Why the cost increase?

I’m in the residential design/build business. Lumber prices began skyrocketing a few month ago. Supposedly beginning to come down based on the futures market. But no, this has little to do with inflation in it’s pure form.

There are a lot/many of reasons for it, but I don’t talk to anyone who understands the primary reason why. That includes my lumber yard salesman who purchase wholesale. When a 2x4 goes from $2 to $10 ‘over night’ that is more than actual inflation, or QE. Personally, I think with the housing/remodeling boom, and the availability of cheap money, the wholesale folks got greedy. We have been incredibly busy over the last 9 months, and lumber costs haven’t stopped anyone from starting or following through on a project. So, why lower costs? Supply and demand allows it. When rates go back up, and they will, prices will drop. But right now, it isn’t stopping anyone as money is cheap, and some are taking full advantage.

@oregonpapa

Of course we have. Listen, I’m no fan of the Fed, or our insane and crazy spending on a federal level (yes, if we keep doing that we will see similar cost increases on all products across the board), but, the lumber increase across the board happened almost literally ’overnight’. The beef industry wholesalers, as the lumber guys, seem to have a cartel on these prices, and can literally do as they desire if the market is there. Gas prices? Well, I don’t think it takes a genius to figure out why that is happening.


I study this stuff, believe me, especially after the housing crash that almost ‘killed me’ financially overnight, but this particular cost increase was so staggering quick nationwide that it goes beyond what would be expected by ‘actual’ inflation.

As example, we just ordered roof trusses for a job. We will have to wait 3 months to get them, minimum. It wasn’t even a year ago would would get those built and trucked to our site in 2-3 weeks max from date of order. Might give you a glimpse of what is happening. Same is happening to windows, cabinets, and many many other building supplies. Makes our job tough in keeping clients happy.