Cooling ahead for CMs
Zillow reports that the number of multigenerational family households has quadrupled since 1971. 18% of Americans now live in multigenerational housing and housing supply is at an all-time low. Families are moving back in with relatives due to increased housing costs.
What does this tidbit mean? For some, housing has always been, and will be, unaffordable. Income inequality and core inflation make that chasm between the “can have’s” and “cannot have’s” ever wider. We are losing the “housing-for-all” quest and have been for half a century, not just a decade. Statistically, there is some percentage of the population that will never own or rent a home, and another percentage that will always need government-subsidized housing just to meet minimum comfort and safety needs. Times of economic prosperity allow for middle to upper class to improve their housing hand.
How does this 50,000 foot view impact the here and now? It means that new home construction and all home sales are elastic, expanding and contracting with availability, affordability, and % of income willing or needed to spend on housing. All of those components seem to be in constant state of flux.
Current housing strength has been supported by millennials, “the wealthy generation.” There is an inflection point where the number of “cannot have’s” reduces housing demand to a point that is less than capacity.
That inflection point is what our lumber market is feeling while being sold on the ideal that all is well. That inflection point is imminent and substantial. Lumber handlers have a growing apprehension about supply shortages and continued sustained demand in the near future. The FDP is foretelling “something” negatively large in Q3. We’ll be ready.
Question: How much lumber did you buy in March. The correct answer should be $0. March was a liquidation month for LLG members.
Looking Forward...ML
A veteran lumberman, Matt Layman publishes Layman’s Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.com.