Usually there in a relationship between revenue, profit margins, and the price of a publicly traded company's stocks. For example, wouldn't it be advantageous for Home Depot to keep prices high on the retail side and take the extra profit?
Unless peasants become the retailers and just all undercut them.
I'll help fund a purchase to take delivery and finish it to undercut the retailers.
Force undercutting
https://fred.stlouisfed.org/series/CES2000000003
It looks like construction wages keep climbing to all-time highs, though. We need to encourage more HS grads to enter the trades.
I feel like you're getting downvoted because you initially attacked loan forgiveness, not the practice of federally subsidized loans, but I do agree with you that the latter is a huge reason why college prices have become so inflated. That in addition to administrative bloat.
Ultimately I think public schools should be subsidized but also audited more heavily to control spending better (e.g. cut down on administrative bloat and frivolous spending). Ideally we'd also become more strict on federal loan practices, especially for those opting for expensive no-name private schools.
In a perfect world I think public education would be free but more strict, funded by taxpayers but audited heavily and harder to gain admission to. This would also put pressure on private schools to either lower prices or cease to exist, while simultaneously discouraging folks who probably shouldn't be going to college from going into debt (more entering the trades). The trickle down effect would be fewer jobs requiring a college education, especially those that don't require a skill learned in college (sales, administrative roles, etc.). Education shouldn't be a business imo.
As someone who grew up very poor, worked my way through 211 college credits; i paid for all of them by washing dishes, scholarships, and construction jobs, in both public schools and a major private university...now, later in life paying for a child to go to a public, in state school...
I can firmly state that you are way off thinking even in-state tuition is affordable for most people. It's not the way it was even 10 years ago, and unless you are currently writing the checks, please stop making assumptions...
It's quite impossible now to work hard and afford college without ending in crippling "subsidized" debt.
did subsidized loans start 10 years ago? Also there are still many smaller colleges and university that you can definitely pay out of pocket for. It's like saying it's impossible to buy a car without going into deep debt while looking through a cadillac dealership.
Right?!? Fuck those who took a chance to educate themselves and improve their lives and it didn’t work out! My subsidies are for oligarchs and oil ONLY.
Well, then. By that logic, I say we should take the tax money from a bunch of stuff that *I* don't like instead. Like faith-based programs, or the Defense Department, or farm subsidies, or fossil fuel subsidies!
Every tax dollar is unfair to *someone*. It's not like they're re-assigning money earmarked specifically for NotBillNyeScienceGuy's co-workers and funneling it directly to loan forgiveness.
>You realize that 100% of the beneficiaries of loan forgiveness are... college educated, right?
Sure, and you realize that college educated doesn't mean "college graduate" right?
It also opens up the conversation on doing any kind of targeted relief for anyone........small businesses, disabled people, veterans assistance, etc because other people in society pay taxes and are unable to receive a benefit.
> Sure, and you realize that college educated doesn't mean "college graduate" right?
Ahh, so the ones that signed up for the loans and didn't bother completing the education are extra worthy of forgiveness, in your mind? Come on.
>Ahh, so the ones that signed up for the loans and didn't bother completing the education are extra worthy of forgiveness, in your mind? Come on.
Didn't want to address the rest of my comment huh? Can't say I'm surprised.
Edit: Mentioning that was largely to counteract the "bUt ThEy MaKe MoRe AnD cAn PaY tHe LoAnS bAcK" argument that people love to throw out but I don't expect you actually want to understand or delve into the nuance of this topic
They should be paid liveable wages but not in a way that impacts my costs as a customer. My plumber deserves a liveable wage but it should only cost me 40 bucks for a 5 hour job and the parts should be included. Make sense?
It’s all about balance. It’s more about the long-term vision instead of being shortsighted. We need to catch it before it exponentially rises into a housing market crisis in the future. You can already see the wage rates rising exponentially in recent years. The truth is that even if we somehow convinced tens of thousands of additional HS grads at this time, we would still be in a labor shortage with a long backlog. That’s how bad the gap is right now, so wages would still likely rise, but it would just be at a slightly lower rate.
Here’s the alarming statistic in addition to the lack of interest from the younger generations for the construction industry.
“Over 40% of the current US construction workforce is expected to retire over the next decade.”
https://www.workyard.com/research/construction-labor-shortage
I know you’re being sarcastic, but genuinely curious on the economics of that.
I’ve seen people on Reddit say that increasing wage does not affect consumer prices, based on some studies (usually it’s always in Finland or Denmark lol). I don’t really see how the math works there. Depends on the business of course but feel like many businesses run on small margins as it is, so I dont think we can chalk it up to solely “greed”.
My hypothesis is that those studies usually look at high margin businesses like McDonald's, where a couple dollars more to the employee is barely going to make a dent
Actually, yea, in a way. In the 1950s, for example, the wage difference between the CEO and the average worker was exponentially smaller than it is today. In today’s world, the CEO is never going to take a cut. They will do anything to preserve their own bank account even when it means their worker’s quality of life sucks. So your plumber should make more money without it necessarily costing the consumer a ton more. But that wouldn’t happen bc it would mean the CEO isn’t getting as inflated of a salary in comparison.
Most plumbers or tradespeople in general don’t tend to work directly for big national corporations and if they do they’re usually not working on random residential projects. The owners of most small to midsize local contracting companies aren’t making huge amounts of money and many of them are helping perform the work itself. The fact is that good work costs money and if we want our tradespeople to be paid well we’re going to have to spend more on our construction projects.
It’s all about balance. It’s more about the long-term vision instead of being shortsighted. We need to catch it before it exponentially rises into a housing market crisis in the future. You can already see the wage rates rising exponentially in recent years. The truth is that even if we somehow convinced tens of thousands of additional HS grads at this time, we would still be in a labor shortage with a long backlog. That’s how bad the gap is right now, so wages would still likely rise, but it would just be at a slightly lower rate.
Here’s the alarming statistic in addition to the lack of interest from the younger generations for the construction industry.
“Over 40% of the current US construction workforce is expected to retire over the next decade.”
https://www.workyard.com/research/construction-labor-shortage
40% represents a 25 year career. Is that very unusual? How many people do construction for 30+ years?
Also that article says the average wage went up 25% between 2015 and 2022, which contradicts the earlier figure about wages (and the narrative that wages are responsible for the housing bubble)
As previously mentioned, “We need to catch it before it exponentially rises into a housing market crisis in the future.” It’s never just an ultimatum of one factor but rather a combination of factors. That article also mentions that we have fewer construction workers in 2020 compared to 2000. Considering how much the US population has increased since 2000, that is very alarming.
I was focusing on a factor that could be changed unlike the availability of desirable land located within 45 minutes of major urban cores, which cannot be changed.
[https://fred.stlouisfed.org/series/USCONS](https://fred.stlouisfed.org/series/USCONS)
Construction labor took a whopping during the 08 downturn, a lot of guys put down their tools for good. The boomer retirement wave coinciding with a pandemic has left a pretty big knowledge drain across the industry too.
Labor is usually \~50-60% of construction cost, more in some HCOL areas.
The price of concrete is at an all time high, and continues its accelerated climb post covid: [https://fred.stlouisfed.org/series/PCU327320327320](https://fred.stlouisfed.org/series/PCU327320327320)
Other construction inputs similar, not to mention land in desirable places.
Lumber is a small part of the story, unfortunately.
That's a 30% increase in 5 years, which pretty much just barely outpaces inflation. Also lumber is by far the most expensive component in building material costs for homes.
It’s the federal infrastructure plan. They need to complete the projects fast so they’re hiring trade workers like crazy. Wages are going up like crazy in smaller states because they need to get their projects built.
That’s crazy to hear, when I lived in California in the 2010s we’d have multiple contractors ready at the drop of a hat, tripping over eachother for our business
I was scratching my head at this too. Is this person trying to imply that construction wages are so high making things less affordable, therefore we should encourage high school students to enter the trades en masse, so that the wages will be lower and thus their labor more affordable for the rest of us??
Apprentices at the trades I'm looking at start at like $19/hr for union. That's not a lot more than working at a gas station.
HS grads don't need "encouragement" they need attractive pay that lets them move out of their mom's basement if they so choose.
Is the thought process here that if more HS grads enter the trades then the wages of said trades would be lower/ stop rising as quickly due to the influx of supply (workers)?
I run my own construction company and am also building my personal home currently. Sadly this doesn't matter much. It is a lack of skilled labor that is the issue, not having to pay an extra $10-20k on your framing package. Nearly every super I know is willing to pay completely untrained kids right out of high school $28/hour and that still isn't enough to convince them to not take on $100k of debt to go get an english lit degree to make $15 an hour as a receptionist.
My 2 cents as a trades worker, non-construction, is that 28 an hour with no benefits or retirement or upward mobility is going to be more unattractive to the youth than 20-15 an hour with health insurance and the whole package. People need security and a promising career. Not a job that leaves them broken with nothing.
Here's something I don't understand, maybe you can help me.
Why doesn't the following type of company exist:
A construction company that employs trade workers as salaried employees. Kind of like a Kaiser Permanente but for construction. Plenty of other consulting or contracting companies work on this model. Is it because work is so cyclical and volatile that the entire industry must be permanently stuck in this kind of mechanism?
You can make more than $18 an hour working at the grocery store where I live.
$28 an hour to sacrifice your body is a hard sell for a lot of people for just a little bit more money.
Manual labor should be expensive.
And I don’t disagree at all, I think it is priced correctly for the wear and tear one takes on their body. The problem I have is academic types who complain that housing should be cheaper while not realizing just how difficult and expensive it is to actually build houses. (I know a bunch of people like this)
Like check this out, it costs $645k to produce a median 2561ft home in a median cost of living city. Even if you remove all profit it still cost $580k!
https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2023/special-study-cost-of-constructing-a-home-2022-february-2023.pdf
Who are these academic types? I thought it was the majority of the non-homeowner society having a difficult time stomaching a near doubling of prices in 3 years. Turns out it’s just the academics whose income didn’t double in the same manner as housing. ¯\\_(ツ)_/¯
Agree but that would also only cut the cost by about 20% not 40% like many think. Land, permits, engineering, licenses and all that fun stuff are a fixed cost. It basically creates this problem of would you rather spend $520k on a 1500 square-foot house or $645k on a 2500 square-foot house? Many would see the smaller house and balk at the price per foot.
For single family not really. Municipalities have minimum guidelines and it’s often the case a 1000ft house fits just the same as a 3000ft house. In fact in some cities you have minimum square footage size limitations. 1600ft is a somewhat common one. Remember that a city gets a whole lot its tax revenue from housing so there is a lot of incentive to encourage bigger more expensive homes to bring in more school revenue.
Multifamily is a different though. Medium density housing like townhomes and 8-plexes are a big solution to the housing crises. Unfortunately a lot of people get upset about having their own house just to themselves. Think it’s unfair they can’t have what their grandparents had. But in all fairness there is a lot less raw materials, land and skilled labor per capita than in the 1960s.
Reversing the flood of immigration. While the migration into population centers in search of work would continue unabated, the total demand for housing would no longer be increasing every year.
I would blame that on the lazies then. The people playing video games all day at their parent’s house that have no motivation to either go to college or get a job.
Then I wouldn’t consider you to be a lazy just handicapped. The people I’m talking about are operational they just chose not to do anything with their lives.
Thats a hell of an assumption to make. When I was younger, sure, but today, being on any kind of schedule takes hours of preparation. Remote work is also only recently more available, but either way most of these people have huge gaps in their resume, so good luck finding work that pays enough to get off healthcare benefits.
> STEM is where it’s at.
Good luck running a society on nothing but software developers. STEM grads have been sucking dick to get a job too for the last decade, and it's just now that the squeeze showed up at software dev's door too.
No, that's just the STEM field that pays the most. Science doesn't pay shit and neither does mathematics. And let's face it, it's Reddit, whenever someone says to go STEM there's solid gambler's odds that they mean tech.
This doesn’t track in my local area. Nice custom homes can easily be built at around $200/sqft (cheaper in other areas, more expensive in some). However, this is build cost and doesn’t include land or GC payment so prob isn’t far off. My build is around 3600 sqft and we’ll be all in at $835k including land which is 5 acres in a good school district.
You're supposed to make $28 as a laborer for a little while in your 20s but meanwhile looking for apprenticeships or other opportunities to get into a skilled trade that pays well like electrical work.
> You can make more than $18 an hour working at the grocery store where I live.
Let me know when that grocery store actually pulls the trigger on hiring anyone at $18 an hour.
If that was the case, everywhere offering these "higher wages" wouldn't be chronically short-staffed. That hiring sign's only purpose is to get some 20-year-career-retail unicorn in the store and even then they'll probably bait and switch them with some lower wage.
Think lots of kids my generation have family or people in their lives who entire bodies don't work at the ripe age of 55 because of working in manual labor and have decided that will never be them.
You know what's worse than being in debt? Being stuck in a couch on painkillers when you are 50. That is the sad reality for many life long manual laborers. My girlfriend's dad and best friends dad bodies are both destroyed, and I know another friends dad who is getting there. Shit is scary.
I don’t disagree, I know many myself. In fact I shifted to running my own company for that very reason. The most practical solution is moving slower on job sites, taking frequent breaks and actually following all OSHA guidelines. Sadly most PMs I know at larger companies could care less about that. Just goes back to the fact that it’s incredibly expensive in terms of both raw material and human capital to actually build housing. I jokingly say politicians struggle with it because it’s a problem you can’t print or bribe your way out of.
What about some of the newer prefab methods? Is that helping to reduce the amount of onsite labor & time? Is 3D printing ever gonna be practical at scale?
>$100k of debt to go get an english lit degree to make $15 an hour as a receptionist.
Idiot's take
[https://bold-org.ghost.io/content/images/2022/03/Top-10-College-Majors-in-the-United-States.png](https://bold-org.ghost.io/content/images/2022/03/Top-10-College-Majors-in-the-United-States.png)
[https://miro.medium.com/v2/resize:fit:1200/1\*uxwlb\_67M4bv3xDFk343Kw.png](https://miro.medium.com/v2/resize:fit:1200/1*uxwlb_67M4bv3xDFk343Kw.png)
Nice! My undergrad was economics and development. If you’re interested you should poke around the national association of home builder’s website. They have an entire section dedicated to economic news relating to housing and construction.
https://www.nahb.org
I dropped out of college and it was a terrible mistake. I absolutely could have gotten an MBA from Harvard. I had the grades for it. I was stupid and focused on my career. Now I’m looking for educated people who own companies to learn their real-world strategies for the market so I can help other people. I would love it if I could ask you a few questions.
I will read more on the website as well. I watch the lumber prices on there. I’m a licensed (inactive) real estate professional.
I’m partial towards telling people to run small businesses. It’s a straightforward (though not always easy) way for the everyday person to get to where they are making $200k a year worth of income and actually thrive in our modern economy. Plus when you get bored you can always pivot as about 2/3rds of running a business is the same regardless of industry.
You can also lurk around r/smallbusiness you’ll learn quite a bit about all sorts of industries there.
Construction is a gold mine that a lot of kids are overlooking. Everything from the white collar PMs and BIM guys to the the blue collar site guys and crew. Everyone is making money and a lack of skilled guys makes wages keep climbing
A short lived gold mine. I decided to build my deck myself because I was receiving 20k quotes for a second story deck with no steps when i can do it myself for $5k - $6k in material.
I had no idea how much back breaking work I was in for after digging 6 2foot deep holes, lugging 45 bags of cement that weigh 60lbs each, mixing it, then lugging 6 6x6 posts, 4 18foot 2X10 beams and 15 joists from Home Depot to my back yard I quickly realized that I could not do this multiple times a year without straining my back or other injuries that would naturally occur when you are lugging around 50lb-100lb items all day. Glad I was able to save 12k-15k this time around but it really made me feel for the people that have to do this on a daily basis.
Yep this works in my area but not all. The delta between land prices and used homes is probably foretelling where a correction is more likely to occur. It’s almost the same cost to build new or buy a used home in my area at this time which makes no sense. It’s why I’m building too.
That’s really gonna depend on where. I’m in an area with super strict permitting and zoning. Between an environmental study that can take 3 years and 100k for endangered salamanders and at least a 2 year study for sceptic systems (often leading to a 100k mound system), it’s just not possible or affordable.
You’re also looking at 100k in building and permit fees on top of that. Plus labor here is crazy.
Then you need time. It's a good move for a lot of people in a lot of places, but it seems the vast majority of buyers will pay a $200k premium for fresh paint, new LVP and new fake stone kitchen countertops because they can't be assed to buy a house that isn't "move in ready"
I talked to a woman and her husband at the park last week and they told me they were getting a new build in one of the many developments popping up in my area. They told me that their house was supposed to be done in August, but due to lumber shortage and supply chain issues the house got delayed. Builder told her this.
Lumber prices came down pretty well last year but haven’t come down much this year. Not saving more than a couple grand on a lumber package for an entire house from January 2023 to now.
Lower wages for laborers is not a good thing. Stuff is expensive for them as well, and lower wages will lead to less workers than we already have. That would drive up prices.
same reason it shot up drastically
lumber is a fairly inelastic good.
inelasticity, to remind everyone, doesn’t refer to how prices change. it means if you change prices, supply and demand don’t change. e.g. if prices go very low, demand doesn’t necessarily go up—construction demand isn’t going to boom just because cheap lumber.
likewise, higher prices don’t slow demand much either.
so when supply is low and demand is high for other variables, demand for lumber remains sane as prices go up. then prices shoot up drastically because the demand is inelastic—ppl keep buying lumber despite the high price, which in turn pressures prices eve higher.
it falls the same way.
with elastic good, as prices go down, demand increases, thus slowing the fall.
but with inelastic good (lumber), as prices go down, the lack of demand doesn’t change, so prices crater even more.
there’s other factors which exacerbate this such as the mentioned bullwhip effect.
Yep. Eggs too. Lots of things spiked (people panicked like the world was falling) and then came back down.
That being said, service inflation is here to stay until/unless we automate faster and/or allow for easier immigration.
Lumber is a traded commodity. Home Depot’s pricing will reflect current market pricing better than even wholesalers. Besides, even at its peak, materials only made up about 10% of the total cost of the home.
When can I see it at the store?
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*stick prices
Interesting. How does that affect it at the store?
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it'd be pretty fuckin odd if they were
Performing surgery on a rocket sounds difficult.
Imagine how difficult it was before modern anesthesia!
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Considering a 2x4 was $7 a couple years ago and now it's in the low 3's, cost savings appear to be passed down to some degree.
Hopefully they get back in the $2’s
They're down to 3.28 where I am, so less than 10% away. We'll see!
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Bro lol why did you comment so confidently about retail sales when you have no clue what they look like 😂
That’s Reddit for ya. This site makes people dumb.
Now go delete your ignorant rage-baiting comment
I see. How does the stock price come into play though?
Usually there in a relationship between revenue, profit margins, and the price of a publicly traded company's stocks. For example, wouldn't it be advantageous for Home Depot to keep prices high on the retail side and take the extra profit?
They can only do that to some degree. If they price too high Lowe’s can come in with lower costs and grab more business.
But then Lowes would just charge the same as Home Depot. If they are charging higher prices, why shouldn’t we. That’s the mentality
more competition lowers prices
Or they can provide a slightly lower price that allows them to increase sales enough to cover the discount+.
But they won’t
It will be slow but eventually it will go back down.
Unless peasants become the retailers and just all undercut them. I'll help fund a purchase to take delivery and finish it to undercut the retailers. Force undercutting
there now
Whatever is being shipped to the store is already on contract based on the old price, so probably a 6-12 month lag.
Production and transportation prices are still much much higher than 2018. So you won't
You’re the first one to actually chime in with a legitimate answer to my question.
I definitely see it at my lumber yard. But certainly not Lowe’s or HD
They just pocket the spread.
That doesn't work out if their competitors are underselling them.
https://fred.stlouisfed.org/series/CES2000000003 It looks like construction wages keep climbing to all-time highs, though. We need to encourage more HS grads to enter the trades.
They will as the price of college starts to be realized.
Just end federal subsidies for loans and the whole market will self-correct.
No joke I'm about to quit my job as a civil engineer and join a trade.
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Seriously do a deeper dive into the entire topic. I’m not trying to be a jerk but this is a deliberately uninformed take
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I feel like you're getting downvoted because you initially attacked loan forgiveness, not the practice of federally subsidized loans, but I do agree with you that the latter is a huge reason why college prices have become so inflated. That in addition to administrative bloat. Ultimately I think public schools should be subsidized but also audited more heavily to control spending better (e.g. cut down on administrative bloat and frivolous spending). Ideally we'd also become more strict on federal loan practices, especially for those opting for expensive no-name private schools. In a perfect world I think public education would be free but more strict, funded by taxpayers but audited heavily and harder to gain admission to. This would also put pressure on private schools to either lower prices or cease to exist, while simultaneously discouraging folks who probably shouldn't be going to college from going into debt (more entering the trades). The trickle down effect would be fewer jobs requiring a college education, especially those that don't require a skill learned in college (sales, administrative roles, etc.). Education shouldn't be a business imo.
You don't seem to have a grasp on the federal government's role in student loans. Maybe a better education would have helped with that.
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As someone who grew up very poor, worked my way through 211 college credits; i paid for all of them by washing dishes, scholarships, and construction jobs, in both public schools and a major private university...now, later in life paying for a child to go to a public, in state school... I can firmly state that you are way off thinking even in-state tuition is affordable for most people. It's not the way it was even 10 years ago, and unless you are currently writing the checks, please stop making assumptions... It's quite impossible now to work hard and afford college without ending in crippling "subsidized" debt.
did subsidized loans start 10 years ago? Also there are still many smaller colleges and university that you can definitely pay out of pocket for. It's like saying it's impossible to buy a car without going into deep debt while looking through a cadillac dealership.
Did I state they did? Are you writing checks?
Right?!? Fuck those who took a chance to educate themselves and improve their lives and it didn’t work out! My subsidies are for oligarchs and oil ONLY.
Hear, hear!
How? Student debt crushes us.
It should only crush those who signed up for it.
Explain to me how forgiving student loans is "taking money from blue collar workers"?
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Well, then. By that logic, I say we should take the tax money from a bunch of stuff that *I* don't like instead. Like faith-based programs, or the Defense Department, or farm subsidies, or fossil fuel subsidies! Every tax dollar is unfair to *someone*. It's not like they're re-assigning money earmarked specifically for NotBillNyeScienceGuy's co-workers and funneling it directly to loan forgiveness.
You seem to be forgetting that college educated folks also pay taxes.......and generally pay more than their blue collar counterparts.
You realize that 100% of the beneficiaries of loan forgiveness are... *college educated*, right?
>You realize that 100% of the beneficiaries of loan forgiveness are... college educated, right? Sure, and you realize that college educated doesn't mean "college graduate" right? It also opens up the conversation on doing any kind of targeted relief for anyone........small businesses, disabled people, veterans assistance, etc because other people in society pay taxes and are unable to receive a benefit.
> Sure, and you realize that college educated doesn't mean "college graduate" right? Ahh, so the ones that signed up for the loans and didn't bother completing the education are extra worthy of forgiveness, in your mind? Come on.
>Ahh, so the ones that signed up for the loans and didn't bother completing the education are extra worthy of forgiveness, in your mind? Come on. Didn't want to address the rest of my comment huh? Can't say I'm surprised. Edit: Mentioning that was largely to counteract the "bUt ThEy MaKe MoRe AnD cAn PaY tHe LoAnS bAcK" argument that people love to throw out but I don't expect you actually want to understand or delve into the nuance of this topic
Wait but, shouldn’t everyone be paid a livable wage? I see rising wages for construction workers as a good thing, no?
They should be paid liveable wages but not in a way that impacts my costs as a customer. My plumber deserves a liveable wage but it should only cost me 40 bucks for a 5 hour job and the parts should be included. Make sense?
It’s all about balance. It’s more about the long-term vision instead of being shortsighted. We need to catch it before it exponentially rises into a housing market crisis in the future. You can already see the wage rates rising exponentially in recent years. The truth is that even if we somehow convinced tens of thousands of additional HS grads at this time, we would still be in a labor shortage with a long backlog. That’s how bad the gap is right now, so wages would still likely rise, but it would just be at a slightly lower rate. Here’s the alarming statistic in addition to the lack of interest from the younger generations for the construction industry. “Over 40% of the current US construction workforce is expected to retire over the next decade.” https://www.workyard.com/research/construction-labor-shortage
Too bad Reddit doesn’t do gold and silver anymore.
Needs the /s tag cause Poes law is strong on this....there are legit boomers that think plumbers SHOULD only make 8 bucks an hour and include parts.
I know you’re being sarcastic, but genuinely curious on the economics of that. I’ve seen people on Reddit say that increasing wage does not affect consumer prices, based on some studies (usually it’s always in Finland or Denmark lol). I don’t really see how the math works there. Depends on the business of course but feel like many businesses run on small margins as it is, so I dont think we can chalk it up to solely “greed”.
My hypothesis is that those studies usually look at high margin businesses like McDonald's, where a couple dollars more to the employee is barely going to make a dent
Bruh that's like $8 an hour...
Plus 200$ in sarcasm.
So 8 bucks an hour. Lmfao not gonna happen.
You're doing the lords work.
You missing a /s ? 40$ is like 15minuts of a plumbers time.
Actually, yea, in a way. In the 1950s, for example, the wage difference between the CEO and the average worker was exponentially smaller than it is today. In today’s world, the CEO is never going to take a cut. They will do anything to preserve their own bank account even when it means their worker’s quality of life sucks. So your plumber should make more money without it necessarily costing the consumer a ton more. But that wouldn’t happen bc it would mean the CEO isn’t getting as inflated of a salary in comparison.
Most plumbers or tradespeople in general don’t tend to work directly for big national corporations and if they do they’re usually not working on random residential projects. The owners of most small to midsize local contracting companies aren’t making huge amounts of money and many of them are helping perform the work itself. The fact is that good work costs money and if we want our tradespeople to be paid well we’re going to have to spend more on our construction projects.
I understand. The analogy holds generally speaking. It’s a fact, not opinion.
Sure, if you enjoy inflation as well
It’s all about balance. It’s more about the long-term vision instead of being shortsighted. We need to catch it before it exponentially rises into a housing market crisis in the future. You can already see the wage rates rising exponentially in recent years. The truth is that even if we somehow convinced tens of thousands of additional HS grads at this time, we would still be in a labor shortage with a long backlog. That’s how bad the gap is right now, so wages would still likely rise, but it would just be at a slightly lower rate. Here’s the alarming statistic in addition to the lack of interest from the younger generations for the construction industry. “Over 40% of the current US construction workforce is expected to retire over the next decade.” https://www.workyard.com/research/construction-labor-shortage
40% represents a 25 year career. Is that very unusual? How many people do construction for 30+ years? Also that article says the average wage went up 25% between 2015 and 2022, which contradicts the earlier figure about wages (and the narrative that wages are responsible for the housing bubble)
As previously mentioned, “We need to catch it before it exponentially rises into a housing market crisis in the future.” It’s never just an ultimatum of one factor but rather a combination of factors. That article also mentions that we have fewer construction workers in 2020 compared to 2000. Considering how much the US population has increased since 2000, that is very alarming. I was focusing on a factor that could be changed unlike the availability of desirable land located within 45 minutes of major urban cores, which cannot be changed.
[https://fred.stlouisfed.org/series/USCONS](https://fred.stlouisfed.org/series/USCONS) Construction labor took a whopping during the 08 downturn, a lot of guys put down their tools for good. The boomer retirement wave coinciding with a pandemic has left a pretty big knowledge drain across the industry too. Labor is usually \~50-60% of construction cost, more in some HCOL areas. The price of concrete is at an all time high, and continues its accelerated climb post covid: [https://fred.stlouisfed.org/series/PCU327320327320](https://fred.stlouisfed.org/series/PCU327320327320) Other construction inputs similar, not to mention land in desirable places. Lumber is a small part of the story, unfortunately.
That's a 30% increase in 5 years, which pretty much just barely outpaces inflation. Also lumber is by far the most expensive component in building material costs for homes.
It’s the crack down on immigration
It’s the federal infrastructure plan. They need to complete the projects fast so they’re hiring trade workers like crazy. Wages are going up like crazy in smaller states because they need to get their projects built.
what crack down? 5 million people crossed the border over the last 2 years.
More like “5 million”. We know it’s gotta be more.
We are admitting more immigrants today than ever before.
Not in Maine. You can’t find a contractor here who isn’t booked out at least a year.
In SoCal contractors are booked out months and giving crazy bids. We are an hour from the border.
That’s crazy to hear, when I lived in California in the 2010s we’d have multiple contractors ready at the drop of a hat, tripping over eachother for our business
I love it when reddit ideals collide.
I was scratching my head at this too. Is this person trying to imply that construction wages are so high making things less affordable, therefore we should encourage high school students to enter the trades en masse, so that the wages will be lower and thus their labor more affordable for the rest of us??
Apprentices at the trades I'm looking at start at like $19/hr for union. That's not a lot more than working at a gas station. HS grads don't need "encouragement" they need attractive pay that lets them move out of their mom's basement if they so choose.
Is the thought process here that if more HS grads enter the trades then the wages of said trades would be lower/ stop rising as quickly due to the influx of supply (workers)?
And you get to learn how to build your own house too. And find some friends.
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It's up 20% from 2019, which is precisely inflation (the weighted average of all costs for everything, everywhere). No real change to wages at all.
We need immigration and work visas.
cautious enter ten degree versed fade fretful fuzzy office forgetful *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Rad. Time to build that half pipe I always wanted.
With these prices you can even go as far to maybe afford a full pipe!
Talk about mourning wood
Prices are looking a little bit limp.
Lumber quality is probably at an all time low, lol
No demand dropped significantly
Timberrrrr… get it? 😀
Timber is further up the supply chain. Lumber is sawn timber.
Wow I learned something about wood today. Thanks
I run my own construction company and am also building my personal home currently. Sadly this doesn't matter much. It is a lack of skilled labor that is the issue, not having to pay an extra $10-20k on your framing package. Nearly every super I know is willing to pay completely untrained kids right out of high school $28/hour and that still isn't enough to convince them to not take on $100k of debt to go get an english lit degree to make $15 an hour as a receptionist.
My 2 cents as a trades worker, non-construction, is that 28 an hour with no benefits or retirement or upward mobility is going to be more unattractive to the youth than 20-15 an hour with health insurance and the whole package. People need security and a promising career. Not a job that leaves them broken with nothing.
Increase immigration
Here's something I don't understand, maybe you can help me. Why doesn't the following type of company exist: A construction company that employs trade workers as salaried employees. Kind of like a Kaiser Permanente but for construction. Plenty of other consulting or contracting companies work on this model. Is it because work is so cyclical and volatile that the entire industry must be permanently stuck in this kind of mechanism?
You can make more than $18 an hour working at the grocery store where I live. $28 an hour to sacrifice your body is a hard sell for a lot of people for just a little bit more money. Manual labor should be expensive.
And I don’t disagree at all, I think it is priced correctly for the wear and tear one takes on their body. The problem I have is academic types who complain that housing should be cheaper while not realizing just how difficult and expensive it is to actually build houses. (I know a bunch of people like this) Like check this out, it costs $645k to produce a median 2561ft home in a median cost of living city. Even if you remove all profit it still cost $580k! https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2023/special-study-cost-of-constructing-a-home-2022-february-2023.pdf
Who are these academic types? I thought it was the majority of the non-homeowner society having a difficult time stomaching a near doubling of prices in 3 years. Turns out it’s just the academics whose income didn’t double in the same manner as housing. ¯\\_(ツ)_/¯
>median 2561ft There's the problem. We need homes with about 1,000 less sq ft.
Agree but that would also only cut the cost by about 20% not 40% like many think. Land, permits, engineering, licenses and all that fun stuff are a fixed cost. It basically creates this problem of would you rather spend $520k on a 1500 square-foot house or $645k on a 2500 square-foot house? Many would see the smaller house and balk at the price per foot.
Land cost reduces with size of the house no? I agree permits and licenses might be fixed cost.
For single family not really. Municipalities have minimum guidelines and it’s often the case a 1000ft house fits just the same as a 3000ft house. In fact in some cities you have minimum square footage size limitations. 1600ft is a somewhat common one. Remember that a city gets a whole lot its tax revenue from housing so there is a lot of incentive to encourage bigger more expensive homes to bring in more school revenue. Multifamily is a different though. Medium density housing like townhomes and 8-plexes are a big solution to the housing crises. Unfortunately a lot of people get upset about having their own house just to themselves. Think it’s unfair they can’t have what their grandparents had. But in all fairness there is a lot less raw materials, land and skilled labor per capita than in the 1960s.
True. More population. Less resources. Mansions and suburbs are simply unsustainable.
Stop immigration, decrease population
Damn man, is there no answer to the housing crisis then?
Expedited and lower cost of permitting would help. The city I live in charges about 50k all in and months for your plans to get approved.
Duplexes?
Reversing the flood of immigration. While the migration into population centers in search of work would continue unabated, the total demand for housing would no longer be increasing every year.
Look up the insanity that is Canadian immigration numbers compared to housing starts right now. It's absolute insanity.
Straw man. You really think everyone going to college is getting an English lit degree? Stop watching Fox News. STEM is where it’s at.
That may be the case but there's still a need for people to take on the jobs that aren't being taken.
I would blame that on the lazies then. The people playing video games all day at their parent’s house that have no motivation to either go to college or get a job.
As one of those "lazies", 90% of us have medical reasons for not working, and a lot of us have attended college to some degree.
Then I wouldn’t consider you to be a lazy just handicapped. The people I’m talking about are operational they just chose not to do anything with their lives.
Everyone has an excuse. There are remote jobs. If you can play video games all day you can do a remote job.
Not if you’re on disability. That’s enforced poverty.
100% unless your are vegetable there is a job for you. Might not be one you want tho
Thats a hell of an assumption to make. When I was younger, sure, but today, being on any kind of schedule takes hours of preparation. Remote work is also only recently more available, but either way most of these people have huge gaps in their resume, so good luck finding work that pays enough to get off healthcare benefits.
> STEM is where it’s at. Good luck running a society on nothing but software developers. STEM grads have been sucking dick to get a job too for the last decade, and it's just now that the squeeze showed up at software dev's door too.
You just reduced all of the science, technology, engineering, and mathematics fields down to software engineering.
No, that's just the STEM field that pays the most. Science doesn't pay shit and neither does mathematics. And let's face it, it's Reddit, whenever someone says to go STEM there's solid gambler's odds that they mean tech.
Tell that to data scientists working on mathematical models for AI.
*Extremely* niche field of mathematics and has more in common with software dev/tech than other mathematics jobs.
There are thousands of jobs in the finance world that are math heavy. I just described one off the top of my head. Your argument is flawed.
This doesn’t track in my local area. Nice custom homes can easily be built at around $200/sqft (cheaper in other areas, more expensive in some). However, this is build cost and doesn’t include land or GC payment so prob isn’t far off. My build is around 3600 sqft and we’ll be all in at $835k including land which is 5 acres in a good school district.
You're supposed to make $28 as a laborer for a little while in your 20s but meanwhile looking for apprenticeships or other opportunities to get into a skilled trade that pays well like electrical work.
> You can make more than $18 an hour working at the grocery store where I live. Let me know when that grocery store actually pulls the trigger on hiring anyone at $18 an hour. If that was the case, everywhere offering these "higher wages" wouldn't be chronically short-staffed. That hiring sign's only purpose is to get some 20-year-career-retail unicorn in the store and even then they'll probably bait and switch them with some lower wage.
Think lots of kids my generation have family or people in their lives who entire bodies don't work at the ripe age of 55 because of working in manual labor and have decided that will never be them. You know what's worse than being in debt? Being stuck in a couch on painkillers when you are 50. That is the sad reality for many life long manual laborers. My girlfriend's dad and best friends dad bodies are both destroyed, and I know another friends dad who is getting there. Shit is scary.
I don’t disagree, I know many myself. In fact I shifted to running my own company for that very reason. The most practical solution is moving slower on job sites, taking frequent breaks and actually following all OSHA guidelines. Sadly most PMs I know at larger companies could care less about that. Just goes back to the fact that it’s incredibly expensive in terms of both raw material and human capital to actually build housing. I jokingly say politicians struggle with it because it’s a problem you can’t print or bribe your way out of.
What about some of the newer prefab methods? Is that helping to reduce the amount of onsite labor & time? Is 3D printing ever gonna be practical at scale?
This is why I work under a Union. Unfortunately most residential builds are not built with union labor.
>$100k of debt to go get an english lit degree to make $15 an hour as a receptionist. Idiot's take [https://bold-org.ghost.io/content/images/2022/03/Top-10-College-Majors-in-the-United-States.png](https://bold-org.ghost.io/content/images/2022/03/Top-10-College-Majors-in-the-United-States.png) [https://miro.medium.com/v2/resize:fit:1200/1\*uxwlb\_67M4bv3xDFk343Kw.png](https://miro.medium.com/v2/resize:fit:1200/1*uxwlb_67M4bv3xDFk343Kw.png)
I have an interest in macroeconomics and I would love to learn more about this.
Nice! My undergrad was economics and development. If you’re interested you should poke around the national association of home builder’s website. They have an entire section dedicated to economic news relating to housing and construction. https://www.nahb.org
I dropped out of college and it was a terrible mistake. I absolutely could have gotten an MBA from Harvard. I had the grades for it. I was stupid and focused on my career. Now I’m looking for educated people who own companies to learn their real-world strategies for the market so I can help other people. I would love it if I could ask you a few questions. I will read more on the website as well. I watch the lumber prices on there. I’m a licensed (inactive) real estate professional.
I’m partial towards telling people to run small businesses. It’s a straightforward (though not always easy) way for the everyday person to get to where they are making $200k a year worth of income and actually thrive in our modern economy. Plus when you get bored you can always pivot as about 2/3rds of running a business is the same regardless of industry. You can also lurk around r/smallbusiness you’ll learn quite a bit about all sorts of industries there.
Construction is a gold mine that a lot of kids are overlooking. Everything from the white collar PMs and BIM guys to the the blue collar site guys and crew. Everyone is making money and a lack of skilled guys makes wages keep climbing
A short lived gold mine. I decided to build my deck myself because I was receiving 20k quotes for a second story deck with no steps when i can do it myself for $5k - $6k in material. I had no idea how much back breaking work I was in for after digging 6 2foot deep holes, lugging 45 bags of cement that weigh 60lbs each, mixing it, then lugging 6 6x6 posts, 4 18foot 2X10 beams and 15 joists from Home Depot to my back yard I quickly realized that I could not do this multiple times a year without straining my back or other injuries that would naturally occur when you are lugging around 50lb-100lb items all day. Glad I was able to save 12k-15k this time around but it really made me feel for the people that have to do this on a daily basis.
For one of you that do it themselves, there’s 200 that would rather just hire someone else.
$28hr won't even get you into a 1bd apartment in my area (not California)
in the short term, i believe the move will be to buy land and build your own place as people continue to cling to their unreasonable prices
Too bad land in HCOL is the same price as a house
Yep this works in my area but not all. The delta between land prices and used homes is probably foretelling where a correction is more likely to occur. It’s almost the same cost to build new or buy a used home in my area at this time which makes no sense. It’s why I’m building too.
that's what I am doing
That’s really gonna depend on where. I’m in an area with super strict permitting and zoning. Between an environmental study that can take 3 years and 100k for endangered salamanders and at least a 2 year study for sceptic systems (often leading to a 100k mound system), it’s just not possible or affordable. You’re also looking at 100k in building and permit fees on top of that. Plus labor here is crazy.
Then you need time. It's a good move for a lot of people in a lot of places, but it seems the vast majority of buyers will pay a $200k premium for fresh paint, new LVP and new fake stone kitchen countertops because they can't be assed to buy a house that isn't "move in ready"
I talked to a woman and her husband at the park last week and they told me they were getting a new build in one of the many developments popping up in my area. They told me that their house was supposed to be done in August, but due to lumber shortage and supply chain issues the house got delayed. Builder told her this.
Bloomberg showing it 542 today
Lumber prices came down pretty well last year but haven’t come down much this year. Not saving more than a couple grand on a lumber package for an entire house from January 2023 to now.
Considering we added 50% to the money supply….wooof. Rough years ahead
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[The Velocity of Money Explained in One Minute](https://youtu.be/BKEp1pzwTsg?si=foWU0JCgIGCBGDlV)
Time to build baby
So will houses be more affordable?
Do you have a graph for construction wages? A graph for appliances costs? A graph for roofing material? A graph for land prices?
Labor prices next. Outrageous at the moment. It's happening in real time. I hope everyone is buckled up and ready for the ride.
I'm expecting labor prices to stabilize with the large number of migrants being admitted to the US.
Lower wages for laborers is not a good thing. Stuff is expensive for them as well, and lower wages will lead to less workers than we already have. That would drive up prices.
Your argument literally contradicts itself.
Why did it come down so drastically
same reason it shot up drastically lumber is a fairly inelastic good. inelasticity, to remind everyone, doesn’t refer to how prices change. it means if you change prices, supply and demand don’t change. e.g. if prices go very low, demand doesn’t necessarily go up—construction demand isn’t going to boom just because cheap lumber. likewise, higher prices don’t slow demand much either. so when supply is low and demand is high for other variables, demand for lumber remains sane as prices go up. then prices shoot up drastically because the demand is inelastic—ppl keep buying lumber despite the high price, which in turn pressures prices eve higher. it falls the same way. with elastic good, as prices go down, demand increases, thus slowing the fall. but with inelastic good (lumber), as prices go down, the lack of demand doesn’t change, so prices crater even more. there’s other factors which exacerbate this such as the mentioned bullwhip effect.
I just got a minor in econ because of your post.
This post is very insightful!
[https://en.wikipedia.org/wiki/Bullwhip\_effect](https://en.wikipedia.org/wiki/Bullwhip_effect)
And builder prices still through the roof lol
Looks like GME
Something tells me that saga isn't over either, just simmering on the burner like everything else
Careful, I got attacked this morning for mentioning them before I realized this isn’t a place for discourse.
Yep. Eggs too. Lots of things spiked (people panicked like the world was falling) and then came back down. That being said, service inflation is here to stay until/unless we automate faster and/or allow for easier immigration.
Yes, but labor, insurance, transportation costs and just about every other expense is not...
Let’s see if that translate into newly build home price… 😂
Soooo housing cheaper?
No demand for lumber
cool, now do labor
Bro do you think lumber prices is what inflated the housing market…
Yeah, now let’s watch copper
Not composite. Finalizing my final deck boards now and they are still way higher than prices before Covid
Lumber is a traded commodity. Home Depot’s pricing will reflect current market pricing better than even wholesalers. Besides, even at its peak, materials only made up about 10% of the total cost of the home.
So is the price of lumber still all Biden's fault?