COVID and the housing market

[mimico_polak]

BOC has more concerns than mortgage rates, the solution of using interest rate hikes to cool inflation has side major economic side effects.

I think they may have slowed the economy too much. Manufacturers are not investing in productivity, unemployment is rising and GDP/capita is falling. BOC will need to shift priorities from fighting inflation to fighting recession.

I expect big cuts over the next 12 mos.

Good. I could use some relief on my mortgage...hopefully I keep my job.

The US is making some large cuts and since our economy is a bit connected to them we like it or not , we may have some suffering coming .
I suspect private lenders are feeling the pain faster than banks as people that need an unconventional source of finance will be sooner to default.


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What do you foresee as the 'suffering'? All my buddies in construction are saying it's super slow and the only work going on is the work that's been slated from 1-2 years ago and they can't stop construction of the buildings now.

All their residential work effectively stopped.

Could this be a good time to fire up my company now that my work around the house is coming to an end? I haven't focused much on it since I needed to finish up my things...but now I will have more time in the fall and winter, but I suspect many contractors will be flooding in to make up for lost wages that they got used to during COVID.

 

[Mad Mike]

Good. I could use some relief on my mortgage...hopefully I keep my job.


What do you foresee as the 'suffering'? All my buddies in construction are saying it's super slow and the only work going on is the work that's been slated from 1-2 years ago and they can't stop construction of the buildings now.

All their residential work effectively stopped.

Could this be a good time to fire up my company now that my work around the house is coming to an end? I haven't focused much on it since I needed to finish up my things...but now I will have more time in the fall and winter, but I suspect many contractors will be flooding in to make up for lost wages that they got used to during COVID.

I'm pretty sure construction is in for some tough times, this may hurt folks in the material supply chain, and contractors but less so for tradespeople.

Producers and wholesalers fatten margins in inflationary times, but are reluctant and slow to roll back when markets cool. Items with short shelf life, like food, rollback sooner because perishables are move 'em or lose 'em -- that's why food prices are dropping. Durable goods can be inventoried, so wholesalers hold rollbacks until they get bloated with inventory. Then comes the big **** - a flood of deals hit the market and prices correct quickly and painfully. I think we're getting close to that.

Tradespeople might suffer a bit, but there's a lot of fat that moves around in the trade pricing. A contractor might have a cost of $60/hr for a carpenter, then charge that carpenter out for $100/hr. If that carpenter goes alone, he might charge himself out at $60/hr making carpentry less expensive or the final payor, but keeping the same income for the carpenter. Ot the contractor cuts his margin and sells the carpenter's service for $60/hr.

Fun times are on the horizon!

.

 

[mimico_polak]

I'm pretty sure construction is in for some tough times, this may hurt folks in the material supply chain, and contractors but less so for tradespeople.

Producers and wholesalers fatten margins in inflationary times, but are reluctant and slow to roll back when markets cool. Items with short shelf life, like food, rollback sooner because perishables are move 'em or lose 'em -- that's why food prices are dropping. Durable goods can be inventoried, so wholesalers hold rollbacks until they get bloated with inventory. Then comes the big **** - a flood of deals hit the market and prices correct quickly and painfully. I think we're getting close to that.

Tradespeople might suffer a bit, but there's a lot of fat that moves around in the trade pricing. A contractor might have a cost of $60/hr for a carpenter, then charge that carpenter out for $100/hr. If that carpenter goes alone, he might charge himself out at $60/hr making carpentry less expensive or the final payor, but keeping the same income for the carpenter. Ot the contractor cuts his margin and sells the carpenter's service for $60/hr.

Fun times are on the horizon!

.

I'll be ordering my lawn sign this weekend then! May as well get that rolling as I've been very hesitant.