Sounds like most people bought more house than they could afford with 30 year variable rate jumbo loans.
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Sounds like most people bought more house than they could afford with 30 year variable rate jumbo loans.
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Well, 20% maybe. And “jumbo” has a specific meaning that likely doesn’t apply here.Quote:
Originally Posted by MagnificentUnicorn
20 % of all the mortgages in Canada is not nothing but 30 yrs was just the amortiztion period, I duno if its jumbo but it might as well be for someone who can't pay it, the low rates were suposed to go on forever and the problem was when they did not
i can still get a 10yr from one of the banks i deal with but I don't think they wrote too many of those, there used to be more of a spread depending on the term of the mortgage, I'm remembering a 2% difference between a 5 yr and a 1 yr so most people went short term and alot of them went variable but i wonder how many of them were really able to think criticaly and work it out on a cocktail napkin ?
my parents took out a 6% 25 yr mortgage in the 60's so the 25 yr terms were around in cancuk land, they paid it off early when interest rates were hitting 18%, of course i tried to tell them it was silly but mom said " we feel we should have the mortgage paid off so we can own our home" and there was absolutely NO convincing her
BlahblahblahQuote:
Originally Posted by fastfred
So, what part does gravy train construction pricing play in this fiscal policy conundrum?
#ohnopricesarehigh
I had a shit year last year because all the construction pricing was still in gravy train mode. Projects that should have moved forward got paused as clients said fuck no I’m not paying what appears to be a 500% motivator bonus to just show up
Glad that shit has trickled back to the build side
Maybe we’ll see some attempts to right size pricing again as they wonder when that next job is coming in
^^ I appreciate your comments, here is my rebuttal.
Gravy Train Definition: I do not have to hustle for work, I do not have to justify my prices, work just flows to me.
Myself as well as some other contractors and subs I know were actually not hitting their marks, I aim for 14% profit. I have actually been slightly under that number for the past three years even though my revenue is up.
I wanted to buy an 84 Toyota RWD manual, fun little truck to have. Seller wants 4k at least, bottom dollar. I am in for $1,800.00, because I don't need a 40 year old beater car. So costs are screwed across the board. Up until 10 years ago I used to buy one beater after another spending only 1,500 to 2,500. Days of cars being priced like that are long gone.
Construction prices will not go down, unless it is taking place in some shit part of the country. The market may try force it to happen but I don't see it happening. If you goto any job site the majority of the work force is well over 40 years of age. This next down turn will be my third time, I have told myself for ten years if that happens I'm out. So are thousands of others. There is no one filling the void. Young kids willing to learn a trade such as a mechanic or carpeted, yeah. Nope. Few and far between. 2008 created a vacuum of skilled workers, that vacuum is only going to suck more. Trades people finally know what they are worth and are demanding it.
Sit down and compare grocery costs from 2018 to 2022. Car costs. Heating bills have just decimated some people this year. My provider xcel energy just posted a 1.74 billion dollar profit. Yet they will gladly turn the heat off on someone who hasn't paid their bill in four months. The CEO of xcel just wrote a pretty op-ed in the Denver post about how much he and his company cares. It was absolutely obscene.
Huh? Is this where the contractors bitch that the design professionals cost us jobs because they won't value engineer a projects. I know exactly zero decent generals and subs that are not buried in work.Quote:
I had a shit year last year because all the construction pricing was still in gravy train mode. Projects that should have moved forward got paused as clients said fuck no I’m not paying what appears to be a 500% motivator bonus to just show up
It's called a labor market for a reason. Its subject to economics just like everything else, theoretically. We have very few trade schools or apprenticeship programs. Nobody wants their kid to be a plumber. Just because labor rates have increased doesn't mean you are being ripped off. That shit is hilarious.
I had a surgeon complaining the other day that he couldn’t get more surgeries done because no one wanted to work and they wanted too much money. I told him to fuck off, adjusted for inflation, healthcare wages have been stagnant for 30 years and if he wanted more out of me to show me the money. I’m not getting rich but he is.Quote:
Originally Posted by Foggy_Goggles
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I’m happy to hear you are unaware of these issues, but they exist and the slinky effect makes its way from inception to executionQuote:
Originally Posted by Foggy_Goggles
Nice stretch on the won’t VE a project — that shit is hilarious
You get your rates until you don’t — and that is happening whether you want to puff up about designers or not
Well right, but why is there nobody available at a non over inflated price? Labor is worth what someone will pay for it. I know of zero tradespeople sitting at home making up a number. They are working.
I'm not telling you its fair or sustainable or not a rip off or any of that. I'm just telling you what it is. I have no idea why people don't quit there job as a teller at the bank to chart $75/hr, to be a a cleaner because that's what they charge around here. People pay it.
I pay my architects and engineers what they charge because they are good and I have no choice. It's business. If you have clients that are not willing to pay the market price to complete their projects, find new clients.
I'm not trying to be a dick about it. I'm just always taken aback a bit when people want to arbitrarily but a value on someone else's skill set. Why shouldn't the electrician charge $130/hr. is he can get it?
That’s not what this is about, so tuck it all back in…
This is about pricing based on my-horizon-is-so-far-out-that-I’m throwing-stupid-numbers-at-stuff-just-cuz…not getting paid what they’re worth but proposing ransom in exchange for services
I’ve talked to good GC’s about it and they aren’t filling their books this year the way they were last year. And that is directly because they scared the shit out of the buyers by just thinking “line goes up” over the last few years. They are warning their subs that the gravy train is slowing down hard and soon
Client’s investments are down AND everything costs more AND borrowed money ain’t free anymore so the door is shutting on just-charge-10%-more-than-last-time
That's not how I run my business but the next 12months looks booked and the ball park numbers my GCs are giving their customer for 2025ish is to expect 10% increase in labor. That's my market.Quote:
This is about pricing based on my-horizon-is-so-far-out-that-I’m throwing-stupid-numbers-at-stuff-just-cuz…not getting paid what they’re worth but proposing ransom in exchange for services
The good subs will make that determination for themselves. Find and keep good customers willing to pay a high price is a good rule.Quote:
They are warning their subs that the gravy train is slowing down hard and soon
So money cost more and materials cost more so labor should cost less? The cost increases are expenses to my business. But yeah, Econ 101...the solution to high prices is high prices.Quote:
Client’s investments are down AND everything costs more AND borrowed money ain’t free anymore so the door is shutting on just-charge-10%-more-than-last-time
I get that there are shit bag contractors that have been charging absurd prices for questionable work. But no one side of market determines price. There is no arbitrated value of ones work. Personally, my customers (both homeowners and builders) tell me they are very happy with the value i provide. I have a pretty established book of business but I leave room for potential new customers. I tell people right from the jump what my schedule is looking like and the applicable hourly or sq. ft. price I'm estimating at. If either of those parameter isn't to their liking I politely end the conversation.
Houses, airline tickets, eggs, motel rooms, car mechanics and so on. If you don't like the price, don't buy.
[QUOTE=Foggy_Goggles;6804276]I think you’re starting to understandQuote:
If you don't like the price, don't buy.
You seem to be on the right side of the curve — good for you
Durrrr….Quote:
Originally Posted by byates1
Go back and check what Keynesian’s vs Austrian’s predicted during the Great Recession (including conservative Keynesian’s like Greg Mankiw, it’s not all big government….). Austrian predictions were all decimated.
There’s a reason every macro model (both private and government) is based on Keynesian (or ‘New Keynesian’ ) foundations.