Monday, April 24, 2006

Even More Thoughts on Plywood, Metals, and Concrete

It's been awhile, but I thought I'd go back to looking at the Producer Price Indices for Plywood, Metals, and Concrete, partially because I'm a fun loving masochist, but mostly because I feel this trinity of parts is indicative of housing construction more broadly.

And I believe that if there is a bubble, it's about to pop (if it hasn't already).

Anyway, look at the Consumer Price Index since December '03:

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OK, so we can see by that graph that inflation has increased by about 8.41% since December '03, which sort of gives us a base to judge the rest of this data.

Here's the results for plywood, architectural & structural steel, and concrete and cement:

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And just to put this into some sort of perspective, here's the rate of change from month to for all three PPIs and the CPI:

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I think it's safe to say that plywood flip flops more that the Republicans think John Kerry did... and as much as George W. Bush actually does.

Anyway, the cost of concrete and cement and steel have consistantly risen over the last few years, driving the cost of construction up. The change in plywood has been driven by, among other things, Hurricane Katrina (9% jump in Sept. '05), and has added instability to the ability of contractors to accurately quote a price. Since December 2003, plywood has only increased about 3% since 2003, while steel and concrete have increased 20 and 24% respectively.


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