Through the roof pricing

"Is there any blue sky with all this economic cloudiness? Yes - interest rates. Interest rates are still close to zero to mortgages and most car sales. However, this might not be the case for much longer. Any additional risks, besides hyper inflation? Yep - government spending."

It all started earlier this year, when my insurance company informed me the premium on our house was going up - way up. When I got the notification, I immediately got on the phone to make an inquiry. I mean, in the almost 40 years we have lived here, we have had only four claims. Two of those were due to roof damage from hail, and the other two were very minor.

The insurance agent on the phone informed me the only reason for the increase was the "rebuilding cost". In other words, should we have a total loss on our house (due to fire or something), the rebuilding cost was up many thousands of dollars. I was perplexed. "Why?" I asked. "The price of materials, specifically lumber" the agent said. Not having bought any lumber for a while, I had no clue of just how much lumber had gone up.

Here it is only May 4th, and the price of lumber is up 67% since the first of the year. And (here is the whopper) - up 340% from a year ago. So what has that done to the price of a house? According to CNBC, it has added about $36,000 on to the price of a new home. That is about what we paid for our first house in Coon Rapids in the mid-seventies. And here is the kicker. It has added value and pricing not only to the new homes - but also existing homes.

Even though some experts are predicting a flattening of lumber prices by the end of the year, right now we have (hold on for this one) - hyper inflation in lumber. Some of the wiser folks in economics have also warned that this might not be all. Besides housing becoming much more expensive, there is also a chip shortage which is expected to affect auto manufacturers. Bottom line? Look for the price of cars to go up also. Houses and cars. Two of the items that most all of us need.

Is there any blue sky with all this economic cloudiness? Yes - interest rates. Interest rates are still close to zero to mortgages and most car sales. However, this might not be the case for much longer. Any additional risks, besides hyper inflation? Yep - government spending.

To quote someone from a weekend financial show - "Our government is now spending money like a 15 year old, with a new credit card, and no limit on what he or she can buy."