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COVID is what I heard it blamed on. I think the material prices have come back down, but I wouldn't expect that to reduce the cost of houses now that the builders know they can sell them for X.
COVID is what I heard it blamed on. I think the material prices have come back down, but I wouldn't expect that to reduce the cost of houses now that the builders know they can sell them for X.
It's one reason, although not as much as people think.
Covid shut down lumber mills or caused them to restrict production, something that's still happening. Plywood demand was high in 2019 along the south coast because of storms and the mills never caught up before March of 2020.
Don't discount environmentalists obstructing at every turn logging companies cutting trees, especially in National Forests which are where logging is supposed to happen. I grew up near a large National Forest in PA and logging there is almost non-existent, the companies have just said "Screw it" because trying to get permits means years in Court. That's also true on the timberlands the companies own themselves. It's easier to import lumber from Canada.
All of the above, plus some other factors, pushed prices up, especially coupled with increased demand (which is the main reason housing prices go up).
Also keep in mind, developers want a minimum price for a house of 2 1/2 to 4 times the cost of a building lot after site prep and land prices keep increasing, as do site prep costs (clearing and prepping the lot, utilities, roads, maybe impact fees for schools, etc.) so that's a main driver of housing prices.
Last edited by North Beach Person; 01-30-2021 at 11:17 AM..
I'm reading that this is the reason for the inflated home prices! Is this true? If so, what is going on with lumber?
I can only speak for Oregon lumber as I don't follow other state policies. Oregon is about 15% of the US lumber market.
1) The Trump administration placed a tariff on Canadian soft lumber of 20% in 2018. They finally cut it back to 9% in Dec of 2020 because of the skyrocketing costs of lumber. Soft lumber is what is used to frame homes. Canadian lumber has been a trade issue over the span of several presidents.
China also slapped tariffs on lumber being exported from the US to China as part of the ongoing China trade wars. There was a 5% tariff on Douglas fir and a 10% on spruce. Which they then doubled as the trade war went on. Oregon's exports to China dropped significantly. This obviously put financial pressure on Oregon mills. Oregon has had a trade surplus with China over the years and not a deficit.
2) Due to workplace restrictions with Covid, some mills had to shut down temporarily and do social distancing. Already hurting mills were less productive as a result. Loggers were really less productive. I live in a heavy logging state and the social distancing rules were problematic for loggers. For example, generally, you put your loggers in one truck, go to the site, camp together, etc all in close quarters. Having to have each person in a truck, etc just increased the costs of the lumber because the logging companies had to separate everyone out. Instead of one truck, you needed 6 so everyone was socially distanced, for example. It was problematic and there needed to be a better, more practical solution.
3) Washington and California shut down their construction industries for a while as did parts of NE England, which buy Oregon lumber. Lumber yards had products ready to go, but no buyers initially in the pandemic. Oregon kept building homes but other states did not. As such lumber yards were running at a loss for many months storing lumber they couldn't sell and was at risk of being ruined. They need to recoup their losses.
The thing about lumber is once you lay people off and close mills, it takes a while to bring them back up and running. Having an experienced efficient logging crew having to go find jobs in another sector, really hurts the industry. Once the spigot is turned off, it takes a while to reopen it.
There are simple old fashioned economics at play. The Trump administration's policy of a weak dollar making imports cost more. Between March and Sept. the dollar fell 10%. Yellen has said she doesn't support a weak dollar; but once the cycle starts its hard to reverse.
The other is commodity futures which has driver up the price; that is abating.
The sooner you realize when there’s a higher demand in correlation with massive fiat currency inflation , the better . The massive money printing with the demand for lumber that exceeds supply is costing the price to rise . Commodities have been in a bear market the last ten years and expect them to explode in price this year . Inflation is setting in and it’s time to start paying the piper for the money printing .
The high cost of lumber has zero to do with Trump. The timeline given in this thread is off by a mile.
I buy lumber fairly regularly and pre-covid had 2 x 4's @ $2.25 each. A 4 x 8 sheet of osb was $13. This was very consistent from at least 3 years back. Sometime last spring 2 x 4's shot up to $5.75 each and 4 x 8 osb is now $30 per sheet.
There was a brief period apprx mar/apr 2020 where I could not find a single sheet of osb. This was after waiting outside in line to get in the store due to store shopper capacity limits. The yards were completely sold out.
The guys at the lumber yard are saying it's due to supply chain, I dunno. There is a ton of building going on in every major metro on the west coast. I'd say it's a simple combination of supply chain and high demand.
There was a lot of demand for two-by-fours by the rioters. So there was competition for the supply between them and the flooring industry. I've noticed that all the carpet stores have been going to selling wood flooring and dropping carpeting.
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