Sunday, January 30, 2005

Materials add up ... way up

Sure, low interest rates, psychology, and the Chinese central bank are the main reasons behind booming house prices, but don't forget the fact that commodity prices are going through the roof, thanks to... well, low interest rates, abundant world-wide credit, and the weak dollar.

This LAT article does a good job showing how it all adds up.

A painting contractor by trade, Don Dellino knows a lot more about residential remodeling than your average homeowner. But even he was startled by the recent run-up in construction costs due in large part to soaring prices of building materials. Dellino and his wife are expanding their two-bedroom Manhattan Beach home into a 3,900-square-foot Italian-style villa.

"One bid for the roof was $14,000 higher if I decided to use copper flashing," said Dellino, who opted for the less expensive — if less attractive — galvanized metal. Despite his cost-cutting, however, Dellino's home makeover will wind up costing about $450,000, significantly higher than his own original estimate of $300,000.


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