Posted on 05/05/2004 4:30:23 PM PDT by snopercod
TORONTO — Lumber and plywood prices have shot up so rapidly in recent months that they are tearing the profit out of home construction for some builders and threatening to dent the booming housing market.
Paul Kuszmaul, president of Kuszmaul Builders in Champion, Ohio, said the run-up in prices had left him unsure whether to push ahead with a condominium development in the Mahoning Valley, between Pittsburgh and Cleveland.
Since January, he said, the cost to build each condo unit in the project had risen $4,000, largely because the price has more than doubled for oriented-strand board, a widely used substitute for plywood made by pressing long wood strips together using adhesives.
The product has been rapidly displacing plywood as a construction material because it is cheaper to make, can be made from the limbs and roots of trees as well as trunks, and is more uniform in quality. Almost three-fifths of all structural wood panels now sold are oriented-strand board, or OSB, compared with a quarter in the early 1990s.
Prices of both OSB and plywood reached records one week last month. According to Random Lengths, a trade publication, 1,000 square feet of -inch OSB sells for $503 in the north-central United States; this time last year, the same amount cost $170. Half-inch four-ply southern pine plywood is up to $523 for 1,000 square feet, from $240 a year ago.
Plywood prices began to rise last year in late May and early June, dropping late in the year, before increasing sharply in January.
Prices of other types of lumber have also risen, although less sharply. And the buoyant metals markets, especially for steel, have also driven up costs.
"It's almost a rocket ship ride," said Jim Enright, general sales manager at Rosboro Lumber, a plywood manufacturer in Springfield, Ore. "The activity level since the beginning of the year has been phenomenal."
The ride has been less exhilarating for buyers. Brian Catalde, president of Paragon Communities, a builder in Playa del Rey, Calif., said that the cost of the lumber used in building a typical entry-level home had roughly doubled in 18 months, to $24,000.
A handful of manufacturers dominate the OSB market. Five companies account for three-quarters of all sales in North America. They are Louisiana Pacific, Weyerhaeuser and Georgia-Pacific in the United States, and Nexfor and Grant Forest Products in Canada.
One reason for the price surge is that production of the boards has not grown fast enough to make up for the loss of plywood, because of the closing of older plants.
Gosh, If only we could get a new President to undo all the evil things Clinton did. If only ...
Use shredded plastic strips. (?)
As long as you got what you paid for it was priced right...I hate contractors that intentionally low ball crap then grind it up through change orders and begging.
I dislike even more the foolish consumers who think that three estimates that range in price are for the same product.
Each and every estimate only reflects what is in the minds eye of the builder providing the estimate. That is why even if your staring at 3 identical prices, each of those bids has absolutly nothing to do with the other...
The only thing you can do is look at the guys work, and talk to his previous clients.
I got undercut buy a guy who came in 250k less then me on a large remodel[my price was just under 750k]. The next guy was 150k over me. The customers took the low ball, and the job cost nearly twice my bid, and took twice as long as I had projected. Live and learn.
Same here. Actually, I don't buy wood at all, I fabricate it.
There are not enough homes for people here in Reno/Tahoe area. Sheesh....real estate agents sell them before they are built here! Wonder how all these prices are going to effect the rate of building now....
You know, I was just in Walmart last night and picked up soda pop for $0.50 a liter. Amazing. Does Walmart sell wood?
Every square foot you cut will save you a couple hundred dollars. You can always add on a bedroom or office later if you plan for it.
Kitchens and bathrooms are very expensive. You can save a lot of money there.
Windows are expensive. Use less and smaller ones.
I would like to recommend that you hire someone look over your plans and advise you on ways to keep costs in line, but there are no such people. (I know because I have been trying to get into that business for over two years and nobody is interested.) Architects and contractors are interested only in running up the bill, not saving you money.
Sorry to lay this on you, but I consider myself an expert because I have done just about everything wrong at one time or another ;-)
Nixon and Carter both did price controls, which discourage new supply and really do lead to inflation.
Couldn't we all. I poured my basement walls out of concrete, then reused the 3/4" plywood forms as roof sheathing. That was a mistake, I think, because each sheet weighed about 100#...
The typical entry level home on the coast of California averages around $400,000 these days. $24,000 is nothing compared to the prices they charge. Being the owner of a redwood timber preserve, I'm seriously considering a limited harvest.
Last time I bought any, it was $11.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.