Lumber prices went up because of COVID-19 related distribution difficulties. Serious labour shortages cut production levels further than they had already plummeted to after a high of $600 in 2018.
Next, priced at $250 per 1,000 board feet, three sawmills closed down. Not so much of a problem in 2020, as most folks delayed house purchasing until later in the year.
Meanwhile, their savings, boosted by sweet interest rates and record-low mortgage rates, created dreams of buying new homes or reconstructing their existing homes.
Fluctuations in its price, which is typically quoted in USD/1,000 board feet (board ft), can significantly affect the housing industry and, in turn, influence the broader U.S. economy. Marcus Lu, Visual Capitalist
What’s happening with houses in 2021?
Not a lot. Despite sawmills valiantly attempting to meet the demand from home builders, their efforts won’t make much of a dent this year.
The current price of lumber stands at $1,635 per 1,000 board ft. To build two houses, home builders will pay $50,000. Compare that to $343 per 1,000 board ft in April 2020 when $50,000 built ten houses.
Certain Canadian lumber companies suffered tariffs imposed by Trump in 2017 adding 20% to their prices. This gave US lumber suppliers a fighting chance. By December 2020, the Government reduced the tariff to 9%.
What is the President’s plan for lumber?
From a meeting of lawmakers on May 14, Senator Moran wants the Canadian tariffs eliminated.
Additional lumber can and should be sustainably harvested from public lands managed by the U.S. Forest Service and the Bureau of Land Management.
He believes adding the addition to the existing lumber should keep domestic sawmills at full capacity and will moderate the price of lumber.
Most cities too expensive
Now lockdown distribution difficulties have passed, lumber stock prices should, in theory, have fallen. Obviously, as we learnt earlier, they didn’t.
To satisfy the hordes of folks desperate for a bigger home to accommodate their home office and gym plus those who lost their homes in the Californian fires, prices must fall.
The unaffordability of most existing properties and the volatility of the lumber situation could mean discomfort for eager homebuyers who, under normal situations, could afford to buy, but no longer can.
Some might give up and buy an RV. Others would do well to bide their time or move to cheaper states.
As of March 2021, Realtor studied the States and discovered that despite trying very hard, most builders cannot meet the demand for extended and new homes. Realtor’s stock dwindled last year. Because work from home city dwellers snapped up larger properties in the suburbs and rural areas.
Worse, the boom hasn’t stopped. Homebuilders struggle to find skilled labour and, of course, lumber.
But wait, how about moving to Texas?
Dallas, Texas tops the realtor’s list for affordable housing. Unhindered by construction red-tape, builders flocked to the city. The state of Texas beat New York, NY for affordability with a median house price of $256,000 less. Plus, Dallas also has a 23% higher number of permits than the previous year.
Austin and Houston would have been included in the top 5 of the list if the author, Elena Cox, had allowed more than one city per state!
For house buyers, they’ll find warm weather, plenty of jobs, and affordable housing. That’s affordable housing that construction companies can actually build because they have the lumber.
Timbertown, Austin, Texas as one of the largest producers of boards supplies the state with homegrown pines. Their thriving business, as they say so themselves:
Today, the industry is going strong, which means more jobs, more money in the economy and more building materials for Texas property owners.
A perfect example of keeping commodities in-country rather than relying on Canadian lumber. Lumber is still priced sky-high, though. So while you may pay $30,000 - $40,000 more for your home, you should actually get a new home.
And the frosting on the cake? Some of the biggest names in business, like Amazon, Toyota, and Charles Schwab chose to expand or relocate to Texas, tempted by reduced taxes and other incentives.
Let's also hope Senator Moran gets his wishes.
Sources
Visualizing the Recent Explosion in Lumber Prices
The housing market stands at a tipping point after a stunningly successful year during the pandemic
Raising the Roof: Here Are the 10 Cities Building the Most Homes for Buyers