Anybody seeing these lumber prices?

Question

Safe to say home prices in the near term must rise?!  It’s impossible to build new construction right now, without paying a serious amount more for the lumber.  2x4x8 is around $7 and 7/16 osb is $24!  Prices have NEVER been this high on lumber.  What is going on, and how do you think this will effect home prices considering inflation, supply and demand and urban lefty cities vs developing right wing cities and suburbs?

Chris Martin · Answer

The NAHB says: "The recent spike in softwood lumber prices has caused the price of an average new single-family home to increase by $16,148 since April 17." The NAHB in 'Solving the Lumber Crisis' suggests that current administration scale back the anti free-trade policies, specifically the import tariffs (2017 tariff was 24%) on lumber from Canada.

Source: https://tradingeconomics.com/commodity/lumber

Account Closed · Answer

@Nicky Reader ¡Wow!  I didn’t realize it was effecting appliances and other materials that bad.  Thought maybe it was partially tariffs too.  The prices are kind of a “kick us while we’re down”.  Lefty/Righty cities was inaccurate.  What I should have said is Democrat run states and Republican run states.  What I observe is people are leaving Democrat run states in staggering numbers while places like Texas, North Carolina, Tennessee, Idaho are starting to see a squeeze in supply of housing.  There’s a big need in these states because many people are pouring into them from their former states of CA, NY, MI etc.  So what are the prices in housing going to look like in these states where new construction is needed, vs where it’s not as demanded?  Shouldn’t we see a big change on new construction prices as a result?

Account Closed · Answer

COVID supply chain issues, lumber prices have been going up. For a while I couldn't even get treated lumber, and also had delays getitng a fridge, stove and vinyl siding. Crazy times.

However, not sure what it has to do with "lefty cities and right wing cities," everyone's getting gouged regardless of political affiliation.

Julio Garcia · Answer

Yeah, i've been following it, crazy prices

Account Closed · Answer

@Nicky Reader right.  Sounds about right...  interesting thoughts about builders taking their fingers off the trigger, but I’ll bet there’s going to be some big gamblers here and there.  Pretty good gambling opportunity for a smaller outfit.  I do think there is something significant happening per the laws being put in place by cities, and I do agree cities in general tend to be legislated by one party, while outside cities it’s majority republican.  I don’t care about parties and don’t affiliate, but people seem to be leaving cities for concerns of rioting, lockdowns, and fear of depreciation, and not just the typical lower cost that people could always leave for.  I think the lower costing places like North Carolina, Idaho and Texas are not so low costing anymore, but represent the freedoms people are looking for.

Account Closed · Answer

@Julio Garcia it’s probably going to make framing a lot more stressful!  The poor framers are going to be chewed out if they cut a 2x4 too short etc.

Michael Spine · Answer

Raleigh, North Carolina and surrounding areas are seeing delays in completion of new home construction and increase prices of materials too. As Account Closed said:  difficulty getting materials secondary to COVID supply chain issues. Some builders are decreasing commissions to the buyer's agent as low as 2%.

Account Closed · Answer

People are leaving expensive areas (like the bay area) or very crowded (like NYC) for cheaper areas, partially because the work from home model allows them to do that, and partially because they don't want to live in really tight quarters during a pandemic. Usually, cities tend to be democratic, rural areas tend to be republican. If there's anything about this that's political it just means everything is going to get more pink/purple instead of red/blue as everyone mixes up. Be careful trying to see politics in everything. The news cycle and facebook algorithms will just feed you both real and inflated/fake information because that's what they think you want to see.

What I've heard is that homebuilders will slow down new projects due to uncertainty and high prices that hopefully are just temporary. Interest rates and the lack of new builds should continue to keep housing markets in desirable areas strong.  I also assume home additions and rehabs will slow down a little due to very high prices, but once everything settles down I assume we will have a construction boom.

This is just one person's guess, these are crazy times and have no idea if this will get worse or better in the near future, and how long it will last.

Alex Lien · Answer

Major supply chain issues due to covid at the moment is causing everything to go up in price, especially appliances and construction materials.  All the businesses being shut down for weeks caused them to use up their excess inventory and now that those companies are working again they aren't able to keep up with the demand and have no extra inventory to offset it .  Hopefully during the winter months when things start to die down a little bit it will allow them to catch up and prices should come down slightly.

Anybody seeing these lumber prices?

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