Have we reached the tipping point?

[rennigade]

Was at a local hardware store the other day. They had their 2x4x8's priced at $12.63/board. Pre pandemic, they were around $4.50. Last I checked at lowes 2x4's were going for around $9 for the cheaper stuff. Granted, my local hardware store gets a much better quality of boards. You rarely ever have to pick through them. Anyway, was talking to the guys in there and I asked how business was doing. They said its slowed down a lot due to sky high prices. Also at lowes, I saw 12/2 electrical wire (250ft) is now priced at $98. I bought it before the pandemic for around $55.

I wonder if we'll start to see home projects coming to an end and the new housing boom coming to an end?

[ua_guy]

No, I don't think so. A wave in the markets, yes. But it's well known that lumber prices are the result of production cuts in 2019/2020, covid complications, and increased demand.

[rennigade]

No, I don't think so. A wave in the markets, yes. But it's well known that lumber prices are the result of production cuts in 2019/2020, covid complications, and increased demand.

Im referring to...are consumers going to stop buying items since the prices keep climbing?

At some point, people will stop buying items if prices reach a certain point. Doesnt necessarily have to be lumber. A lot of things have already doubled/tripled in price over the course of a year. It hasnt been a gradual increase. Are we close to people saying "im good," and they'll start holding off until prices correct?

[corn18]

Who knows? Maybe it will, maybe it won't. There are a lot of things happening that the talking heads on CNBC love to blow up into the world coming to an end. I'm guessing lumber prices are a leading indicator to broader inflation but what should I do about it? I am keeping my mortgage because I can and it's dirt cheap. That is a great inflation hedge. I am holding 100% of my fixed income in my stable value fund because it pays me $42 every day regardless of what the interest rates are doing. I have a diversified portfolio of US and international stocks. I wish I owned rental property, but I missed that boat. We are doing a lot of landscaping right now and the price of plants and pavers is about the same as it was last April when we first got quotes. Gas is no where near 2008 highs. Maybe we should install a bomb shelter.

[ua_guy]

Im referring to...are consumers going to stop buying items since the prices keep climbing?

At some point, people will stop buying items if prices reach a certain point. Doesnt necessarily have to be lumber. A lot of things have already doubled/tripled in price over the course of a year. It hasnt been a gradual increase. Are we close to people saying "im good," and they'll start holding off until prices correct?

I think the point is, it depends. There's still a huge appetite for housing and builders are continuing to break ground in popular areas. The price of lumber doesn't really concern me because I think the causes of those price increases are supply/demand. The housing market in many areas is heavy in demand and very short in supply. A rise in lumber prices could certainly help resales where there is high growth. It did in 2020 when we sold our last home.

The bigger question is will we start to see severe inflation where the price of all goods rises astronomically as to cause dramatic shift in markets and consumer behavior. I think it's certainly possible, although in the modern era of manipulated everything, there is great incentive to keep inflation stable, so I think it remains to be seen what the fed does and says.

[Jluke]

My contractor delayed my basement project from appx October to December start because of the price of lumber then. It dropped a little at that point and he started.

it will only get more expensive to do projects if the supplies stay at high prices.

I think

[kork13]

I'll see if I can find the article, but just this morning I saw one saying that increasing numbers of people are cancelling construction contracts due to the high materials prices.

[Singuy]

There's really no housing boom, more like a housing transition. Those who paid top dollars at NYC to be close to dining and theater found everything to be shut down. So the point of inner city living is gone, so people decided to transition from a one bedroom studio to the suburbs. The average rent for places like NYC has been dropping like a rock.

https://www.google.com/amp/s/www.forbes.com/sites/palashghosh/2021/02/19/rents-home-prices-in-new-york-city-drop-at-steepest-pace-on-record-in-january/amp/

[TexasHusker]

"There is only 2 percent inflation." That is what our trusted Fed is telling us, even earlier today. File that away for a second.

It is always difficult to pick the top, and the bottom. No question, lumber prices are cancelling a lot of projects. Like fossil fuels, timber is a commodity that permeates virtually every nook and cranny in our economy. When timber rises in price, it is a stealth tax. Everything goes up. Paper goods, broom handles, lumber, bird houses, wood flooring, fencing. You could list the products from timber in a book that would be as thick as a dictionary. Below is a current chart of lumber futures contracts over the last year.





Lumber is up around 250% since last June, but the Fed steadfastly denies that there is only 2 percent inflation, while they continue dumping money from helicopters everywhere.


Here is a look at May 2021 gasoline contracts. Up 60+ percent over the last few months.





The "tipping point" is much nearer than we are being told. The Fed has decided that we will have no more recessions and keep the stock market rising forever, if they continue to manipulate the bond market. We can print out $ trillions at a time and toss it back to the citizenry with no consequence. Folks, we cannot trust our government. We are being lied to. To tell us that inflation isn't a concern and that it is only 2 percent is an insult to anyone with average intelligence. When they say "it's different this time", you'd better hold onto your wallet.

[Leo]

What's your advice for someone like me who doesn't have any inflation hedge?

Got some cash but no property. We've been waiting for the housing market to cool down a little bit but no luck.

[bjl584]

I was going to put a deck on our cabin this year, but I'm waiting. Treated lumber is sky high and hard to come by.

From a production and logistics standpoint things should start to normalize mid summer.
Prices, not sure

[rennigade]

I was going to put a deck on our cabin this year, but I'm waiting. Treated lumber is sky high and hard to come by.

From a production and logistics standpoint things should start to normalize mid summer.
Prices, not sure

A friend of mine has been trying to get quotes to have a deck redone at his house, with treated lumber. Contractors really cant give a real accurate price since prices are fluctuating so much. When they do give a quote they flat out tell him this could change. He's decided to hold off for another year.

[disneysteve]

"There is only 2 percent inflation." That is what our trusted Fed is telling us, even earlier today.

There are multiple ways of measuring inflation. The Fed uses a core inflation rate which focuses more on the long-term and specifically excludes volatile things like food and energy. I'm not sure if something like lumbar is included or not.

Personally, other than gas going up, which happens regularly, our spending is actually down sharply. So far in 2021, we're spending even less than we did in 2020 which was already down a lot from 2019.

[TexasHusker]

What's your advice for someone like me who doesn't have any inflation hedge?

Got some cash but no property. We've been waiting for the housing market to cool down a little bit but no luck.

I am not a financial advisor, but I am moving a chunk of my liquid into commodities-oriented investments. Timber, fossil fuels, palladium, iron ore, copper.

Even the basic materials for “green energy” - batteries, wind turbines, solar panels - has to be mined from the earth.

[TexasHusker]

Here is a pure, vanilla energy play.