May 12, 2022
Clients & Partners
- Inflationary environment is continuing but at a declined rate. Most of what we are hearing now is related to gas and delivery prices that are driving the costs
- Lumber Prices: Lumber peaked in the 2Q and now is holding steady in the 900-1,000 $/mbf range. We will start start to see prices come down here as suppliers cycle through their more expensive inventory
- Foundations: Concrete, steel and other material related to slabs are still going through slight increases, with the increases in concrete being driven by higher gas prices
- Material Shortages: We are still seeing unpredictable shortages in material, particularly around framing. While these delays are typically manageable, we are keeping a close eye on them and staying in contact with our suppliers to source from various companies or provide alternative materials to our clients. The large shortages we are seeing right now are in hardie products (used on the exterior of many of our homes), and flooring products, as many of the flooring materials come from eastern Europe and Russia
- Discussions with Real Estate Agents: In conversations with real estate agents in our areas of focus, we are hearing that existing home prices are also increasing due to the high replacement costs associated with current construction cost inflation. Initially I was not seeing that, but it is now coming to fruition in highly desirable areas of Houston
- Additional excerpts from articles related to these trends:
- China’s Covid Outbreak – https://www.wsj.
com/articles/chinas-covid-19- outbreak-cools-metals-rally- 11651534641 - Summary: The pandemic’s resurgence in China has helped pull metals prices down from highs hit following Russia’s invasion of Ukraine. Worries that new economic lockdowns will erode demand from the world’s largest commodity consumer have dragged aluminum and tin down more than 17% from their recent all-time highs. Copper, vital to everything from construction to electronics, has lost 8.5% since its March record, while zinc and lead are off 8.7% and 10% from this year’s highs, respectively. Analysts say Covid-19 lockdowns and travel restrictions in major Chinese cities could weaken demand for metals, helping offset the supply-chain snarls and dwindling inventories resulting from the Russian invasion. While prices for many metals remain above prepandemic levels, their retreat from records eases some immediate concerns about supply shocks adding to an inflationary spiral.
- Russian War – https://www.forbes.com/
sites/edwardsegal/2022/04/02/ supply-chain-crisis-worsens- as-russias-war-against- ukraine-continues/?sh= 10396d9a6e49 - Summary: According to Tomic, “One broad effect is in metals and ores, where Russia and Ukraine are significant producers of commodities such as aluminum, steel and platinum… The largest broad effect comes from the rise in the price of oil, which is more contributing to inflationary pressures than it is affecting the actual delivery of goods.”
- Mortgage Rates & How to Cope: https://www.wsj.com/
articles/home-buyers-are- finding-ways-to-take-the- sting-out-of-rising-mortgage- rates-11651445773?mod= djem10point
- China’s Covid Outbreak – https://www.wsj.
- Quick and clear decision making to assist in keeping the home moving
- Flexibility on move in dates while we work with subcontractors to finish work (of high quality) and with suppliers to receive all selections and get them installed
Tyler Renaudin