General Question

Smashley's avatar

Should I build now, or wait till next year?

Asked by Smashley (7783points) 3 weeks ago

My family is planning to build a new house for ourselves on some property we own. Plans are finished and we were planning to break ground in May, and get the house enclosed by the winter.

Unfortunately, material prices, in particular, wood, have become very expensive in the past year. Our budget has ballooned by 27k at current prices.

Will prices come back down by next year? Does it make more sense to wait right now, from a financial perspective? I’m particularly concerned by issues like increasing interest rates for the portion we’ll borrow, and inflation.

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12 Answers

YARNLADY's avatar

I predict limber will continue to increase in price as the supply continues to dwindle. I am investing in that industry because of it.
If your area is anything like ours, it will take forever to get the permits.

chyna's avatar

My brother is a retired contractor. He doesn’t think the prices will go down, they will only go up. Now is the time to build or buy due to the extremely low interest rates. Hopefully that will make up for the increase in wood, etc. I think interest rates will also go up again, maybe in the next year. Good luck!

Tropical_Willie's avatar

You can’t get wood, plywood or timbers in my area and prices have skyrocketed. Lead time for lumberyards have gone from three to four weeks to two to four months

jca2's avatar

A friend of mine told me that the price of a 2×4 went from 2 dollars and change to about 9 dollars. I’d try to wait a bit. Last summer, housing prices skyrocketed and everyone was moving out of the cities, looking for more space because of the shutdown. Hopefully things start calming down this year.

stanleybmanly's avatar

The huge spike in lumber prices results from the major mills in this country conspiring to take advantage of covid delivery shortages as an excuse to jerk up the price of milled wood. If you want some interesting reading, have a look at the balance sheet of Weyerhaueser in 2020 compared to 2019.

Smashley's avatar

@stanleybmanly – I’ve been feeling similarly, especially when I learned that timber prices weren’t rising nearly as fast as lumber: mills were the bottleneck on supply. The balance sheets seem to show a trend of hoarding assets, leading to higher profits in certain years, and a big sell off later, with lower profits, suggesting lower prices should come in the next year. I think I’m reading that right. Great answer!

@jca2 – I think property speculation is a big part of it too. For people without the stomach for the stock market, real estate has been a good investment, especially with interest rates so low. Prices keep going up everywhere and new houses keep being built. It seems like everyone is making money, which suggests another crash is coming, but timing these things right is like a quantum impossibility, for me at least.

@chyna – I guess I’m only somewhat worried about interest rates now that I consider it. I’ll only need to borrow about 50–75K, which I should be able to polish off in about 5 years. The biggest concern to me, I think, is wood price, and maybe inflation, or maybe I’m overworried about that too.

stanleybmanly's avatar

Exactly. Covid has seen everyone in the chain from the forest to your house take a hit EXCEPT the mills. And the stock market for anything but the very long term is nothing more than a “chart on the emotions of rich people.” I expect major legal actions against the 5 dominant milling corporations for price fixing. Save your receipts!

Strauss's avatar

4×8 sheets of plywood in my area went from $7.49 to $30.00 per sheet.

I’d say buy now. If you don’t intend to build for awhile, store it. The worldwide supply chain for commodities like that is limiting availability and bound to cause prices to rise even more.

Michaellb's avatar

Doesn’t matter. Market is good for sellers of houses, so won’t effect you very much. Might cost you a bit more for the land though.

Smashley's avatar

@Michaellb – I’ve already got the land, and the house is for me, not for sale, ideally ever.

I’m currently thinking I’ll go ahead building this year, but doing the walls in concrete instead of wood.

Tropical_Willie's avatar

Concrete walls are not good insulators, all utilities are permanent or if you want to add or change them require cutting through concrete.

I know we had a relative that built a house in the late 1930s outside Boston. Oh back then it was 80 Amps service for the whole house, now most are 200 AMP more wires and outlets. He had been in three major house/wild fires and didn’t want this house to burn.

Smashley's avatar

@Tropical_Willie – That’s why ya go with ICF. Easier than wood to rewire, excellent sound and draft protection, huge thermal mass, plenty of insulation. Any cutting through concrete is just a matter of the right tools; it’s not particularly special or more difficult. I’d always wanted to build with these blocks, but the price comparison with wood held me back. Well, no more!

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