The real reason(s) lumber prices are up and climbing

1. 90% of the wood used to build US houses comes from Canada and the Pacific Northwest.

2. Canadian timber harvest is controlled by the government. Annual Allowable Cut (AAC)

3. A few years ago, the Canadian gov opened up a lot of woodlands for harvest due to pine beetles. They wanted to get the wood while it was still useable and avoid the fire risk.
This created a glut of lumber. Some stores still have this blue stained lumber.
So even though demand was up, so was supply...prices remained flat.

4. The only lumber brokers to survive The Great Recession were those who were inherently conservative. These are the ones who hold cash reserves and avoid too much supply.

5. In 2016, the Canadian government reduced the AAC. This devastated the Canadian timber industry and many mills shut down by 2019.

6. It takes 50-70 years for a Canadian tree to be ready for harvest.

7. Pine from the southern US is good for pulp products but not so great for building. It tends to be wet, heavy, prone to twist, and causes a lot of worksite waste.

We’re seeing a perfect storm of low supply of raw lumber, much fewer mills to produce the cut lumber, conservative brokers who don’t buy stocks (futures) to last beyond 30-60 days, slow regeneration of the trees, and a much increased demand due to a housing shortage based on the low density housing standard we enjoy in the US.

Typically, high prices fixes high prices...but this hasn’t been the case. This is leading many to believe timber has long been underpriced. This is a direct result of the Canadian pine beetle glut.

The supply side won’t be corrected anytime soon, because the cut isn’t available. When supply eventually does catch up, prices will NEVER go back down to 2019 levels.

In the meantime, builders are shifting to OSB alternatives such as foam board and metal trusses, and existing home prices are climbing into the stratosphere.