Is lumber the new gold? It certainly seems that way when we look at the evolution of lumber prices since 2020 in the US! With a mix of the lumber industry decade-long scaleback and unexpected market demand in Covid-19 times, wood prices are at the highest ever and the future is uncertain.
That is for new lumber in the US, where we based our research, but inflation is happening in many other parts of the world! At Kaltimber, our prices never got more attractive than now. Time to go reclaimed!
Salvaged ironwood boards before processing into decking
The situation
Troubles started in 2008 and the great recession. Since then, the market never really recovered from sawmills closures. Later, the aftermath of 2017 Hurricane Harvey and the 2018 raised import duties on Canadian lumber brought prices up. In March of 2018 lumber got to $520 per 1,000 board feet!Afterwards, it has only kept rising,
Nowadays? Sit down before reading further: the National Association of Home Builders evaluated that since mid-April 2020, “lumber prices have skyrocketed more than 300% since April 2020, causing the average price of a new single-family home to increase by nearly $36,000”.
Lumber mindset right now
Unexpected demand in an uncertain economy
As with mostly everything in our modern global economy, lumber prices are all about supply and demand. When supply is short, but demand is high, prices go up. But how did the lumber industry fail to foresee the rise of the demand?
Most woodworkers thought that Covid-19 would lead to an industry-wide slowdown, not an industry-wide boom. Most sectors of the economy had to shut down during the pandemic, but ongoing construction projects went forward.
Additionally, numerous people stuck at home figured that there was no better time to fix up their homes to ease the pain of being in lockdown. New fence, deck or spare room, there was no shortage of DIY ideas to create a better “pandemic bunker”! Others who fled the cities bought homes in the countryside, but some also built theirs!
Homemade Gold?
The future of lumber pricing
At the moment, “boards are sold before they are even cut”, said business media Bloomberg recently.
Therefore, it will take time for the market to find the right balance again. In the U.S, lumber production will need to increase to cover the demand. Because of the time it takes for mills to become operational, it will not happen right away. Covid is still here and it is uncertain when everything will be able to operate normally. When it finally does, it is uncertain how quickly lumber prices would go down even though analysts see that it should start in 2022.
Meanwhile, if prices of new lumber rose to the moon, our own reclaimed lumber prices remained the same! Waiting for your email!