October’s Industry News Update

Building Material Prices: Large Increases Year to Date

Although the recent drop in softwood lumber prices since mid-May is helping bring costs down (after having driven them up drastically earlier in the year), the decline has been offset by large increases in the prices of several other building material products.

Let’s talk DECINE – framing lumber prices are still ROUGHLY TWICE as high as the were in April of 2020.

Second, framing lumber is only one of the softwood lumber products used in the average home.  NAHB’s estimates also include plywood, particleboard, fiberboard, shakes and shingles—in short, any of the products sold by U.S. sawmills and tracked on a weekly basis.

The prices of these 10 have increased the most thus far in 2021, and all are up at least 30%:

1. Steel mill products
2. Building paper and building board mill products
3. Asphalt
4. Plastic water pipe
5. Fertilizer materials
6. Laminated veneer lumber
7. Thermoplastic resins and plastics materials
8. Structural metal joists and concrete reinforcing bars
9. Wood window and door frames
10. Copper pipe and tube

10 major contributions to lack of affordable housing. The builder margins continue to get tighter and tighter.

According to the NAHB’S latest estimate increases of new builds, is a directly correlation to households paying about $92 more a month to rent a new apartment.

Rents Continue To Grow As Vacancies Reach Historic Lows

1. Housing costs were rising before Covid, but the coronavirus exacerbated the problem:
2. The national median rent has increased by 11.4% so far in 2021,
3. Compared with just 3.3% for the first six months of 2017, 2018 and 2019, according to a report from Apartment List, a rental listing site.

Inflation is still on the rise…..

• What is inflation?
  • Inflation is an increase in the price level of goods and services throughout a specific time frame. Basically, it means that a dollar today buys less than it used to. It’s usually discussed in terms of a percentage rate. So, if inflation is 2%, a carton of eggs that was $3 is now $3.06.
• Main causes of inflation and how we are measuring up:
  • Growing economy – check! Been in a progressively growing economy for 10+ years.
  • Expansion of the money supply – do you KNOW how much money we’ve pumped into the economy in the last 18+ months? OVER $6.5 TRILLION
  • Government regulation – check!
    • See above….. the government injected over $3 trillion into the US economy:
      • Via COVID package
      • Small and big business packages
      • Unemployment payments
      • Forbearance
  • Interest rates – check! Really low… all time low.
    • The Feds could correct this, but I HIGHLY doubt they will anytime soon.
    • In fact, they announced last week that they will not be moving rates.
    • Best way to correct inflation; increase rates. Period.

So there is HOPE ON THE HORIZON:

• I do not believe you will see a significant slowdown in real estate.
• We have yet to meet the demands of our buyers.
• Supply is still low AND we still had 600 more listings last month, YoY. ALL GREAT NEWS!
• I would encourage you to START investing in a business and marketing plan for 2022
• I would start using technology and CRM’s to my advantage
• Technology won’t replace agents; however, agents using technology will outgrow the masses.
• And I know just the people that can help you with that.