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What's even crazier is that the builders are identifying that even with the increased price for lumber, demand is still there—people are willing to eat the cost

by skit 5y ago

What's even crazier is that the builders are identifying that even with the increased price for lumber, demand is still there—people are willing to eat the cost. I don't imagine builders will be decreasing their prices after there being plenty of lumber supply.

nfRfqX5n 5y ago
it's likely still cheaper than buying into the overpriced housing market right now
throwawayboise 5y ago
Unless they are colluding that's not how a free market works. If supply is truly plentiful, someone will be willing cut prices to gain sales. Others will then have to follow or watch their customers disappear.
- Leherenn 5y ago
  Doesn't that assume that you can scale relatively quickly? Otherwise the effect can stay marginal.
  - bluGill 5y ago
    You can though. Most of the labor is in skills that are easy to teach. You can take your half your seconds and promote to foremen, the other half as seconds under the old seconds. The foremen get the old third line as seconds, and you hire all new third-line people. There are a few people who aren't worthy of, or don't want that promotion, but overall the limit is how fast you can convince inexperienced people to work for you. This process can repeat yearly. You can also work more overtime - money talks to a lot of young people. You do take a small productivity hit, so it isn't all smooth. Still there is plenty of opportunity to expand to meet demand.
    - jonfw 5y ago
      With residential construction, most of the jobs are being contracted and subcontracted out, so promoting new foreman, etc. isn't even overhead the builder worries about. They just get new crews bidding on jobs out of nowhere
      - bluGill 5y ago
        You are at least half right. The new crews are not out of nowhere though - the builders know who the good foremen are, so when those foremen go on their own they will take them. Builders don't just take bids from anyone, they call the companies they always use to bid on a job. The builders often keep the same crews busy year round: there is no bidding, just at the end of one job they tell the crew where the next job is. When a builder has more work than crews they contact their current sub contractors and ask if any want to expand.
pbronez 5y ago
I recently met with a builder who said exactly this: prices are up quite a bit, but he expects they'll be sticky and stay high.
bluGill 5y ago
It doesn't take much to start a construction company. Most of them have foremen who are perfectly able to quitting and starting their own company. Both the new and existing company will hire a few new people (zero experience needed, start today at $18/hr - or some wage that gets people in) and so there are more in construction overall. As such builders will try, but once lumber prices go down a bit they will probably lower prices to attract customers. Plumbers and the like might get a little more many as they are harder to train up, but for the most parts there is enough competition that passing savings on to customers is going to happen.

by skit 5y ago

nfRfqX5n 5y ago

it's likely still cheaper than buying into the overpriced housing market right now

throwawayboise 5y ago

Unless they are colluding that's not how a free market works. If supply is truly plentiful, someone will be willing cut prices to gain sales. Others will then have to follow or watch their customers disappear.

Leherenn 5y ago
Doesn't that assume that you can scale relatively quickly? Otherwise the effect can stay marginal.
- bluGill 5y ago
  You can though. Most of the labor is in skills that are easy to teach. You can take your half your seconds and promote to foremen, the other half as seconds under the old seconds. The foremen get the old third line as seconds, and you hire all new third-line people. There are a few people who aren't worthy of, or don't want that promotion, but overall the limit is how fast you can convince inexperienced people to work for you. This process can repeat yearly. You can also work more overtime - money talks to a lot of young people. You do take a small productivity hit, so it isn't all smooth. Still there is plenty of opportunity to expand to meet demand.
  - jonfw 5y ago
    With residential construction, most of the jobs are being contracted and subcontracted out, so promoting new foreman, etc. isn't even overhead the builder worries about. They just get new crews bidding on jobs out of nowhere
    - bluGill 5y ago
      You are at least half right. The new crews are not out of nowhere though - the builders know who the good foremen are, so when those foremen go on their own they will take them. Builders don't just take bids from anyone, they call the companies they always use to bid on a job. The builders often keep the same crews busy year round: there is no bidding, just at the end of one job they tell the crew where the next job is. When a builder has more work than crews they contact their current sub contractors and ask if any want to expand.

pbronez 5y ago

I recently met with a builder who said exactly this: prices are up quite a bit, but he expects they'll be sticky and stay high.

bluGill 5y ago

It doesn't take much to start a construction company. Most of them have foremen who are perfectly able to quitting and starting their own company. Both the new and existing company will hire a few new people (zero experience needed, start today at $18/hr - or some wage that gets people in) and so there are more in construction overall. As such builders will try, but once lumber prices go down a bit they will probably lower prices to attract customers. Plumbers and the like might get a little more many as they are harder to train up, but for the most parts there is enough competition that passing savings on to customers is going to happen.