Posted on 06/10/2022 10:15:13 AM PDT by bigdaddy45
I just went to buy some lumber. The price has come down about 40% in two weeks. Yes, lumber is crashing even though everything else is going through the roof. Demand is starting to evaporate. Buckle up.
Aha! There is the equity I was looking for!
a lot of “lumber” is white pine... Yeah.
Actually even with this decrease they are still up huge from prepandemic but you are generally correct
In the past(prior to covid) sawmills were always their worst enemy. If prices went up, they all increased production. The theory being IF we are making “X” producing 1 million board feet/day, we will make even more if we add another shift and produce 1.6 million board feet/day.
The fact is the machinery is already there so why not use it. All you are paying is more logs, labor, maintenance and electricity.
So, if prices went up, mills always bumped up production and eventually OVERSUPPLIED the market. In 2020 production went down due to mill closures from covid. MEanwhile demand wen up because every person working out of the house decided to build a deck. Then everyone decided to move to the country and build a house or rebuild an existing house.
Now, the sawmills are having a tough time hiring enough people to run the mills. Sawmills a generally located in rural areas. many of these small towns only have X amount of people to work there.
A Boise Cascade mill in WA state just had to go from two shifts down to one because they can not hire enough people.
So, after hitting 1.8 million housing starts we are going back down. However, because we under built houses from 2008-2018 we are going to continue to build 1.4-1.5 million houses. Even if mortgage rates go up. It just means housing prices need to come down.
My prediction is lumber will hit its low for the year in October or November. FYI, July Lumber Futures contracts are currently trading at $564/m. Its high in 2020-2021 was $1630/m.
Timber prices never saw the huge increase because the sawmills could never increase production during covid. Today they are still having a hard time hiring enough people to work in the sawmills.
There has been plenty of timber available for the sawmills.
You planning on borrowing another 10 from someone to get you back home?
On the plus side, I may actually get to replace the sagging subfloor in my MBR.
Well, yeah! LOL!
Yes, when covid first hit lumber futures dropped to $256/m in April of 2020. All the mills were shutting down and we all thought the world was coming to an end.
A month later is was screaming up.
The actual top was $1680/m.
We will not get down to those levels again because the fixed costs for the mills have all gone up. Just like any other company they have to pay $18-20/hour. Plus you NEED to pass a drug test to work in a sawmill. This is increasingly difficult in states were DRUGS are legal. Like WA & OR.
The other factor affecting the market is the war in the Ukraine. This war has killed construction in Europe. One of the largest steel mills and a gypsum mill were destroyed in the Ukraine. It is difficult to build anything without steel and drywall. This has brought construction in Europe to a halt. So, the European sawmills are trying to ship a much higher percentage of lumber her to the USA.
Just co-signed for a house for my son and his new wife. Didn’t you know MBT is racist. The politically correct term is “principle bedroom.” Honestly, our country’s going mad
Because you have unconscious bias. That's right. This is the kind of crap I have to listen to where I work.
Delivery charges due to higher priced diesel or any gasolene will probably negate any lower lumber prices. The bigest shipping cost increase is from the forest to where you buy your lumber.
I spoke with someone in the housing business back then who gave the same explanation. The cost of lumber skyrocketed, which led to an increase in the price for new home construction.
The Dixie fire salvage has flooded the northern california timber market with logs... to the point our firm could not sell burned timber from our clients lands. Even the large companies cannot sell wood as Sierra Pacific owns virtually all of the sawmills and they are flooded with their own wood, so Sierra Pacific is not buying logs from outside sources.
There is no shortage of logs, there is a shortage of sawmills.
Fortunately, we replaced our redwood decking and front steps, the Summer/Fall before the Covid B$ insanity and increases.
The fellow, who did the decking went into window and door replacement due to the price increases of good redwood
My wife wanted to replace our front door as it had become kinda ugly. It was a solid mahogany door.
Our decking guy said to have a professional wooden door refinisher, remove the door, take it to his shop to refinish it and reinstall it. That professional wanted $1,000.
My wife thought that he was overpriced until she checked on door prices at home depot. Even with my 10% veteran discount their costs were just under 2 grand and that didn’t include
installation of the door and refitting the door locks.
So, we went with the refinishing route. 2+ years later, the refinished door looks great.
Yes, the only sawmill not owned by Sierra is Shasta Green in Burney. They are for sale, but the owner does not want to sell out to Sierra Pacific because they will just shut them down. They already have a mill in Burney. Right next door.
That is awesome, my brother got some quotes for window replacement and a replacement front deck floor and a few joists. Windows were $22K for 11 windows and a slider door. For the deck, it was similarly high. He wants me to do it, and I can save him money and fill me pockets to boot. TIME TO START....
Like you, the fun starts when you forget what day or time it is on a project.
It was not just the increase in lumber.
Everything went up in price:
Labor
concrete
windows
doors
appliances
carpet
flooring
electrical romex and components
rebar
plywood
osb
cabinets
roofing
drywall
basically every component to new home construction
Just this week I was told by a customer in northern Idaho that a big job was delayed because the local concrete companies could not get enough Portland Cement
40 years ago we had 5 lumber mills in my area. $10 would buy all the 2”x4”x8’s your pickup could carry
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