richer. As commodity prices rise, developers will simply use cheaper materials, cheaper labor, and they'll cut more corners. The quality of materials and labor modern houses are built with are already bottom barrel, so think about how bad it will get in the future.
I work in the metals industry. Yesterday we received pricing on steel plate at a record high, surpassing that of 2008. It has almost doubled since August of 2020. We have had 3 major projects postponed/cancelled due to material escalation pushing them out of budget. 2 of these were residential towers which means those units won't be coming available, worsening an already tight housing market.
Lumber is also at a record high, one 2x6 stud is $9.31 today. A sheet of 15/32 plywood sheathing $56 (our local HD has over 1200 sheets on hand). 23/32 OSB subfloor $58, 1-1/8 plywood subfloor $108!!! Yet one can drive by the lumber or plywood mill and there is plenty of logs in the yard. Log prices aren't up anything closely relative to the record high prices we are seeing.
To me, it smells of greed. Furthermore, there is no better way to ensure that the tariffs put in place to protect domestic production could be reduced or removed than to continue to gouge for materials to the point that the construction industry, it's jobs, and new home starts are stalled. It's pretty obvious we need a lot more housing in many areas across the country and this is not the way to let it all falter.
The materials shortages having been showing up lately in bid prices. We had a couple projects bid in January that came in comfortably under budget, but everything since then has been creeping upward and in some cases the low bid was over the budget amount by double digits. We are seeing projects pause and owners having to make difficult decisions whether to proceed or wait for a more favorable environment. These are big projects: $25+ million.
The lead time for steel is insane right now - 6 months or more out from the time submittals are approved. Bar joists are in short supply, so GC's have been offering to swap them out for wide flange steel and pay for the design fees.
Construction materials prices are spiking because all the plants/mills where they're processed have had extensive COVID related downtime over the last year.
It's not having the least effect on slowing construction where I live - people are on wait lists 50 long for new houses in hot suburbs.
Eventually more and more people are going to be priced out of the market at this rate.
It takes time to rebuild inventories, and businesses on this side see the price increases and stockpile to guarantee projects aren't disputed, avoid even higher prices, and profit off of the inflation.
We see the same with restaurants here since the competition has thinned out.
Are area has low inventory and houses are like popcorn. Everytime you turn around one is popping up, and selling before the foundation is even laid.
Prices are spiking to unsustainable peaks in 2021
Steel prices will spike in the first quarter but fall rapidly over the following months. All products are rising rapidly. Rapid construction and industrial recovery from COVID-19 lockdowns outpaced sluggish capacity restarts, so supply is temporarily tight.
Plus I read that China slowed their production.
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It's worse than that. Kalik beer for a specific example is not only overpriced via the mechanisms you noted it's just as crappy as it was pre-price increase.
ETA - although I must say I'm not seeing a strong connection(s) between tariffs and current building input price increases.
I can buy Kalik cheaper in Florida than I can in the Bahamas where it's brewed even the paint thinner strength, Kalik Gold. My comment about tariffs was specifically to the OP who mentioned the impact of tariffs in the original post. I have no idea which if any construction materials are affected by tariffs and profiteering by producers.
I work in the banking industry and have been for the last 18 years in the southern region of the United States. When lumber costs triple to over $1,000/thousand board ft and people are literally running to build homes, then you have to start thinking the market is a little overcooked. I see a plethora of financial statements and tax returns in my day to day work life and there's a lot of people spread somewhat thin buying the biggest house that they can afford.
For the region that I'm in, Wal-Mart has spurned a bulk of the growth. However, 2020 was a record year for home sales. Benton County, which houses Wal-Mart home office, saw home sales increase 10.7% in 2020, while Washington County (Fayetteville, Springdale, etc) saw an 11.8% increase in home sales. There's no inventory as existing homes are having multiple offers in a day with a good portion going for more than the asking price. There's also no new inventory and we have developers/builders with 6-9 month waiting lists right now.
Obviously the borrowers qualify for the loans; however, it blows my mind that people are tripping and falling over each other to spend considerably more for a home today than just even 2-3 years ago. What makes the move more attractive now compared to then? Granted, there's a sizeable amount of relocation to the NWA area for career and entertainment purposes, but the overall prices are just mind boggling.
I don't see any type of big real estate fall out, since employment is steady for the individuals that can afford these homes.
The Government has created between 7 and 9 Trillion dollars out of thin air in the last year or so, the price of everything is going to rise ...
I stopped reading.
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