Soaring lumber prices add to the cost of a new home
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Re: Soaring lumber prices add to the cost of a new home
#2So about 0.3% of the price of an SF Bay Area home?
At least in this area, the price has a lot more to do with NIMBYism than the cost of materials.
Re: Soaring lumber prices add to the cost of a new home
#3Sheet of plywood last year = $8, this year = $54.
Re: Soaring lumber prices add to the cost of a new home
#4I don't know what the risk calculus is for these home developers, but I do know that in particular areas of the US, you just straight up cannot afford a home anymore on median income (or even the top 20%ers looking for fair pricing!).
I anticipate that mortgages will continue to push past 30 years into a strange 45-year+ territory, and we'll begin to see Japan-like multi-generational mortgages. Actually, in reality this is already happening, because people buying homes past the age of 37 (think retirement at 67, but these people are still working and trying to figure out estate handling late in the game) are passing on their mortgage to their children. I am personally seeing this with my friends. No headroom for paid off inheritances!
Alternatively, if the federal government does not prevent it from happening, residential REITs will buy them all up and force people to rent.
Re: Soaring lumber prices add to the cost of a new home
#5> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back.
How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply?
Re: Soaring lumber prices add to the cost of a new home
#6The universe is determined to keep as many millennials from buying homes as it can.
Re: Soaring lumber prices add to the cost of a new home
#7> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back. How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply…
Marginally profitable mills shut down/go bankrupt when tariffs are introduced, and unlike AWS instances cannot be spun up on demand.
Re: Soaring lumber prices add to the cost of a new home
#8What's even crazier is that the builders are identifying that even with the increased price for lumber, demand is still there—people are willing to eat the cost. I don't imagine builders will be decreasing their prices after there being plenty of lumber supply.
Re: Soaring lumber prices add to the cost of a new home
#9> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back. How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply…
The big bottleneck is mill capacity (as evidenced by the fact that timber prices have not increased much). Unexpected high demand is driving most of the rest of it. Both of those affect Canada as well. Tariffs are only a small part of the overall cost increase.
Re: Soaring lumber prices add to the cost of a new home
#10> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back. How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply…
Production slowed down - less wood was cut. Then demand didn't drop as much as expected and so the supply is down a bit.