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Are Lumber Prices Ever Going To "Normalize"?
Posted on 6/13/21 at 2:25 pm
Posted on 6/13/21 at 2:25 pm
Or is this the new norm? Sure they may drop in price some but are we really expecting to see a drastic decline in prices overall? Obviously this is all hypothetical but what benefit do supply companies have to drop the prices? There's no shortage of buyers at this price so the demand is still there. I'm not a economic genius (and I know someone will quote that making a joke about the overall thread) but I just don't see this changing. I believe this will also keep the housing market a current levels as well. I view it as just your run of the mill inflation. Being able to buy a coke for a nickel comes to mind. As someone who is wanting to build a home I hope this "bubble" pops soon but I'm pessimistic the bubble even exists.
14
Posted on 6/13/21 at 2:46 pm to GAFF
I always look at it like this - following the BP oil spill the prices of oysters skyrocketed bc shortage in supply due to the pollution. It has been many, many years since the spill, the waters are back to normal, but prices never came down. As you said, if there is still demand at the elevated prices, why would you voluntarily reduce them?
Posted on 6/13/21 at 3:10 pm to jfw3535
If prices are this high and the number of lumber isn't curtailed, then the price will never come down.
If we see a significant reduction in purchasing it'll come down until purchasing is resumed.
If we see a significant reduction in purchasing it'll come down until purchasing is resumed.
Posted on 6/13/21 at 3:52 pm to GAFF
I work in freight forwarding. Insert container for lumber and the question is the same. People are paying $22k for something that cost them $6k 14 months ago. No sign of a slow down either.
Posted on 6/13/21 at 3:58 pm to GAFF
quote:
Obviously this is all hypothetical but what benefit do supply companies have to drop the prices?
Lumber demand isn’t inelastic. Short term factors don’t change that over the longer haul, so yes, they’ll normalize.
This lumber talk reminds me of people who thought we’d never see oil under $100 ever again.
Posted on 6/13/21 at 4:07 pm to GAFF
Prices for lumber are falling fast already. Raw lumber prices are down almost 30% in just the past week alone.
As it relates to housing prices; lumber is just one piece of the product. I don’t think the impact of lower lumber prices will be all that significant.
The housing market pricing surge is being driven by a lot of other forces in addition to raw material price hikes.
As it relates to housing prices; lumber is just one piece of the product. I don’t think the impact of lower lumber prices will be all that significant.
The housing market pricing surge is being driven by a lot of other forces in addition to raw material price hikes.
Posted on 6/13/21 at 4:12 pm to wiltznucs
Yes and no. Demand will slow due to cities reopening and prices being too high of a barrier for new construction but inflation is about to explode so it'll probably never be as low as 2019 again.
Posted on 6/13/21 at 4:17 pm to GhostofJackson
Hope so. I’m trying to build a house. Was going to do it this summer. But we’ve put it off. Hoping for first of the year.
Posted on 6/13/21 at 4:25 pm to GAFF
Typically when the price of building material goes up like this, it never really comes back down. Maybe it will give back 1/4 or even 1/3 of the increase, but essentially this is the new normal.
It is what it is.
It is what it is.
Posted on 6/13/21 at 4:42 pm to Ace Midnight
It’s called price conditioning
Posted on 6/13/21 at 4:44 pm to slackster
quote:
Lumber demand isn’t inelastic. Short term factors don’t change that over the longer haul, so yes, they’ll normalize.
I agree with this. There are numerous unique factors that have the building commodities markets the way they are. You kick a combination of factors out from under and it'll come right back down
Let interest rates climb and see if people still pay an extra $30k just in wood to build a 2k ft house lol the sticker shock of $40 7/16 osb isn't going to just go away
Posted on 6/13/21 at 5:22 pm to GAFF
When you use cultural appropriation of terms like “normalize” that are traditionally reserved for lgbtqia, poc, and people of size, you spread your hatred of those marginalized people. Please try to be an ally and not spew hatred during this pride and size month
Posted on 6/13/21 at 5:49 pm to Drizzt
quote:
Lumber is down 40% from May high. Last time it dropped this much was the year before the 1987
I was in Home Depot a couple days ago and 3/4 t&g osb was $70
Posted on 6/13/21 at 6:52 pm to wiltznucs
quote:
Prices for lumber are falling fast already. Raw lumber prices are down almost 30% in just the past week alone.
They may never get back to where they were but they will be reasonable by late fall.
Posted on 6/13/21 at 9:10 pm to el Gaucho
quote:
people of size
Posted on 6/13/21 at 10:22 pm to wiltznucs
Lumber, at $1,059 per 1,000 board foot is 40% below it’s high of $1,670 a month ago but it’s almost 3 times higher than it was a year ago at $371.
Look up the increased revenue for public companies like wyerhauser and west Fraser and it’s clear to see who is making the money on the price rise. It’s not the timber farmers and it isn’t necessarily the big box retailer although they’re benefiting.
Fraser q1 sales increased 81% from the prior quarter.
Weyerhaeusers net revenue increased over 350% from a year ago.
They’re killing it.
The hay days are coming to and end though. Covid’s impact is wearing off on the home remodeling and project work. Supply is going to catch up and bring the equation more into alignment.
I canceled a guest house project months ago and the builder told me that he had several cancelled jobs at that time but I know he’s still busy. He said some people just don’t care about material cost.
Look up the increased revenue for public companies like wyerhauser and west Fraser and it’s clear to see who is making the money on the price rise. It’s not the timber farmers and it isn’t necessarily the big box retailer although they’re benefiting.
Fraser q1 sales increased 81% from the prior quarter.
Weyerhaeusers net revenue increased over 350% from a year ago.
They’re killing it.
The hay days are coming to and end though. Covid’s impact is wearing off on the home remodeling and project work. Supply is going to catch up and bring the equation more into alignment.
I canceled a guest house project months ago and the builder told me that he had several cancelled jobs at that time but I know he’s still busy. He said some people just don’t care about material cost.
This post was edited on 6/14/21 at 6:14 am
Posted on 6/14/21 at 8:53 am to Drizzt
We need a good market crash.
Posted on 6/14/21 at 9:44 am to GAFF
quote:
Are Lumber Prices Ever Going To "Normalize"?
If the free market works, it should.
It's not a long term constraint, like not enough raw timer. In fact there is TOO much timber.
Posted on 6/14/21 at 10:05 am to GAFF
If the prices remain high, supply will increase. Once supply increases, prices will get more competitive.
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