Jump to content

The Economy


lowrider
 Share

Recommended Posts

What has happened to the fundamental principals that once defined an economy. An eight foot 2x4 costs  $7.00 a sheet of plywood is $75.00 houses sell for hundreds of thousands over asking price and a new truck can't be had for lack of computer chips. I don't think anyone would argue that the only tool to curb inflation is a substantial  interest rate hike but the gov't doesn't seem to be interested in addressing this at the present time. Perception  and reality help me understand what's going on today.

  • Like 1
Link to comment
Share on other sites

I'm no expert, but here, last year the demand for houses dropped because not many people wanted to buy during COVID uncertainty and now there is an excess demand for property since all the people who would have bought last year but didn't are all backed up and competing for houses now.

I believe it is the same deal for cars (increased demand due to backed up potential buyers) and the supply of manufacturing has been reduced to covid and other environmental factors. Which is great, because I just put one of my cars up for sale 😄.

Here, we have a lot of foreign investment and over the past couple of decades it has driven the house of prices up ridiculously, especially when compared to the wage increase. Where we bought our houses has gone up apx $300k in just 5 years since it is between 2 universities and a lot of foreign students attend and reside close-by and end up competing for property in this particular area. They just have more money than local Australians and they're willing to pay way over market value, essentially shifting equilibrium market value up.

Not sure if it is the same as where you live, but our house prices are essentially directly proportional to the land size upon which they are built. There could be an amazing architect designed house with all the best fittings on a 500sqm block, which would sell for less than an old rundown dump which would be knock-down only, on an 800sqm block.
 

Edited by daveo
most likely definitely wrong probably
Link to comment
Share on other sites

Interest rates don't matter to people who buy for cash.  We just had a condo that was purchased for $76K in 2009 that was listed for $469,900, sold in 2 hours for cash, for $490,000.  It closed in 3 weeks.  There's almost nothing offered under $1,000,000 unless you want to buy a condo with outrageous HOA fees, and I mean up t $20K/year.

Many of the houses that are in Big Sky, Seattle/Tacoma/Duluth, are selling for cash offers significantly above asking price.

A house across the street from me in Tacoma Wa. sold for $384,000 4 years ago.  2044 Sq Ft on a 5,000 Sq Ft lot that was listed at $725,000, sold for $775,000 in a week.  It could have sold in a day, but they wanted to have the highest bid before signing the contract.  There was probably $100K in upgrades and a good view of Puget Sound and an ugly roof in between.

If you want to buy a house in any really desirable locale, expect to have a cash offer over the asking price. 

The law of supply and demand dictates exactly what something is worth by the person who's willing to pay the price.  It really is the single economic principal that's driving the housing market.  Interest rates will dampen some people that are on the margins, but not for cash or those that another $280/mo on a 1% increase in interest rates will matter on a $500,000 loan.  And there's a lot of those people moving out of wealthy cities.

As far as building materials go, it's exactly the same thing.  Not enough supply and way too much demand.  You either pay the price or go without.  The market will eventually catch up, maybe not totally to lower the previous prices, but it will come down when sawmills go back on line and the housing market cools.

My wife and I just walked through a subdivision with maybe 30 obscenely big Mansions.  3 were occupied.  Average price would be around $7,000,000.

Nothing makes sense anymore.

Anyone want to buy a digital image of me doing a faceplant with a Sony Walkman for $450,000?

 

  • Like 1
Link to comment
Share on other sites

29 minutes ago, bumpyride said:

Anyone want to buy a digital image of me doing a faceplant with a Sony Walkman for $450,000?

 

Yes. 

 

 

 

Sorry wait I mean no. 

Edited by daveo
Link to comment
Share on other sites

Last year increases in lumber prices were mainly due to people being stuck at home with stimulus checks. The producers of lumber products had anticipated a downturn during the pandemic, and had cut production. Not a good combination. This year, pent up demand for housing has compounded the problem. I don't think the lumber producers want their products to be like the face mask and hand sanitizer filling clearance shelves recently, so prices may take a while to come back down.

Link to comment
Share on other sites

No one can address this topic seriously without going into politics. As we have seen from previous posts, no one cat touch politics without someone attacking the person rather than attacking the data points in the argument. 

Don't worry though, the housing market will cool off. It is, in fact, on another path to another crash as salary incomes vs mortgage outflows are not in alignment and many who don't have a memory that can go back as little as 10 years ago seem to have forgotten the last housing bubble, how and why it happened.

Also be prepared for a good round of hyperinflation on everything else as well. This has just begun and the cause is obvious....

 

Link to comment
Share on other sites

Careful here folks.
:nono:

 

23 hours ago, TVR said:

No one can address this topic seriously without going into politics. As we have seen from previous posts, no one cat touch politics without someone attacking the person rather than attacking the data points in the argument. 

This is a really awful flaw of human nature, not specific to this community.  This is why political discussions are not allowed anywhere on this site.

  • Like 1
Link to comment
Share on other sites

On 5/21/2021 at 6:33 AM, lowrider said:

Perception  and reality help me understand what's going on today.

Until you realize this is bigger than a 2x4, bigger than inflation, than a car, than housing, covid, or any like factor, your perception will never figure this out. Those realms are only the symptoms of some other plan or "desire"...

Link to comment
Share on other sites

On 5/25/2021 at 8:23 AM, TVR said:

Don't worry though, the housing market will cool off. It is, in fact, on another path to another crash as salary incomes vs mortgage outflows are not in alignment and many who don't have a memory that can go back as little as 10 years ago seem to have forgotten the last housing bubble, how and why it happened.

Also be prepared for a good round of hyperinflation on everything else as well. This has just begun and the cause is obvious....

First point--> my experience tells me there are 1) always idiots / rubs out there, 2) everyone wants to get rich and thinks real-estate is a great way to print money, 3) American's have no memory in general... always been the case, always will be.  Buying opportunities are ample for those with memories, however.

Second point--> "hyper" not so sure, inflation, sure.  Not always a bad thing, however.  We shall see how this all cooks up, as many causes stem from the pandemic and its impact on production and the supply chain.  No one has the answer.

 

Hey! That was a pretty good response that kinda sorta dodged outright politics, right?

Edited by Atom Ant
typo
  • Like 2
Link to comment
Share on other sites

I'm reading closely between the lines looking for a hint of politics. Can't find any ! Except ( "no memory in general , always been that way " ) I'm thinking it could be reference to a particular individual . 

Link to comment
Share on other sites

7 hours ago, lowrider said:

I'm reading closely between the lines looking for a hint of politics. Can't find any ! Except ( "no memory in general , always been that way " ) I'm thinking it could be reference to a particular individual . 

Incorrect.  A broad stroke reference to all Americans, and people in general.  We tend to remember only what we find convienient.

Sincerely,

The comments author.

Link to comment
Share on other sites

Why not get him in trouble? Isn't he that guy taking up the whole mountains with those ridiculous giant S's anyway? His board it too long anyway on that "monoski" ......

Link to comment
Share on other sites

i is but a simple country college drop out.
The older i get the more i find the study of economic fascinating.

Used to be on the right side of the purity spectrum but more and more leaning toward the human side.  https://xkcd.com/435/

IMHO:  monetary/fiscal policy != politics

It should about interpretation of data and how to maximized efficiency of the market while balance human dignity.

Pure capitalist does not work - result in Oliver Twist like exploitation
Pure socialist does not work -  Fall of the USSR
Largest economy of the world:  USA/China/EU are working by balance between free market and social safety net.

Politic to me are the bits about percentage and arguing who's opinion is better. Which i have very little interest in.

Macro economic(fiscal, monetary) is difficult to get right: interest, tax rate 
Close loop system sounds great in theory but assume we know what we are measuring.

Butterfly effect at play here:  

“some systems … are very sensitive to their starting conditions, so that a tiny difference in the initial ‘push’ you give them causes a big difference in where they end up, and there is feedback, so that what a system does affects its own behavior.”

-- John Gribbin
Micro economic:  this is more manageable bite chunk.  "simple" supply demand

Behavior economic:  now with human emotion in the mix. 
illogical and irrational.  What seems illogical to people can be perfectly rational to me the individual.

ie:  buyings new snowboard over and over and hoping that it will make me a better snowboarder - seems illogical to my family and bank account.  However It's perfectly rational to me.  Mental gymnastic is hella powerful.

Take a more empathetic view toward our fellow man and don't let emotion rule our decision seem the pragmatic things to do.

Long winded way to say:  this idiot doesn't know for sure but likely it's because we is human.

Link to comment
Share on other sites

1 hour ago, pow4ever said:

 

Used to be on the right side of the purity spectrum but more and more leaning toward the human side.  https://xkcd.com/435/

 

The math doesn't lie. Maybe we need more mathematicians in government. Can you imagine a politician doing this.

"Meanwhile, Gowers said he could precisely date the moment at which he realised that a herd immunity policy was “disastrously wrong”. After writing a Twitter thread on 13 March in which he backed the concept, a reply prompted him to re-evaluate."

 

https://www.theguardian.com/world/2021/may/28/academic-who-helped-change-no-10-covid-policy-in-first-wave-warns-of-easing-risk?CMP=fb_gu&utm_medium=Social&utm_source=Facebook&fbclid=IwAR0U6WOYxUMuupAUOyE2HaMcw4aG72YJ5rkTdfc7lVXRn27QAbBdz8onGYg#Echobox=1622217899

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share



  • Recently Browsing

    No registered users viewing this page.

×
×
  • Create New...