Building costs in 2009

[Driller1]

Originally Posted by Cosmic

It is not that simple. I've owned stock in companies like refinery(s), how the pricing works is more a FILO principle, they make money buying low and selling high. Far more difficult, if their storage tank farms are full of very high priced crude. What they really need is to be able to buy in an "Off Season" and price out the inventory to make a profit on all of it. Sort of an averaging out strategy. They have to keep the tank farm full but at a price that can make the total inventory profitable. It is a two fold problem. Juggle volume in the inventory, hope you don't guess wrong and get caught on the wrong side of the price equation for very long.

Some of it is a problem with sales volume. Their volumes have dropped and the unit profit margin per gallon goes up. Especially true with the dealers at the gas station level, their margins try to hold a more or less fixed income as a total, more complicated than normally batted around. Get caught in the wrong time of the year and the profit margins go to hell, stock price drops. Just remember the refinery(s) are between oil companies and the customers and many are their own independent companies. The price of crude is not the whole story.

Same probably is true with the building supply type companies. They have to attempt to get their own costs plus a profit. Lot depends on what they had to pay for their own inventories. Make it all work, be competitive and still make a profit. Some of them may not do that this year. Just remaining in business may become the goal.

One thing is true with buying stuff for construction, never pay retail. I'm sure bargains can be found if you just shop around. Same with a builder / contractor, hopefully you do not sign a contract that is more a guessimate but a real total fixed price. Figure out who is hungry and bargan hard. Real cash money talks. The real smart guys probably can do it but the big problem hasn't been material costs for new houses, they should start with cost cutting for all the Palava crap, get all the non-essential noses out of the trough. All the costs for the non sticks / bricks parts of it haven't dropped. Might be going up even more.

And when that "hungry" contractor has gone out of business, who will warranty their work??

[Maryjane55us]

I'm sure bargains can be found if you just shop around. Same with a builder / contractor, hopefully you do not sign a contract that is more a guessimate but a real total fixed price. Figure out who is hungry and bargan hard. Real cash money talks. The real smart guys probably can do it but the big problem hasn't been material costs for new houses, they should start with cost cutting for all the Palava crap, get all the non-essential noses out of the trough. All the costs for the non sticks / bricks parts of it haven't dropped. Might be going up even more.

What do you consider "Palava" crap? The fancy stuff? We have built before and like to get the basic's in (the floorplan, lots of windows) and add the extras later (formica vs granite countertops; carpet vs enginneered wood)

That's what we were hoping for.. builders who just wanted work .. and yes, with a fixed contract. Our home and debt are paid off, so it would be cash.

We are retired, living on SS, pension and savings.. really wanting to build a 2 story, 2000sf rectangular in Mt Pleasant, SC outside of Charleston for our remaining lifetime. Their exorbitant lot prices are just barely starting to drop a little (or become more competitive). We can afford a nice lot ($200k for .25 lot) or a nice house.. (350k) but not both.. unless we head a further 30 miles out away from the coast. Mt Pleasant, SC is just beginning to see depreciation with few new buildings and overpriced new construction just sitting on the market.

That said, we were hoping that a drop in building materials costs/labor would offset some of the expense. But from what I am reading, it appears to be that we are still in somewhat of a *stand-still*. So it looks like we have to wait another year and then see if things are improving or deteriorating.

Thanks for all your input. I'm assuming many of you are in the building industry.