Be it homeowners, contractors, or hardware stores, everyone is feeling the spike in the cost of lumber.
The pandemic stimulated home improvement projects or people buying houses, which has led to price increases for materials. For wood, these price increases end up in the margin of 250%, according to various estimates. This will have consequences for everything related to wood, from your DIY improvement project to meeting the high demand for housing. The National Homebuilders Association estimates the spike added $ 35,872 to the price of an average single-family home in the past year.
There are a number of factors, including rates, fires and labor needs. One notable challenge, however, was that demand grew when sawmills were temporarily closed due to the pandemic.
About that time, explained Nathan Perry, a professor of economics at Colorado Mesa University, housing construction was entering uncharted territory best understood by going back to the last economic downturn.
“In 2008 a lot of houses were built locally, but then the economy and oil and gas collapsed. So you had open houses on the market and construction workers left. But over the past three years we need more single-family homes, ”said Perry. “The industry (last spring) was caught off guard because they expected the slowdown from 2008. Then people started home projects or started buying houses.”
Perry said the unique thing about this situation in contrast to 2008 is that the Fed has done everything it can to create the boom with its low interest rates, encouraging further home purchases.
THE RIGHT TIME ‘
Roger Taylor, owner of Discount Lumber & Metal Roofing, 2660 Interstate 70 Business Loop, stopped supplying lumber a few years ago.
The tendency to hammer is tedious and has tight profit margins, and since he was nearly 60 years old at the time and essentially runs the business on his own, he chose not to buy it at all anymore.
When the COVID-19 pandemic started and needs grew, Taylor tried wearing it again until he saw the prices. He still owns and sells wood, but he is not actively buying.
“I got out at the right time, the prices are just crazy now and you don’t know when they will end,” said Taylor.
It is already difficult for smaller companies to keep an eye on their wood. You have to keep wood dry. Otherwise, it could warp or, if the interior gets wet, get moldy. That is why it is often tied in trusses and stored outside under tarpaulin.
Taylor would always expect to lose some of the wood he bought.
“You’re not going to make a huge profit on that stuff because you don’t know what form it is in and it comes from nature, so it plays by its own rules,” he said. “It’s like a box of chocolates, you don’t know what you’re getting.”
That volatility, plus the rising prices, didn’t seem worth it to Taylor.
Taylor has owned his business for 28 years and said he hasn’t seen the industry in this form since 2008.
And although he is now out of the timber business, he cannot escape the rise in material prices.
Its specialty – steel and metal – is also not immune to the price spikes. According to his estimate, prices have risen by about 50% since the start of the pandemic and have risen every month this year.
Supply chains are now lagging behind. Taylor said some steel orders have been delayed for months and he and his industry friends expect to run out of materials before running out of customers.
The load on building materials has had predictable consequences for homebuilders in the area.
“When any of these costs increase, it becomes more difficult to provide enough affordable housing to meet our state’s demand,” Ted Leighty, CEO of the Colorado Association of Home Builders, told The Daily Sentinel. “We also know that rises in the price of a home in turn pull hundreds of homebuyers out of the market, so it is critical to keep costs under control.”
According to April’s Bray Real Estate Report, there were only 166 homes for sale last month. The average number of days on the market compared to April 2020 has decreased from 68 to 44 and 358 building permits have been issued. That is an increase of 58% compared to last year.
Leighty said they have called on state and federal politicians to help come up with solutions.
“In view of the cost and supply issues associated with wood, in particular, we called upon our delegation from the Congress of Colorado and the government of Biden to investigate the supply chain and seek solutions to increase production and Domestic supplies of timber from public lands too could provide even more employment opportunities for Coloradans, ”said Leighty. (A) and negotiating a new softwood agreement with Canada. These efforts will increase the supply of wood and help reduce costs. “