Lumber prices and home values

Guard Dad

Guard Dad

Administrator
Staff member
I'm reading that lumber prices are falling fast, and many are saying home values will be taking a serious hit due to materials costs and reduced demand for housing.

I'm not sure everyone agrees with this, but I do think we're in for some correction.

This won't really affect me; I'm about done for now with the basement, and have no plans to sell for the near future. But It will be a big deal to some people.

Any of you have any insight?
 
I follow a couple home building groups on Facebook and the general consensus is that lumber prices are definitely falling fast, but other building costs (especially labor) are going up so the overall cost isn't changing that much. I still check out Zillow occasionally and I see way more price drops than there were a few months ago. Higher interest rates, combined with economic uncertainty and inflation, are definitely having an affect on the market. Combine all that, and I don't think there will be a huge price correction in home values, but there will be some.
 
I'm thinking that really big and expensive home prices will drop due to so many being priced out of the market. However, I feel the demand for smaller homes is going to keep that part of the market strong.

I mean on a $400K home, the interest rate at 2.75% was $1633 a month (P/I), at 6.6% it jumps to $2555 a month (P/I) nearly a $1000 a month more!

So, they buy smaller you say. Well, only problem is that the builders (esp around here) have found they can hide a lot more profit in a BIG home on a small lot. I mean it's hard to get $100K profit out of a $200K home isn't it? So they build big and so called starter homes are almost non-existent. There are no homes for those people to move down to. Sound Daughter bought a 1970 split level in April and had to pay $240K to get it. There are houses around her now approx the same size/age that are listing for 350-400K!!

Those owning smaller homes I don't think have to worry about drops all that much.
 
Last edited:
This topic is taboo for me until 10am on Aug 31. I will not dare touch it, tempt it, or screw it up. I'll give you my full opinion after the "scheduled" closing.
 
I'm concerned about recent home buyers being upside down again soon. This was a big problem after the last real estate crash. Many people owned far more on their homes than they were worth after that.
 
Guard Dad said:
I'm concerned about recent home buyers being upside down again soon. This was a big problem after the last real estate crash. Many people owned far more on their homes than they were worth after that.
Click to expand...
I see that as quite possible. Those who paid inflated prices for a home because they could afford it with the ultra low rates are going to be hurting if they are forced to sell with rates at the Jimmy Carter level.
 
Agree on all of the above. Inflation is out of control. Folks can thank the dumb ass politicians (both parties) for pouring hundreds of billions (over a trillion) of unbacked dollars into the economy for very short term gain with no thought of the consequences. The bulk of the blame lies on the Dems but the ball less GOP bear plenty of blame themselves. I am sick and tired of them blaming a damn virus for every dumb ass decision they have made. I am blessed enough to be debt free with no mortgage now for five plus years. I don't know how young folks or older folks with big payments are going to survive.
 
The Sound Guy said:
I'm thinking that really big and expensive home prices will drop due to so many being priced out of the market. However, I feel the demand for smaller homes is going to keep that part of the market strong.

I mean on a $400K home, the interest rate at 2.75% was $1633 a month (P/I), at 6.6% it jumps to $2555 a month (P/I) nearly a $1000 a month more!

So, they buy smaller you say. Well, only problem is that the builders (esp around here) have found they can hide a lot more profit in a BIG home on a small lot. I mean it's hard to get $100K profit out of a $200K home isn't it? So they build big and so called starter homes are almost non-existent. There are no homes for those people to move down to. Sound Daughter bought a 1970 split level in April and had to pay $240K to get it. There are houses around her now approx the same size/age that are listing for 350-400K!!

Those owning smaller homes I don't think have to worry about drops all that much.
Click to expand...
That home in 1970, probably cost between 17K-20.
 
As for rent, those prices def affect my oldest. She was not able to compete to buy a house so she decided to rent a home to get out of the apartment complex she was in. She pays over 1900 bucks a month and it will go up when the lease is renewed. She can easily afford a home based off what she is paying in rent, but lenders see her differently since she is self employed. At some point she will be paying in rent what we pay per month for our mortgage. It's ridiculous!
 
Guard Dad said:
I went through that for years when the business was young. A surprising number of lenders don't understand how self-employed people make their income, especially sole proprietors.
Click to expand...
Yep. She makes most of her money via YouTube, but she also makes some things that she sells. Sometimes a company will sponsor her to do a video and make extra money that way.
 
You must log in or register to reply here.
Back
Top