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Lumber is shockingly expensive. Thanks, Obama.
the week ^

Posted on 04/29/2021 5:11:29 AM PDT by mylife

Lumber prices are so high that this ordinarily sleepy industry has captured headlines around the world. The generic lumber spot price reached $1,420.50 at time of writing — more than triple the figure of December 2019. The National Association of Home Builders estimates that this has added $24,000 to the average cost of new home construction relative to this time last year.

It's an unfortunate situation for builders, buyers of newly constructed homes, or anyone else who uses lumber. But it's also an unavoidable long-term consequence of some horrific policy mistakes that were made after the Great Recession. The only way to deal with this problem sensibly is to keep running the economy hot so that new supply can come online to catch up with demand.

(Excerpt) Read more at theweek.com ...


TOPICS: Business/Economy; Chit/Chat; Miscellaneous
KEYWORDS: lumber
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To: mylife
This is supply and demand in action.

Scarcity of a commodity will always increase the price of that commodity (if it is in demand).

This represents an opportunity for an entrepreneur to find a way to produce lumber more cheaply and gain market share by providing this commodity at a lower price point.

41 posted on 04/29/2021 6:48:18 AM PDT by SamAdams76 (By stealing Trump's second term, the Left gets Trump for 8 more years instead of just four.)
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To: 4yearlurker
In my neighborhood in Westmoreland County, W PA, the houses are typically 4 bedroom, 3-4 baths and sell for $275 - $400.

Last week a nice house went on the market and the "Pending Sale" sign was posted within days.

I have no idea how much it sold for, nor if a bonus was paid on top of the asking price, but homes in quiet, clean neighborhoods will sell, and sell very fast.

The high cost of material only increases the demand for older homes.

Not surprisingly, all of the new owners of the 6-8 homes sold in the past 18 months have been to couples with pre-school aged children, or young couples without children.

The neighborhood is a 40 years old development, and most of the originals {including me} are dying or moving to smaller places.

I guess a coffin is a smaller place:)

42 posted on 04/29/2021 6:56:10 AM PDT by USS Alaska (NUKE ALL MOOSELIMB TERRORISTS, NOW.)
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To: 43north; All

I am the accursed middle man. First of all IF you are against people making a profit, maybe you should be over on DU.
Lumber wholesalers make on average 2-3% mark up. It is a high volume, low margin business. Even lumber yards only make about 10-20% on most nominal 2” framing lumber.

I read this article first thing this morning. This author does not know what he is talking about. it has nothing to do with Obama. Lumber has doubled in price because mills have not been able to increase production as much as they have in years past. This is primarily because like ALL industries they are having a hard time hiring NEW employees. The main two reasons are the enhanced unemployment benefits from the various stimulus and second the inability for 50% of potential new employees to pass a drug test.

The other main supply restriction is the destruction of Lodgepole Pine in BC & AB by the Mountain Pine beetle over the last fifteen years. This has caused sawmills to shut down in BC & AB. Production in Canada is down out west. In the east it is up slightly.
These same mills have been buying up sawmills in the southern US for the last 10+ years.

The other main factor affecting price is that there has been a huge increase in demand in the last 12 months. First, when everyone was home due to covid every yahoo decide to do a honey do project on their house. They could not go anywhere, so they built a deck, an addition, a shed, a barn.
In places like CT & NJ they are putting sheds in their back yard and turning them into home offices.

Then the exodus from the big cities took over and suddenly people wanted a NEW single family stand alone home instead of an apartment or condo. They wanted some space to walk the dog, the kid, etc. Housing starts in March were the highest they have been since 2006(1.7 million). The main factor in that is the huge increase in single family. Multi family is down or flat. In addition, Canadian housing starts are at RECORD highs of 330K.

Interest rates are at or very close to record lows. In most big cites, you move out to the suburbs to escape BLM riots and have a mortgage payment for the same as your rent. If you moved to the country, your payment was cheaper than your rent in town. Many 30 somethings who had held off buying their first home and chose to live in town changed their mind in the last year.

Also, there is a record amount of European Spruce dimension lumber coming into the US. Primarily on the east coast. Euro has become the predominate White wood species in the Carolinas. This has increased the supply coming into the US.

There are about a dozen production increases planned on the books right now including 3-4 brand new sawmills being built in the AL & MS.
North American production is slowly shifting south. Southern Yellow Pine is the least expensive wood resource in the world. Plus these are all non union mills.

The main reason OSB has decreased just recently is that a glue manufacturer in Texas lost a couple weeks of production during the severe winter storm in February. This glue is used by almost every manufacturer of OSB, I-joists, LVL, Finger Joint Long lenths(22-40’) in the USA. Several mills claimed Force Majour and canceled contracts with everyone EXCEPT the Big Boxes.

Keep in mind, lumber has gone up over 300% from its low of April 2020. However, EVERY construction component has also gone up a minimum of 30%. Copper Romex wire has doubled. Steel has increased by 30-45% and some truss plates are now on allocation. nails & screws are up. Roofing is up. Composite decking is up. Drywall is on allocation. Plywood has tripled in price.

The Lumber Broker


43 posted on 04/29/2021 7:01:35 AM PDT by woodbutcher1963
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To: woodbutcher1963

Outstanding post. You know your $hit.


44 posted on 04/29/2021 7:06:03 AM PDT by nesnah (Infringe - act so as to limit or undermine [something]; encroach on)
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To: woodbutcher1963
The other main factor affecting price is that there has been a huge increase in demand in the last 12 months

Heard a Trump supporting builder on the radio this morning. He also says housing stocks have dwindled since the 08 recession and have yet to make it up so yes demand is coming from all angles. He said his subcontractors are also seeing a hiring problem as the normal workers are now on the government unemployment payroll enjoying significant benefits. His home prices went from 370k to 430k due to all of these factors and he cannot price them today for prices out 6 months so he's finishing his 85 in progress homes and taking a break. Good sellers market, bad buyers market.

45 posted on 04/29/2021 7:11:51 AM PDT by 1Old Pro
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To: mylife

There has been a war waged against logging and lumber since the 80’s. What did we expect would happen?

Why is lumber so expensive? Why are there so many forest fires? Twits


46 posted on 04/29/2021 7:13:37 AM PDT by walkingdead (We are sacrificing American youth's future on the altar of our own fear. And it is a travesty.)
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To: mylife

Obviously as most people here have noted, there are multiple factors at work. The one nobody’s mentioned so far that I can see is we’ve totally crapped up our supply lines and distribution system over the last year.

It took over three weeks to get a Michelin tire for my motorcycle. The service manager said rubber and plastic parts are suffering significant delays.

Basically everything that could be gone to screw things up has been, and is being done, as far as supply and distribution in this country.


47 posted on 04/29/2021 7:16:34 AM PDT by ChildOfThe60s (If you can remember the 60s.....you weren't really there..)
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To: USS Alaska
"I have no idea how much it sold for, nor if a bonus was paid on top of the asking price, but homes in quiet, clean neighborhoods will sell, and sell very fast."

We're in SE PA, and prices are jumping here as well. We get phone calls and post cards every few days asking us about selling our place. We've also had calls about our little vacation place in upstate NY, which is in a depressed but pretty area.

On one level I'm wondering who has money to buy houses these days with so many people out of work in PA and NY. I also wonder who is migrating into them, because they both lost representation in the last census. I hear lots of people saying they or family members are pulling up stakes and moving to places like Florida. Things aren't quite adding up. I am thinking some of the demand is from people who are snapping up hard assets in anticipation of debt-driven inflation. My husband and I came out of college during the Carter stagflation. It's been a long time since people had to think about getting ahead of the inflation spiral for major purchases, but maybe that's part of what we're seeing.

48 posted on 04/29/2021 7:21:12 AM PDT by Think free or die
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To: 43north

You are 100% correct.

The mills are spitting the 6/4 by 2 and 1/2-5 and 1/2 inch lumber out in record production rates.

It used to be 7/4 thickness, now its 6/4.

Spent over 8 years in the sawyers seat at Cleveland Cliffs Forest Products at Munising Michigan. Used to be the highest production sawmill of its kind in the world at one time.


49 posted on 04/29/2021 7:28:41 AM PDT by crz
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To: woodbutcher1963
Great insights, thank you for the explanation from within the industry.

Our son lives in Colorado. On our visits, we've seen massive destruction caused by the pine beetle, with square miles of dead trees. As I understand it, some of the dead trees are used to produce a specialized distressed lumber, but most are left in place. Of course, this contributes to the fire hazard, as we saw with the massive wildfires last year.

Here in PA, we are plagued by the emerald ash borer, which is taking out most of the ash trees in our area. Homeowners are getting hammered with the cost of removing dead trees. It can't be helping the hardwood supply situation either.

50 posted on 04/29/2021 7:34:07 AM PDT by Think free or die
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To: woodbutcher1963

” 2” framing lumber.”

It isnt 2 inch. Its now 6/4 by 3 and 1/2 or 5 and 1/2.

Used to be at least 7/4.

Yet here in the good old southwest “AZ”. Nobody will take the chance to set up a good high production portable circle mill to saw the over 18 inch Pond Pine.

A nice model 40 Cleereman mill package with a nice 44 inch McDonough Horizontal resaw behind it would spit out in excess of 40 MBF per day.

But the dumb idiots will dump 700 grand into a brand new processor for the woods and go broke.

You tell me how to fix stupid. I got the place to set it up and have designed 4-four mill layouts for the talkers. All near a BNSF mainline with the ability to load containers on a siding. Not only that, the property is alongside a nat’ gas power plant. Get the drift? In a economic zone to boot.


51 posted on 04/29/2021 7:40:50 AM PDT by crz
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To: Paul R.

Prime location - just 4 levels high!

52 posted on 04/29/2021 7:51:22 AM PDT by corkoman
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To: woodbutcher1963

Good info. Thanks.


53 posted on 04/29/2021 8:06:15 AM PDT by SimpleJack
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To: bray

Oregon environmental nazis are trying to stop salvage logging in the forests that burned last year.


54 posted on 04/29/2021 8:08:03 AM PDT by Cold Heart
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To: Think free or die

The Emerald Ash bore is all over now. I cut three down in the last year on my property in southern NH.
They were 12-18” in diameter.

There is actually a surplus of Ash right now because they are all being cut down. in 5 years there will be none.
That means all the wood baseball bats will be made out of Sugar Maple.

FYI, the Eastern Hemlock are also dying because of another insect.


55 posted on 04/29/2021 8:21:29 AM PDT by woodbutcher1963
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To: Think free or die

Yes, in Co and other parts of the country there is big demand for Blue Stained 1x6 V-groove pattern boards.
The problem is that this type of stain is not allowed in the shop grade that goes to customers like Anderson Windows, Marvin Windows, etc. This is the high grade Ponderosa Pine that is the product the mills are cutting for.

There is only one mill in Montrose, CO making studs out of that Lodgepole Pine.


56 posted on 04/29/2021 8:26:50 AM PDT by woodbutcher1963
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To: mylife

It’s because all the businesses that have to board up their windows.


57 posted on 04/29/2021 8:27:32 AM PDT by webheart (I already had COVID disease and 2 vaccine shots Can I take the mask off now?)
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To: crz

You misquoted me.

I said NOMINAL 2” lumber.
Obviously, you know what that means.


58 posted on 04/29/2021 8:28:09 AM PDT by woodbutcher1963
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To: Cold Heart

Environmentalist/preservationist have been trying to hold up timber sales for 40+ years. This is nothing new. The difference is that with a “fire” sale they know the longer they hold up the sale, the less the timber is worth to the mills.

Burnt timber gets bug holes, shake, more splits, rot, and other defects that lowers the grade recovery for the sawmills.
In Canada they provinces made the mills take the dead timber along with the green timber just to clean up the forest.


59 posted on 04/29/2021 8:33:55 AM PDT by woodbutcher1963
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To: woodbutcher1963

10.4

Potlatch at KI Sawyer is running at full capacity. I hear still shipping abt 30% of their studwood to Canada.

Go figure.


60 posted on 04/29/2021 8:34:26 AM PDT by crz
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