2 replies to this topic

[CLK]

With lumber futures in half from the highs and apparently ahead of the
top in housing, does this mean the price of a $200K house at the top
will be selling at $100K at the bottom ?


Or does demand trump cost of materials ? Someone is pocketing some
nice change off these materials drops, home prices have not dropped much
I don't think.

[LeroyB3]

I believe labor is the largest cost input into building a new house. Best, LB

[flyers&divers]

Lumber is a sensitive indicator of construction activity but most of the time land is the largest portion of the cost of a house (this may depend on location)followed by labor(including all trades), and soft costs(construction period finance costs, architect, legal, permits, inspection fees, marketing etc.) Mechanical systems are also a good chunk. When it comes to the futures I do not know how much the industry is using it because lumber never managed to be a liquid futures to trade. In other commodities -like wheat, sugar, copper for example -there is very active hedging and swapping delivery certificates at premium or discount to the futures depending on quality and location of the goods but for some reason not so much in Lumber. Regards. F&D

Edited by flyers&divers, 19 March 2007 - 08:20 AM.