Real Estate

Woodpeckers as Profit Stealers: Price of Lumber in 2021

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Did you hear the joke between the woodpecker and the owl? *knock knock* Hoo’s there? 

You may be wondering why I am starting this month’s blog with a joke. Ponder no more. I plan on discussing the price of lumber as it affects the housing market, so the correlation is obvious now, right? 👀 

But let me digress again as I am reminded of the old time cartoon Woody Woodpecker.  If you are not familiar with this anthropomorphic bird, he was created in 1940 by some folks at the Warner Brothers. I have generously linked TWO full episodes here for your viewing consternation! Click his name above.

Back on track now, listen to this! We ordered two new windows for our house in March of this year. They are scheduled to be installed in or about AUGUST, as the company cannot find installers and (more relevant), the factory that produces them also makes things from wood and the price of that wood has skyrocketed leaving them short-handed, with limited supplies, blah, blah, blah. Shiver me timbers! And, apparently, this is not just a problem for me alone or just about windows.

Just as America was coming out of the woods of covid, it was running out of wood.Yes, there’s a wood shortage and a qualified worker shortage and the price of lumber has skyrocketed and new appliances are super delayed. Who cares? Almost EVERYONE. Here is some documentation on that.

Look at this first, courtesy of 85209.com out of toasty Mesa Arizona:

Now take a gander at this chart:

From iProperty Managment.com

Home sales are through the roof. But, apparently, the amount of home building has been struggling to meet home builder demand, although clearly higher than 2019.  Is there enough lumber and wood products to meet the demand?

According to CNBC

“Single-family housing starts dropped more than 13% in April compared with March, according to the U.S. Census.

Prices for new and existing homes are at record levels, and the increases are accelerating at the fastest clip in over 15 years.

Roughly 15% of builders said they are putting down concrete foundations and then holding off on framing the house.”

And there are ramifications that may not be immediately apparent. How about this, as reported on katc.com news: Lumber prices impacting Habitat for Humanity. And, of course, karma comes into play as reported in the Wall Street Journal, “Lumber Prices Are Falling Fast, Turning Hoarders Into Sellers”. Hopefully the prices fall really, really fast for both groups. 

And TTTTIIIIMMMMBBBBEEEERRRR, it wood appear then, that things are improving. (sorry!) Charting things, courtesy of Fortune magazine:

BUT …

As mentioned above, note the word, “Started” in that chart. But there is proof of good news. 

CNBC summed it up by saying, “The great lumber bubble of 2021 has popped.” 

Source: Markets Insider

On May 7 at their highest, lumber prices hit an all-time high of $1,670.50 per thousand board feet. That was more than six times higher than their Covid low in April 2020. But we can see the price drop starting. 

This has been partly attributed to Americans taking the first post-pandemic vacation and literally seeking less lumber for home building and remodeling. The old supply/demand economics is in action. But money is money and the costs had skyrocketed.

The National Association of Home Builders posted that the surging price of lumber added a whopping $35,872 to the price of a single family home.  And check this out!

  • Gypsum (or drywall) prices are up almost 7% from just one year ago.
  • Steel mill pricesrose about 18% in March year over year. That’s used for beams, sheet metal products and wiring in home building.
  • The price of copper also set a record high this month and is up a crazy 27% year to date.
  • Single lot cost has gone up 11% this year but lot supply is down 20%. 

Will things improve? Will my windows ever get built and installed? 😓

The answer seems to be, “YES!!!! And maybe even faster than expected!” According to InvestorPlace

“The falling lumber prices in 2021 means customers might see them return to normal levels faster than expected. While the volatility in the market makes it hard to track, previous estimates weren’t expecting those prices to get back to normal levels until a good way into 2022.”

So we’re ahead of the game! Besides, most would say something along the lines of surviving a pandemic is expensive. They are so right. 

Fee.org: “Federal ‘COVID’ Spending Just Hit $41,870 Per Taxpayer.”

CIDRAP.com: “COVID-19 to cost US hospitals $200 billion through June”

Healthline.com: “The federal government has poured billions of dollars into COVID-19 vaccine research, development, and production.”

USA Today

JamaNetwork.com

When you talk about money using the T and B words (trillion and billion), paying double and triple cost for lumber seems almost like lunch money, right? [Okay, NOT.] Regardless, let’s celebrate with some fun.

A weak little man applied for a job as a lumberjack, but the foreman refused to take him because he was too small. "I may look puny," protested the man, "but I'm not. Just give me a chance to show you my strength."

The foreman consented and told the man to go chop down a giant redwood that stood nearby. Half an hour later, to the foreman's shock, the redwood was lying on the ground.

"Where'd you learn to cut down trees like that?" the foreman asked.

"The Sahara Forest," the man answered.

"You mean the Sahara Desert?" the foreman ventured.

"Sure," said that man, "if that's what they call it now."

What did the lumberjack cobbler make?Wooden shoe like to know?

What do you call a stupid lumberjack?

An Axymoron!

Did you hear about the lumberjack who got fired for cutting down too many trees ?

He saw too much.

I used to work at an orange juice factory but was fired because I couldn't concentrate.

So I tried my hand at being a lumberjack. I couldn't hack it, so they gave me the axe.

Then I gave being a barber a go. But I didn't cut it.

I was then hired as a tailor and found I wasn't suited for the job.

The best way to carve wood is whittle by whittle.

What do you call a piece of wood with nothing to do? Bored

😁😁😁😁😁😁😁

About Kathleen Heck

Kathleen Heck has worked with hundreds of top sales professionals, authors, corporate executives, educators, and management level professionals. She started her career as a college and high school educator. Later she changed industries and moved to financial services, first as a Mortgage Loan Officer and then rising to lead of team of over 2000 financial professionals. She is the author of "After the Beep" and "Meltdown: I Need a Plan". Currently serving as the President of the Croyance Group, Ms. Heck is a Certified Professional Coach and holds several Masters Degrees and a PhD. See more at Croyancegroup.com

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