Well, we’re only halfway through 2020, and the effects of this year’s changes are being felt all around the world. The pandemic we’re all experiencing, the social unrest that is widespread in our country and an uncertain political future are all fueling big market changes and the home building/construction industry is no exception. Why exactly are lumber prices rising? How does this affect you and companies within the industry? Read on and we’ll answer that!
As we all know, the world changed in March of this year. A historic pandemic rocked the world, and the changes were drastic. Unemployment skyrocketed, people were finding themselves furloughed, laid off, and left without work. Restaurants closed. Businesses closed. Schools sent the children home to learn remotely. Basically, life as we know it came to a screeching halt and everything changed. These changes have affected all businesses, from top to bottom. But exactly why are lumber prices rising?
Prior to the pandemic, new house construction and remodeling were experiencing a record high. Demand was up, and lumber mills were running at full production. When COVID hit, lumber mills, like many others, had to cut their production drastically. This was for two main reasons, the first is that they had fewer employees to run the mills due to the pandemic and social distancing. Secondly, the mills expected demand to die off due to the pandemic and uncertain financial futures so they reduced production to account for this assumed reduction. The industry was shocked when the opposite happened and demand significantly increased. With more people at home, more home improvement was happening. As with supply and demand; as production and supply went down, demand went up. Unable to meet the demand of the industry, the cost of lumber and raw materials has subsequently risen about 50%-100% on select materials which has homeowners and contractors looking at steep price increases. This has affected all home improvement, from exterior painting to new construction.
So what does this mean for you, the homeowner? As we’ve already explained, the price of lumber and building materials has skyrocketed making it more difficult to secure those materials. This is forcing home contractors and lumberyards to raise their prices to keep up and accommodate the rising cost of lumber and materials. Additionally, some materials can’t even be found at all, and wait lists for certain products have become common. This has caused prices of home remodeling and new construction, wood working and painting to climb along with the rising material costs. Basically, it costs more for less, and homeowners will feel this in their wallets now and assembly for the next year.
Unfortunately, no one is safe from this price increase here in the United States. Believe it or not, this shortage of materials will impact the entire country for at least the next year. Prince increases range from 30-80% across the country, adding thousands of dollars to home projects.
Shaun, a local Denver Real Estate investor had this to say “The cost of raw materials even effects the current houses values. With an increase in the cost of raw materials and subsequent pressure on new builds, there is a chance current houses prices will remain high. If you are needing to sell your Denver house now you should not have any trouble. Just remember that your contractors need to pay rent too so might have to charge a little extra when renovating it to sell.”
For the foreseeable future, a change is not likely. This may have you considering whether or not you should postpone any projects but a word of caution. Next year we will likely see that prices are still high and materials are still in a shortage. There is no telling when this supply and demand issue will be rectified so it’s critical that you take care of your projects as soon as possible because the siding and wood on your home must be maintained. Like most of us, your home is no longer just your home. Your home is your office, your gym, your classroom, it’s where you spend nearly every day and for the majority of Americans, it’s your largest investment. Failing, rotten wood only worsens over time because it spreads if left unchecked. Yes, the cost of lumber is high but we would encourage you to address those concerns now because waiting will only lead to much steeper costs and possible damage in the long run.
So if you’re planning some work for your house, the price you’re getting now will be cheaper than it will be next year. This is something that the savvy homeowner will want to keep in mind, and if you’re trying to get the best bang for your buck, the time is now.