Material costs rising- what would you buy now to hedge inflation

[MasseyFerg231]

When you figure out how to predict the future, please let us all know.

Dodge Man is correct. We are seeing major trades like TPO roofing have monthly allocations from manufacturers.
Some of the Commerical roofers we deal with will take all bid invitations (for the month let’s say) and compare against monthly material allocations for the month the installation will be scheduled to occur and do that to maximize the profit they make. Nothing wrong with that, but some items are harder to get right now. I’m sure some of this is spilling in the residential market.

if you want/can afford to do it now, do it now. If you want to wait and see, wait and see. It may go up, it may go down, it may stay the same. One thing is for sure is that time will tell!!

One more, skilled labor is in short supply right now!

 

[Root Cause]

Thanks everyone.
I do have a house to live in and it is going up in value while I whittle at the new one.
I agree, I don't have a crystal ball but copper wire is going up $5/250' currently every week here. I haven't ever heard of it going down over the years.
As I understand it, Shanghai is and has been under strict lockdown due to the virus and much of our copper comes from there. It is what made me consider this and why I posted my question here.


No doubt, I will guess right some of the time and wrong on others. That is why I came here to see what others thought.

 

[jigs_n_fixtures]

NM Wire went up twice last week. And, in most areas the code now requires a nuetral in the switch legs for lights etc, so they can be wired for smart switches.

 

[Hay Dude]

Building here is going as strong as it ever has. And inflation isn’t going to reverse. If you’re waiting for prices to drop it could take a while.

FL & TX get all the headlines, but I heard TN is up there with them as one of the top states city people are fleeing to to get away from the violent war zone cities like Baltimore, Chicago, etc.

 

[Bill Guenthner]

So, I was supposed to build a house this year. I just finished phase one (well, septic, roads, and drainage) and am ready to start the actual build.
With gas prices, inflation, supply-chain issues etc. it looks like the worst time in history to build something.
I just read that Shanghai has been in total lockdown and this will disrupt the supply chain for many items including copper.

So that's the background and I am thinking about going out today and buying
1500 ft. 14/2,
250 f.t 14/3 and
250 ft.12/2 wire just because it takes up little space and doubt it will ever come down in price in the next 18 months.

Anyone have other thoughts or ideas? I know others here have more experience with home building.

Having lived through the 70s recession, 80s recession, dot com crash and 2008 housing bubble, my feeling is that anything you buy today, you will be able to buy cheaper when the inevitable recession hits, and it’s going to be doozy. This country is leveraged to the eyeballs.

 

[ultrarunner]

Experience had shown when things turn bad many put everything on hold.

When the bottom dropped out of real estate I know many that had been complaining of high prices I thought would have jumped in but few did unless investor types.

Prices do vary and careful shopping with safe storage can keep a project on track...

My builder friend is having a heck of a time with the custom windows his client finally decided on only now they are 3 months more out.

Things like refrigerators not so big a deal... get anything cheap to make do.

Where he has saved significant money is putting out all lumber for bid and locking in the price but a little harder now...

So many units of plywood, OSB, framing etc... can be significant

My concrete costs are up and not much I can do and find at the end of the day just happy when it's done.

On a side note inspection and permits remain a huge problem as city departments still remain closed with many working from home or in person by hard to get appointments...

 

[NoTrespassing]

Thanks everyone.
I do have a house to live in and it is going up in value while I whittle at the new one.
I agree, I don't have a crystal ball but copper wire is going up $5/250' currently every week here. I haven't ever heard of it going down over the years.
As I understand it, Shanghai is and has been under strict lockdown due to the virus and much of our copper comes from there. It is what made me consider this and why I posted my question here.


No doubt, I will guess right some of the time and wrong on others. That is why I came here to see what others thought.

In early 2008 copper prices were almost $4/pound, by early 2009 copper was only about $1.50/pound. I can't imagine copper wire prices not dropping in 2009 but I guess it's possible. Maybe someone else can speak to that.

 

[4570Man]

FL & TX get all the headlines, but I heard TN is up there with them as one of the top states city people are fleeing to to get away from the violent war zone cities like Baltimore, Chicago, etc.

Property taxes are low here. Like our yearly dues are less than the monthly dues of some areas. The housing prices by my standards are spiraling out of control but compared to other areas it’s still half price. Those 2 factors are driving a huge influx of out of state buyers so I don’t see the local housing market tanking anytime soon.

 

[rScotty]

You built up this big pitch about saving money, but you forgot to say where the money savings is here...Sizing is of little consequence when building or remodeling.

Contractors make money on getting in and getting out and on to the next one.

Oh, yeah good point, Snobdds. The money savings comes about because anyone can have these old interiors complete for free or more likely the cost of hauling it. Kitchens are just an example because they are a concentrated part of the cost of building. One place where a lot of cost can be deferred.

I am making an assumption here that most people who are building their own house are hoping to get it done with cash on hand and no mortgage. My hints are aimed at that kind of builder....simply because that's what I understand.

The point is that everyday complete appliances in a house - including kitchen and cabinets - are being torn out by remodelers and destined to be junked. Everything works fine - these are high dollar houses he is doing - but it is being thrown away to replace it with the latest .

And since the sizing dimensions of stoves, refrigerators, HWH, and even sinks are standard, when drawing up a new house you just draw in the spaces for standard size appliances & take your pick.
rScotty

 

[Fuddy1952]

If you have a home now I'd wait. If you didn't I'd put a trailer there temporarily since you have well, septic, etc. Our neighbors brother bought a nice older but fairly large travel trailer $1,500 then sold it after a couple years & house finished.
Predicting the future...who knows.
I had a horse stable built a couple years ago, really nice one. It was finished...Covid hit and the contractor said how lucky I was, the price just a month later would have been DOUBLE.
Recently I built a tack room. OSB was $46/sheet. I saw it go down to $24 and bought everything I needed. A week later I needed one more sheet and it was and still is $46.
I'd wait, buying some things if you happen to see the price drop. I wouldn't buy now with high prices thinking it will go even higher.
That's me & my 2c worth.

 

[jaxs]

Oh, yeah good point, Snobdds. The money savings comes about because anyone can have these old interiors complete for free or more likely the cost of hauling it. Kitchens are just an example because they are a concentrated part of the cost of building.

The point is that everyday complete appliances in a house - including kitchen and cabinets - are being torn out by remodelers and destined to be junked. Everything works fine - these are high dollar houses he is doing - but it is being thrown away to replace it with the latest .

rScotty

Eeeew,have you took into account what friends,neighbors and coworkers might say about putting used appliances and cabinets in the house? Now if one finds something called trendy,retro, Art Deco,vintage or antique "AND" pays handsomely for,that's totally different. People are judged by their house,car,clothes and who they know. BTDT and I know.

 

[PuffyC]

if you want/can afford to do it now, do it now. If you want to wait and see, wait and see. It may go up, it may go down, it may stay the same. One thing is for sure is that time will tell!!

I'll second that, I've wasted a ton of money trying to outsmart the future. When the people who do it for a living can't get it right why would I think I could?

 

[rScotty]

Eeeew,have you took into account what friends,neighbors and coworkers might say about putting used appliances and cabinets in the house? Now if one finds something called trendy,retro, Art Deco,vintage or antique "AND" pays handsomely for,that's totally different. People are judged by their house,car,clothes and who they know. BTDT and I know.

BTDT too. So I know that's important to some people. I wouldn't call them friends.
I think that viewpoint is a bit dumb, but then I think that deliberately amassing huge debt instead of huge assets is dumb too - so being wrong about the one may well make me wrong about the other.

Realistically, after you do a normal clean and refinish how would those acquaintences know? Do you know how much they paid for their Bosch refrigerator? I don't..... Ever looked under the tablecloth?

Some of our house - including the kitchen cabinets - used to be trees in a previous existance. But whatever they were before hasn't really changed their current use as cabinets, framing, and flooring. At least not that I've noticed.
rScotty

 

[Root Cause]

Eeeew,have you took into account what friends,neighbors and coworkers might say about putting used appliances and cabinets in the house? Now if one finds something called trendy,retro, Art Deco,vintage or antique "AND" pays handsomely for,that's totally different. People are judged by their house,car,clothes and who they know. BTDT and I know.

This post was a request to see if someone felt that buying a specific material to build a house now made sense as opposed to waiting 6-12 months.
I could care less about being judged by what I own. Maybe a new thread for that on the front porch.

 

[rScotty]

Good luck with your project.
rScotty

 

[Root Cause]

Good luck with your project.
rScotty

I do appreciate your thoughts on saving money. That is what I am trying to do and you have given me some ideas as have others. Thanks.
-

 

[jyoutz]

Mortgage rates went to 5% recently and timber stumpage appraisals have taken a corresponding decrease. Lumber prices will be coming down, but how long it takes for lower stumpage prices to affect the retail lumber market is unknown. There is still the factor of fuel and labor costs affecting prices.

 

[ultrarunner]

Supply Chain wise the ability to move material continues to be a problem...

 

[RSR]

It seems to me the very nature of the OP's post (anxiety about rising prices and therefore a desire to get in quickly before prices rise even further) is an almost textbook definition of the prevalent attitudes that drive bubble markets. This is clearly a common sentiment that can be observed in the public for a variety of goods: housing, energy costs, automobiles, etc. We are seeing the exact same arguments for why you need to get into the housing market NOW as we did back in 2005/2006'ish.

My interpretation is that if you find yourself making decisions based on worrying about missing out on future opportunities due to rising prices (whether in goods or investment opportunities), it's probably a pretty good indicator that you might be getting caught up in bubble market mentality

A reasoned, well thought out, detached assessment of the situation may be what is most helpful before making any decisions.

Personally, my worst financial decisions have come from feeling rushed, panicked, and worried, and trying to outsmart the market. My best ones have come when I recognize those feelings and decide to wait to make a decision until I feel I am in a more stable environment and can feel clarity about the situation.

 

[drumminj]

My interpretation is that if you find yourself making decisions based on worrying about missing out on future opportunities due to rising prices (whether in goods or investment opportunities), it's probably a pretty good indicator that you might be getting caught up in bubble market mentality

A reasoned, well thought out, detached assessment of the situation may be what is most helpful before making any decisions.

Personally, my worst financial decisions have come from feeling rushed, panicked, and worried, and trying to outsmart the market. My best ones have come when I recognize those feelings and decide to wait to make a decision until I feel I am in a more stable environment and can feel clarity about the situation.

While I agree with what you say above, unfortunately such "bubble markets" can last many years. Look at the current run in housing prices -- one could easily have said/felt the same thing several years ago (honestly I did 2 years ago where I previously lived) and yet it's still going.

That's a long time for someone to wait with no guarantee of what the final outcome will be. Personally, my family has made the decision to move forward with life vs put it on hold for even longer. But it does leave us playing the game you describe above -- purchasing some things when we can/before prices go up even more, and hoping we don't totally screw ourselves by locking in today's prices.

Unfortunately, one cannot rely on market fundamentals and analysis anymore for making such decisions, as the government (and fed) intervene and fight those forces at random times.