The Market Thread

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Birry

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Feb 6, 2007
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Not that I'm moving, but our neighborhood is seeing comps around $215/sf where it has always been closer to the $175-200/sf range. New home construction is booming around us and these buyers are paying a premium with the extremely inflated cost of materials. I assume they're getting appraisals near cost, so I assume the entire areas comps should be permanently increased.
I don't understand how inflated values due to building material cost increases will hold longterm. Seems like it's a premium that builders and/or buyers are taking hits on in the short-term, but will eventually have to flatline or go down at some point. My theory is that buyers are ok with paying $30k more for a house, and it'll just take them 10 years to start building equity. Surely prices won't go way UP from the premiums we're seeing now due to material costs, right?

If I'm a buyer in 5 years, I won't care if the seller paid an extra $30k to build the house in 2021. I'll just see that they overpaid to build it 5 years prior. That's their loss, not mine. Why should I pay a premium 5-10 years in the future for current 250% price increases on building materials?
 
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oks10

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If I'm a buyer in 5 years, I won't care if the seller paid an extra $30k to build the house in 2021. I'll just see that they overpaid to build it 5 years prior. That's their loss, not mine. Why should I pay a premium 5-10 years in the future for current 250% price increases on building materials?
There's a house that's started building across from our neighborhood that's for sure gonna be $400k+ they JUST poured the forms. I can't imagine wanting to actually build right now unless I locked in my price before lumber skyrocketed. If I were looking at a $400k build, I'd be trying to work with my builder to see if it'd be possible to delay the build and have me reimburse them for what the land is costing them to sit... It certainly seems like that could be cheaper than the increased cost in materials at least.
 

Birry

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Feb 6, 2007
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There's a house that's started building across from our neighborhood that's for sure gonna be $400k+ they JUST poured the forms. I can't imagine wanting to actually build right now unless I locked in my price before lumber skyrocketed. If I were looking at a $400k build, I'd be trying to work with my builder to see if it'd be possible to delay the build and have me reimburse them for what the land is costing them to sit... It certainly seems like that could be cheaper than the increased cost in materials at least.
Builders are still building, and people are still buying them before they're built. We were in the market for most of the last 9 months, but we bailed after the frenzy and the building costs went up. We started working with a local builder who was locking in his current house price and eating the inflated material costs on that one, but then up-charging for his next 2-3.

Obviously my hypothesis could be wrong, but I just can't see how these current insane prices on building materials can possibly translate to future home values.
 
Sep 6, 2012
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Obviously my hypothesis could be wrong, but I just can't see how these current insane prices on building materials can possibly translate to future home values.
Its not just the increased costs of lumber, companies like mine had to put in increases. Its the demand, you had families locked in the same home. The homes probably felt small, because some people stayed home for work. They decide hey lets get a bigger home, or hey lets remodel. I know we did a bathroom remodel, not because of covid. It was on the books for a bit. Supply and demand with low interest rates is the biggest driver.
 

TheMonkey

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I was looking at Cinemark, which was down 3% this morning and closed up 2.29%. Goldman Sachs isn't optimistic on theaters recovering, but I wonder about Cinemark and Imax. Seems like there's a lot of pent up demand for folks getting out of the house this summer.
 

Bowers2

Stackin' Joe's Cups
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Fed removing support for the market starting now:

Federal Reserve Board announces plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility

The Federal Reserve Board on Wednesday announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF), a temporary emergency lending facility that closed on December 31st, 2020. The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers, and bolstering employment through the COVID-19 pandemic.
SMCCF portfolio sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds. The Federal Reserve Bank of New York, which manages the operations of the SMCCF, will announce additional details soon and before sales begin.
The SMCCF was established with the approval of the Treasury Secretary and equity provided by the Treasury Department under the CARES Act.
 
Oct 7, 2008
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AMC isn't up because of their current or even future outlook. It's all about the meme stock.
Tons of stocks that are heavily shorted have been popping this week. Media likes to say this is all retail but I really don't think retail has the power to move multiple stocks like this, sure they're riding the waves but they aren't the ones making them.
 
Nov 6, 2010
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Tons of stocks that are heavily shorted have been popping this week. Media likes to say this is all retail but I really don't think retail has the power to move multiple stocks like this, sure they're riding the waves but they aren't the ones making them.
Hard to say which is the dog and which is the tail. Those institutional guys aren't dumb, and after they got scalded by the whole Gamestop thing, you can bet they wrote some algorithms just for that so it wouldn't happen again. Fool me once...
 

steross

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This could get interesting.

https://www.axios.com/resignations-companies-e279fcfc-c8e7-4955-8a9b-47562490ee55.html

"Great resignation" wave coming for companies
Erica Pandey


Companies that made it through the pandemic in one piece now have a major new problem: more than a quarter of their employees may leave.

What's happening: Workers have had more than a year to reconsider work-life balance or career paths, and as the world opens back up, many of them will give their two weeks' notice and make those changes they’ve been dreaming about.

“The great resignation” is what economists are dubbing it.

Surveys show anywhere from 25% to upwards of 40% of workers are thinking about quitting their jobs.
"I don't envy the challenge that human resources faces right now," says Anthony Klotz, an associate professor of management at Texas A&M University.
Anumber of colliding trends are driving the resignation boom, experts say.
 
Sep 12, 2008
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It will be interesting to see how companies are still in the WFH band wagon in 12 months time. I expect many to try to return to pre COVID practices. I enjoyed WFH very much and ideally would prefer some hybrid work schedule, but I don't see that happening in my current gig. I am glad that my commute is short and that doesn't come into play, but I know many people who commute an hour or more each way.

The problem with WFH is that eventually employers may figure out they can hire more workers from out of the country who they can pay less just as easily.
 

oks10

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It will be interesting to see how companies are still in the WFH band wagon in 12 months time. I expect many to try to return to pre COVID practices. I enjoyed WFH very much and ideally would prefer some hybrid work schedule, but I don't see that happening in my current gig. I am glad that my commute is short and that doesn't come into play, but I know many people who commute an hour or more each way.

The problem with WFH is that eventually employers may figure out they can hire more workers from out of the country who they can pay less just as easily.
My company created a hybrid model at the corporate level but then gave all the plant managers the option to participate or not. So yeah, I'm back in the office full time again... And that's fine. If they want me to work from the office then I'll work from the office. Screw them though if they think I'm going to be taking my laptop home on evenings and weekends. Either you think I'm able to get work done from home or you don't. Can't have it both ways.