Just like the lumber market, housing has benefitted from the unfortunate situation of the COVID-19 pandemic.
One must wonder why? The answer is simple if we just listen to the narrative provided by builders and the usually lopsided media. Folks are fleeing to the suburbs. The pandemic has struck fear among families who cannot escape crowds, so they are literally running for their lives. The more data that shows younger children are vulnerable, the more flight to suburban safety we will see. School is the immediate quandary. Who wants their kid to be the guinea pig to see how the virus spreads in children?
This bodes well for the housing industry as long as there is fear of close contact with others. Also promising for housing is the trend towards larger square footage making space for an office, in-home gym, and learning space for children.
There is a paradigm shift underway among current home buyers. Dwellings that are more self-sustaining are more a priority than proximity to entertainment, shopping, and schools. That shift includes larger lot sizes and/or privacy fences, decks, play equipment, or in general secluded outdoor living space.
These new home requests are becoming requirements, which creates higher demand for lumber and higher demand for the upper end of home price ranges. Home buyers are committing more disposable income into their dwelling, i.e., a larger % of income.
Does that mean less demand for multifamily construction? Likely not. It may mean changes in design, but the fact remains that there is a large % of the population that does not want the responsibility and expense of ownership.
In conclusion, at the current pace of new home construction, inventories remain inadequate and our lumber market is under supplied, i.e., produced.
Until sawmills increase production or the frivolous DIY and home panic buying slows, we will likely see $1,000 /mbft fob mill 2x4 #2 in all species pretty quickly.
Watch for increased volume of mill offerings particularly 3-4 weeks out. That is a sign of the end. More quick offerings is severe warning.
Looking Forward...ML
Would you like to have bi-weekly updated forecasts of the constantly changing framing lumber market? Are you fed up with being caught on the wrong side of the market...losing orders because your lumber prices make you uncompetitive. I can assure you the orders you lose are not because the other guy is selling at a loss. It’s not you or your buying style. It’s just timing. I forecast when the Lumber Market will rise and fall. Why? Because after 30 years, I know it better than anyone. No one else tells you months in advance when prices will reverse....no one! Call me 336.516.6684. www.laymansguide.info