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I am going to talk why that vein is pulsating in your forehead as you try to complete your home projects, SPOILER ALERT! It’s all your fault lumber.
As you may or may not know, there has been a large lumber shortage since the beginning of the pandemic, and with a hurting supply comes a substantial demand which in turn creates a skyrocketed lumber price tag.
After being stuck in quarantine for all those months, homeowners have spent some quality time with their homes and realized it’s time to put the Chip and Joanna Gaines hats on and do some much needed renovations. So after you plan everything you want to do to get your home where you want it, you take a trip to your local home depot and take a gander at price tags for lumber, immediately that pulsating forehead vein emerges.
Not only is it lumber, it’s doors, windows, appliances, plumbing fixtures and tiles. With this short supply has come extensive lead times that have left homeowners right in the middle of their construction projects. It definitely doesn’t make for a safe living environment, especially if you have kids. Supply has taken a big hit due to covid-19 restrictions hampering sawmills, Not only that, natural disasters, tariffs on Canadian lumber and a railcar shortage for lumber has been another factor to the deteriorating lumber supply, it’s safe to say lumber is a very hot commodity.
With more millennial home buyers coming to the market, and new construction homes being halted for a brief moment in time, the demand for new homes has increased drastically, so it’s safe to say there is quite the predicament. According to the National Association of Builders, the current lumber prices are adding at least $24,000 to the price of a new single family home.
A recent article written by Fortune, displayed the lumber price per thousand foot board feet showed that in recent years the price would hang around $400, whereas today it’s hanging over $1,000. A National housing data platform found that 70% of builders are purposely raising their home prices in an attempt to slow demand to allow for more time to acquire materials. They’re also putting a cap on the number of sales to keep production consistent with minimal delays.
There’s a theory going around as to how home builders are going to adapt to this new climate. Numerous sources and professionals across the nation have been saying builders will simply purchase all the lumber in advance and build the homes to be all the same or similar plans, customization and builder packages will diminish a little bit, as builders try to maximize their profits.
This benefits the builders as they won’t have to spend so much time with clients figuring out their desires, instead they set a standard and build as much as they can. Will this hurt customer satisfaction in the building industry? Most likely, but with demand so high for housing, most buyers are settling in a home they would have had no intentions of buying if the market wasn’t as hot as it is.
One of those most asked questions on Google pertaining to real estate is, when will lumber prices return to normal? Many sources are saying that with COVID-19 vaccinations being rolled out, it should be a matter of time. Fortune reached out to a senior economist named Dustin Jalbert who specializes in wood prices, also agreed there would be some relief after the roll out of vaccinations.
Jalbert also said that lumber will most definitely increase supply as new producers will hit the market to take advantage of this highly demanded item. Another convincing fact about increasing the lumber supply is based on the DIYers who participated in the excessive spending during the pandemic, will soon simmer down as the ability to start traveling more and participating in more things will redirect their time and energy elsewhere.
But homeowners across the nation are still wondering how vaccinations are going to make enough impact to balance supply and demand, that’s where the national association of home builders comes to play. On March 12th, 35 different housing organizations joined the association in hopes to push the Biden administration to solve this lumber issue by reaching out to Commerce Secretary Gina Raimondo to examine the lumber supply chain and identify solutions to increase production.
There is, however, a suspicion regarding this topic not being about why the supply for lumber is so low, it’s why is lumber being priced so high even when there truly isn’t a shortage? Many millworkers throughout the nation have come forward and said this situation is a lie and that they are making lumber 24/7 as fast as they can make it while keeping the lumber yards full. To put simply, there was an artificially created lack of supply, which then equals more money made when demand increases.
So let me ask you, do you think there is a true lumber shortage? Or do you think there is price gouging going on? Comment your thoughts!
Andrew McManamon is a Michigan REALTOR® with Signature Sotheby’s International Realty and provides real estate services to Buyers, Sellers and Investors throughout SE Michigan including Livingston County, Oakland County, Washtenaw County, Genesee County & beyond. Andrew has become one of the rising stars of Michigan real estate agents. Prior to his real estate career Andrew was responsible for managing a senior living facility in Brighton, Michigan as a dining supervisor and an activities assistant. Andrew’s passion to help people is unlike any other, and he continues to strive to be best resource he can be. Andrew graduated from Cleary University in Howell, Michigan with a double major and currently resides in White Lake, Michigan.