I was having a chat with a friend who owns two rental units last week and has been doing some regular maintenance. He told me generally the same thing that the Wall Street Journal has crisply quantified
Prices are surging for the raw materials used to build American homes. Lumber, one of the biggest costs in home-building after land and labor, has never been more expensive and is more than twice the typical price for this time of year. Crude oil, a starting point for paint, drain pipe, roof shingles and flooring, has shot up more than 80% since October. Copper, which carries water and electricity throughout houses, costs about a third more than it did in the autumn.
Prices for granite, insulation, concrete blocks and common brick have all pushed to records in 2021, according to the Bureau of Labor Statistic’s producer-price index, which measures the change in prices that producers receive for their output. Drywall and ceramic tiles are short of records but have also climbed.
Building supply chains weren’t prepared when Americans began swarming model homes and Home Depots in April. Sawmills and factories shut down like most other workplaces early in the lockdown. Suppliers never caught up. Now building permits for residential construction are being issued at their highest rate since 2006.
Can you imagine if B'game had passed rent control? There would be deferred maintenance all over town. You have to wonder how the neighboring towns that did (looking at you, Mountain View) will view the creeping neglect that has to occur when prices go up 80%, double, or a third on key materials. The Law of Unintended Consequences isn't an economic law, but it should be. I'm unclear on how the Fed can say they don't expect inflation to hit soon. Oh, and gas is right behind. "In California, the most expensive market, average prices stand at $3.88, according to AAA."
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