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I heard of one over the weekend.
Up to $300,000 escalation for materials costs. $1.7--$2 Million construction project.
Lumber yards are being told to buy everything they can, just to have materials in stock.
I heard of one over the weekend.
Up to $300,000 escalation for materials costs. $1.7--$2 Million construction project.
Lumber yards are being told to buy everything they can, just to have materials in stock.
I was listening to a personal finance/advice radio show and a caller mentioned that. The Host said "I wouldn't like that, and I wouldn't do it, but I can't say that you're going to have any choice in the matter unless you want to let the project wait for lumber prices to come down."
Supposedly wtih plywood it's a glue shortage. Lumber it's a bottleneck at the mills.
While I really doubt that RE will go DOWN, RE will stabilize and flatten. Lumber will go down as the mills are able to meet the demand.
Rapidly escalating material costs are reasonable as long as the costs can be verified and are not automatically added. Likewise, if a builder wants the buyer to protect him from rising costs, it's only fair that the buyer insert his own schedule and other performance clause.
It also seems logical for most larger builders to stockpile materials and then be able to price them out on a LIFO basis. Another thought is that on competitive bids, builders should be required to include and reveal a percentage for cost escalation. That prevents builders from quoting at today's costs against others who anticipate increases.
Rapidly escalating material costs are reasonable as long as the costs can be verified and are not automatically added. Likewise, if a builder wants the buyer to protect him from rising costs, it's only fair that the buyer insert his own schedule and other performance clause.
It also seems logical for most larger builders to stockpile materials and then be able to price them out on a LIFO basis. Another thought is that on competitive bids, builders should be required to include and reveal a percentage for cost escalation. That prevents builders from quoting at today's costs against others who anticipate increases.
We are seeing a return to spec houses, to avoid the entire scenario.
Builder builds what he thinks he can sell on the market, and prices it when he has his complete bill of materials established.
One builder told me he wants to build spec, to put the house on the market only after the cabinets are in.
I heard of one over the weekend.
Up to $300,000 escalation for materials costs. $1.7--$2 Million construction project.
Lumber yards are being told to buy everything they can, just to have materials in stock.
In our area I've been seeing more and more homes with lumber piled in front before they even finish the foundations. Some Builders are thinking ahead that way unfortunately they are doing nothing to protect the materials from long term weather exposure. Here is one example of that https://www.city-data.com/forum/dall...umber-out.html .
We are seeing a return to spec houses, to avoid the entire scenario.
Builder builds what he thinks he can sell on the market, and prices it when he has his complete bill of materials established.
One builder told me he wants to build spec, to put the house on the market only after the cabinets are in.
That's about the way DR Horton does it already, at least in this area.
In our area I've been seeing more and more homes with lumber piled in front before they even finish the foundations. Some Builders are thinking ahead that way unfortunately they are doing nothing to protect the materials from long term weather exposure. Here is one example of that https://www.city-data.com/forum/dall...umber-out.html .
Around here, they’re doing the same, except piling it in the back, so it's just a little harder to steal.
Location: Danbury CT covering all of Fairfield County
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In my market it's typically built only with a contract, not really much on spec,mostly small time builders. I heard one small builer had to cancel a contract that was signed several months ago for something to be completed by fall because the cost of material has gone up that he couldn't afford to build and he thinks he could get more more $ for the house . I don't know what's gonna happen between the buyer and seller..
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