To clarify the homebuilding costs are increasing that much isn’t because of the population growth.
Additional demand on building materials might push up the prices slightly, but the higher building costs are a result of inflation, higher interest rates and unfilled jobs in the construction industry.
Yep. One of the problems with relying on interest rates to curb inflation, is that interest rate hikes also make it more expensive to increase supply, ie build more houses (hence stagflation).
I think fundamentally the surge in inflation we are seeing is a supply side issue, less stuff but same or more demand. Between the pandemic and ensuing supply-chain disruptions to the Russian invasion of Ukraine, there has to have been a pretty sustained and severe loss of stuff (especially food) being made with all the resulting increases in prices.
Specifically wrt to housing construction costs in Canada, we should be able to insulate ourselves from much of those bigger underlying problems. The problem also isn’t housing costs, that’s the symptom. The problem is that housing is expensive.
The article is mostly descriptive of the problems, and it seems more or less on the mark. Not addressed though, and something I ponder, is the role of “housing as an investment” vs. “Housing as a necessity”. Developers like to build big expensive houses for higher returns it seems, where what we need is more middle density housing. I think it’s getting better, but the article doesn’t really go into what sort of houses are being built. Still the problems with lumber supply and concrete will apply no matter what.
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To clarify the homebuilding costs are increasing that much isn’t because of the population growth.
Additional demand on building materials might push up the prices slightly, but the higher building costs are a result of inflation, higher interest rates and unfilled jobs in the construction industry.
Yep. One of the problems with relying on interest rates to curb inflation, is that interest rate hikes also make it more expensive to increase supply, ie build more houses (hence stagflation).
I think fundamentally the surge in inflation we are seeing is a supply side issue, less stuff but same or more demand. Between the pandemic and ensuing supply-chain disruptions to the Russian invasion of Ukraine, there has to have been a pretty sustained and severe loss of stuff (especially food) being made with all the resulting increases in prices.
Specifically wrt to housing construction costs in Canada, we should be able to insulate ourselves from much of those bigger underlying problems. The problem also isn’t housing costs, that’s the symptom. The problem is that housing is expensive.
The article is mostly descriptive of the problems, and it seems more or less on the mark. Not addressed though, and something I ponder, is the role of “housing as an investment” vs. “Housing as a necessity”. Developers like to build big expensive houses for higher returns it seems, where what we need is more middle density housing. I think it’s getting better, but the article doesn’t really go into what sort of houses are being built. Still the problems with lumber supply and concrete will apply no matter what.
Don’t forget plain ol’ corporate greed