I agree with some below I do think cost that are tied to labor intensive type services and such are going to stay stubbornly high and continue to rise Labor has been exploited for a long time . Saw yesterday that Carnival is cancelling cruises because they can’t get the people to work the ships. There was a blog and people were complaining about how the last cruises were awful because of poor service . Many said they would not cruise again after recent experiences. This is happening through all businesses to some degree .
“Labor has been exploited” is nonsense. Labor is mobile. It can always move, change jobs, etc. Ergo, the price of labor is competitively priced. That is NOT exploitation.
FYI, most cruise ships are NOT US registered/flagged. This enables hiring of foreign workers, and avoidance of many US regulations etc. They can’t get ‘people’ on Carnival, because PEOPLE DIE. Their health record is atrocious.
This is nonsense. People are terrified of germs because of the propaganda, and therefore any crowded venue triggers doubt in your mind. Its subconscious.
The workers are a totally different problem which has absolutely nothing to do with Covid, and I have no idea why you even brought it up. Yes workers are exploited, which is generally fine because its a social contract that the employee enters into. We know we are exploited as long as I feel I am compensated for it. That is the mobility and equilibrium you speak of.
Inflation is running rumpant because of completely inept leaders. Plain and simple. Now $12 an hour goes way beyond exploitation – it’s unsustainable. In theory these are “jobs for young people” or “unskilled”, and yes however in reality common people rely on these jobs for income.
The system has been perverted by free money. Now we see the consequences. The job openings is a crumbling of the foundation. And your twisted and fallacious lies about Covid have scared the money away from cruises, and movies, etc. I literally and figuratively spit on the CDC “stats” and decision-making and decision-makers. Thank you for making the world a worse place.
Some hoping for a new normal are going to be for a rude awakening. Farmers know more than most about climate, weather, seasons and cycles. When they say there is no normal you know we’ve crossed the chasm.
In weather and climate, ‘normal’ is an average of extremes. The mean temperature isn’t what it is supposed to be all the time any more than the mean precipitation accumulation is what is supposed to occur at any given location. The Great Salt Lake is dwindling, possibly to join the other great pluvial lakes in being relegated to history – anthropogenic forcing or not, conditions change. There is the Pacific Decadal Oscillation, the Meridianal Overturning Circulation (especially the Atlantic component for climate in the NE U.S.), and a myriad of other cogs in the machinery of the planet’s climate.
At least the farm Mr. Kemp manages has been around for almost 30 years (unknown how long he has been in that position), so he should know a thing or two about ‘normal’. /sarc
“I manage Mountain Meadows Farm for Dr. Amiel Cooper, a retired
pathologist from Boston. Amiel started the farm 19 years ago with eight
heifers and one bull. MMF is now a certified organic beef farm growing
375 finished beef all born and raised on our 1900 acre farm. We direct
market all of our beef to Wholefoods Markets from New York through
southern New England.”
you mean the same farmers that mono cropped and didn’t see the dust bowl………coming from a thousand miles away????? let’s face the music ladies, farmers are like everyone else including stock traders. a few wise ones, but mostly idiots.
“Farmers know more than most about climate, weather, seasons and cycles.
When they say there is no normal you know we’ve crossed the chasm.”
There never has been a normal. We don’t have El Nino every year, or La Nina every year. Ever since records have been kept in California, they show that the rainfall has varied wildly from year to year. This year there has been a lot of summer monsoonal moisture in the southwest. Las Vegas has had a couple of flooding downpours. There is no normal for farmers from one year to the next.
There are a lot of “doom and gloomers” who seem to “always” be predicting a housing crash or an economic crash. Yet we seem to keep muddling along, don’t we?
I realize that crashes do happen on occasion. But rather than obsessing and worrying about a crash, and always hiding out in cash, I prefer to look for the investment opportunities that arise in every situation.
My core position is up over 200% in less than 2 years. I expect another 200% over the next 2 or 3 years.
And I love the volatility! Since I day trade and swing trade 25% of my portfolio, I am making a killing on the big price swings. I bought and sold FANG over a hundred times in the last week or so. Just took a break from trading to get a coffee and check the blog.
How are they muddling along in Argentina these days? I read yesterday that they just raised the interest rate to 69%, with 71% inflation and are apparently stopping the printing of money. People in Panama aren’t too happy these days, either.
Mr. Klaus Schwab intends for us to own nothing and be happy doing so. Investment opportunities won’t mean much if they confiscate everyone’s assets as part of a socialist Great Reset.
It has become grossly unaffordable for new homebuyers. Yes chugging along for now. Let’s agree to revisit this comment thread in 8-12 months.
I was first time homebuyer making +$100k pretax. Sale price was $500k with 35% downpayment. Very average-ish all around. I bought my home in 2019. If I bought it now, my savings rate per paycheck would be 0%.
Cry me a river. The housing market has been tough to get into for 50 years. And that will continue for another 50 years. Yet millions like you have done it and millions more will.
Life is difficult and no one is going to make it easy for you. Stop whining.
Avery
1 year ago
Most everything gets to the supply house and job site via a diesel fueled conveyance.
Define modern economy. With enough deflation a lot can change. Most of the price of energy is due to derivatives and speculators. We don’t have a financial regulation scheme that supports the real economy anymore. So speculators and investors ‘win’ until everyone loses.
How is that different for any other commodity? Modern economies include investors and speculators and regulators. And what are you going to do about it? Complain, or take advantage of the opportunities?
Maybe speculators make the market? If they were consistently wrong, they would be bankrupt. Consistently right, everyone would do it. It is all about risk, something most ‘investors’ don’t really understand.
Not going to happen. 50 basis in Sept then 25 in Oct with at least least a two month pause which could go to 6 before the fed decides to sell MBS or not.
The chart that catches my attention the most is the price change in ready-made concrete. It’s pullback confirmed the end of the housing bubble. The housing market over the last several months certainly is behaving like a top is very close.
Dr_Novaxx
1 year ago
A house is more than just lumber — it’s also labor costs and all of the other peripherals such as plumbing. It’s hard to find labor & it appears from what I’ve seen is we have mostly illegal immigrants filling the gap, but I haven’t confirmed this.
I also purchased a 4″ PVC fitting recently & paid > $4.00 — it shouldn’t cost more than $1.00!
Just wait until you look at conduit prices! WTF?!!!!
vanderlyn
1 year ago
stagflation. slowing economy and raging inflation. FED is gonna jack rates up until 2023 at least.
prumbly
1 year ago
Most of these cost increases directly reflect the increase in energy costs (thanks to the climate apocalypse lunatics and the frankly bizarre Russia sanctions). Concrete, steel and gypsum all require MASSIVE amounts of energy in their production, and you ain’t going to get that from windmills. Lumber requires very little energy for its production.
Food production is also hugely energy intensive, which is the main reason why food prices have been on a roll lately. Did you know it takes 31.5 KWh to produce 1 pound of beef? Your average wind turbine would be enough to produce about 30 pounds of beef per hour (1MWh). Average annual US consumption of beef per person is about 55 pounds, or 2 hours of wind turbine time. One turbine could therefore produce enough beef for about 4500 people. 330,000,000 people in the US, so you would need 70,000 wind turbinesjust to produce beef. Coincidentally, that’s also the number of wind turbines currently operating in the US. Yes, we have just enough wind turbines to entirely power beef production andnothing else. Gives you some idea just how truly pathetic renewable energy is compared to the might and majesty of fossil fuels.
JeffD
1 year ago
Price gouging and inflation are the two components of price increases, and the gouging now dominates.
Got any sources on that? I’d love to see a disaggregation of the costs embedded in a new house. I’d like to see the numbers for:
– Stick-built single-family detached
– Stick-built townhouse
– Apartment/multi-unit condo
– Prefab single family
– Mobile home
What share of new construction are each of those categories, and what are the percentages for building materials, fixtures, labor, transportation, and permits? Without a great deal of that information, it’s impossible to analyze the gross numbers or to even guess what impact lumber prices might have.
Lumber material costs make up only about four per cent of a new home’s
price, according to the analysis. Labour accounted for 50 per cent of
new home costs, followed by mechanical, electrical, heating, cooling and
plumbing accounting for 22 per cent, and foundation work accounting for
five per cent of the cost.
How much of that 27% for mechanical, electric, etc. is labor and how much is materials? If these sources are going to play cost accountant, they should do it right, even if they are Canadians who take longer. LOL
That’s crazy. Two months prior to the quoted article, lumber futures hit $1,477 / 1000 bf. Maybe in Canada where just about every person working on a house is unionized would it be low single digits. When you consider ALL the lumber that goes into a house, that true cost is easily in excess of 10%.
There is no shortage of skilled labor in the home building industry. There is a shortage of skilled labor in the home building industry who will work for illegal alien wages.
It is the same in any industry; whether driving truck, working the oil fields, construction work, or computer coding. People will not work unless the pay is commensurate with high skill level. There is a lot of skimming in the housing industry: Banks, Loan officers, Planners, Architects and Designers, Permits, Building Fees, Park Fees, Sheriff Fees, School Fees, Real Estate Ladies , Inspectors etc………… The most skilled people in this sequence are the people who actually put the building together. Try and tell any of the other pigs at the trough to work for peanuts and see how many of them show up.
You have a bias that no amount of education can fix. This is not to denigrate the skill and effort of the trades in construction. One reason there is an increasing cost for construction labor is a shortage of workers (both skilled and unskilled)–caused by people wanting ‘higher education’ in the belief they will have a higher living standard and greater social status by going to college.
Experience teaches more than education. Traditionally many people have wanted to work with their hands, work outdoors, create something etc. People seek higher wages and the handwriting on the wall says don’t make a career out of residential construction. I worked the trades for two decades, In the early 80’S when I started it was exciting and there were many fantastic older carpenters. Really smart guys who knew their stuff, not only in their trade but very well rounded intellectually, and educated as well. Before I could even get to their veteran status the industry had gone through too many downturns and finacialized booms, so I did something else. Middle aged Carpenters never die, they just fade away.
The trouble with learning by experience is you take the test before you learn the material. Education and experience is obviously superior–which is why cooperative education programs turn out great employees.
“There is a shortage of skilled labor in the home building industry who will work for illegal alien wages.”
Sounds like you are the one who wants them to work cheap.
I’m saying that skilled workers should get as much as the market will bear. They should be well paid if they have highly desirable skills.
And since labor is half the price of a house, that is why new house prices will remain high.
“There is a shortage of skilled labour in the home building industry. Hence, labor costs will stay high. And so will house prices.”
RonJ
1 year ago
I think Elon has a micro home for something like $10,000. Maybe the price has inflated some since then, but one could possibly buy X number of them and connect them together somehow to create a small modular home. That or inter modal shipping containers. Just cut windows and doors where you want them.
I had a house built 5 years ago. I looked into everything, and wound up with a traditional stick-built house. Those “innovative” modular houses (with some exceptions) usually wind up being architecture school projects that were never going to be available. Those “tiny homes” are just plain stupid. That’s the short story. The long story is, well, a lot longer. With this stuff, cynicism or at least a boatload of skepticism is the way to go.
By the way, who’s this Elon you mentioned? A personal friend?
$50K for 400 sft. = $125/sft not including land, hookups, permits, foundation and probably a whole lot more. Those “tiny houses” are laughable ripoffs.
MPO45
1 year ago
High cost of concrete, lumber, gypsum, steel, paint, freight, AND *labor* = inflation, inflation, inflation. Got Fed hikes?
It will eventually come down although I think it will take 18 months to do so. In the meantime, more value dividend stocks for me.
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pathologist from Boston. Amiel started the farm 19 years ago with eight
heifers and one bull. MMF is now a certified organic beef farm growing
375 finished beef all born and raised on our 1900 acre farm. We direct
market all of our beef to Wholefoods Markets from New York through
southern New England.”
When they say there is no normal you know we’ve crossed the chasm.”
– Stick-built single-family detached
– Stick-built townhouse
– Apartment/multi-unit condo
– Prefab single family
– Mobile home
What share of new construction are each of those categories, and what are the percentages for building materials, fixtures, labor, transportation, and permits? Without a great deal of that information, it’s impossible to analyze the gross numbers or to even guess what impact lumber prices might have.
price, according to the analysis. Labour accounted for 50 per cent of
new home costs, followed by mechanical, electrical, heating, cooling and
plumbing accounting for 22 per cent, and foundation work accounting for
five per cent of the cost.
How much of that 27% for mechanical, electric, etc. is labor and how much is materials? If these sources are going to play cost accountant, they should do it right, even if they are Canadians who take longer. LOL
There are illegal aliens everywhere… in the shrubs, in the fridge behind the olives, under the car in the garage… you just have to look!
By the way, who’s this Elon you mentioned? A personal friend?