Pricing graphs
- Thread starter 30ashopper
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Costs have increased at least 50% since 2002. Lumber is low right now, but labor, steel, concrete, and petroleum-based materials such as asphalt and PVC (which is now used for most plumbing) are way up. I don't think a "standard rate of inflation" would be an accurate indicator in this case because these items are commodities that trade independent of the rate of inflation. Bottom Line: You simply cannot build now for what you could 10 years ago. Add to that the fact that the building codes now require hurricane-related costs such as wind-rated glass, which is extremely expensive, and huge amounts of hurricane strapping that you won't find in 1999 homes. You are comparing apples and oranges.
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CCK, I am not in SoWal now but do you think that labor is up, as in they are wanting more pay? (or were you just talking about labor across the USA) Many of the subs that we know are here in LA doing work from after Gustav b/c they can't find any work in SoWal that pays or pays well.
There is very little work. Period. Subs got used to making decent money and now they won't settle for less. Doesn't make sense.
30ashopper, regarding how people are purchasing these days, I found the following regarding single family detached home sales including all areas of South Walton, only.
2004 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52%
2005 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 57%
2006 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52.2%
2007 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 56.1%
2008 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 25.2%
2004 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52%
2005 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 57%
2006 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 52.2%
2007 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 56.1%
2008 cash sales as a percentage of total sales (from Jan 1 thru Sept 26) 25.2%
If you look at it from the perspective that consumer costs to put gas in the truck and groceries on the table, if labor costs are staying the same, they have really gone down, since everything else has increased with inflation.
A lot of people were taking cash out of equity (that today doesn't exist) and using that to invest. I think these numbers reflect the fact that we have gone back to the old way of doing things. People with credit get loans and buy homes with 15%+ down. The investulators are gone from the market. This implies even more downward pressure on price because these folks don't throw money out the window expecting to flip property 3 months later.
The wild roller coaster market of 2001 -> 2007 is over.
Relative to 1999 labor costs have gone up considerably more than the rate of inflation and they are a higher percentage of the overall cost of a home. During the peak of the market, subs could charge a contractor whatever they wanted if they were reliable and showed up to the job--classic supply and demand. Subs now want to charge the same high prices, which the market can't support. "Paper only" contractors are hurting because they can't afford the high labor costs. Contractors who are doing a lot of the work themselves are the only ones who can afford to build and sell within a reasonable price point. The problem with that is that when a contractor is doing his own work on-site, he doesn't have the time to manage several jobs (if he can get multiple jobs) and so his company has greatly reduced revenue. The construction industry and all supporting industries are really hurting right now.
But I digress. My point is that in spite of what 30AShopper hopes/predicts, it is not likely that prices will to drop to 1999 prices. Replacement costs are at least 50% higher than 10 years ago and price increases are from more than just an inflated market--there are legitimate reasons why homes prices have increased which are related to costs.
The forum is Sowal centric-- and rightly and gladly so!! But, there is no second home market in America that will stabilize or increase in value until the primary residence market in middle America stabilizes. People in poo dunk, USA are not going to buy a second home anywhere until their view of their economic well-being improves.
I disagree. If people think that great potential for increase in value over time exists in second home markets, they will put their money into those markets. Many owners in South Walton have more value in their secondary home than they do in the primary residence.