The rise in lumber prices during 2021 has rocked the home improvement industry. If you look at the lumber prices today compared to just one year ago, they are 350% higher! With prices skyrocketing, contractors and homeowners alike have been stunned and left questioning why the price of lumber is so high. The reason lumber costs increased is a complex one but there are a few key factors.
What Determines Lumber Prices?
Wood prices are driven first and foremost by the amount of trees growing in the US but that doesn’t cause a huge swing in the market prices. For example, if an invasive beetle moves into the country’s lodgepole pines, you may expect a slow increase in the wood prices for pine lumber. However, a forest fire doesn’t typically increase lumber cost drastically.
So How Does The Cost Of Wood Increase So Quickly?
In the last couple of decades, lumber mills have operated on a system of having products made just before it ships out. This way, they don’t have to store the product. All those logs in the yard? They aren’t made into plywood until they have to be.
This method of production makes sawmills more efficient but when production had to be cut down during the Coronavirus pandemic, it caused a serious issue since they weren’t able to keep up with regular demand. However, the demand for home improvement products during the pandemic wasn’t normal.
How Are The Lumber Prices Today Different?
With no trips to take and very few restaurants open, homeowners had nothing else to spend their money on other than fixing their homes. This is the main reason for the cost of lumber increase that we’ve seen in 2021. There were massive increases in spending on home improvement. In some local hardware stores, spending on home improvement increased by over 50% compared to previous years.
With sawmills unable to keep up with normal demand, they didn’t stand a chance to keep up with increased demand. Unfortunately, it is not a good business move for sawmills to increase capacity since the housing market will eventually return to normal levels and the business loans required to increase capacity are in the millions of dollars.
When Will The Price Of Lumber Go Down?
The only way there will be a reduction in prices is to rely on the basics of capitalism: demand must decrease if supply won’t increase. We’ve already started to see a slowing of demand that has led to at least a leveling off of prices and in some products a decrease. However, for prices to return to “normal” there will need to be an extensive cooling off of the market; and the prices may never return to what they were.
What Home Projects Can You Do That Aren’t Affected By High Lumber Prices?
If you don’t want to deal with the lumber prices today, there are several projects that you can tackle that add value to your home, some of which I’ve mentioned in the previous article on best home improvement projects. My favorite home project that hasn’t seen any increase with the lumber price increase is paint. A fresh coat of paint adds incredibly value compared to the price of the materials.
Another great project that isn’t affected by lumber prices today is lighting. I always say that lighting is like jewelry and it can make or break the room. Change out old fixtures to quickly modernize a space.
Finally, now is a great time to change out your flooring since that hasn’t been greatly affected by the cost of wood. Even hardwood flooring doesn’t seem to have increased as much as you would expect.
Ultimately, the Coronavirus pandemic has affected building material prices in several ways. The answer to the question of “Why is lumber so expensive?” is a complex one but it boils down to a couple of key factors. Since the cost of wood has increased for the retailers, anybody needing a lumber yard project has noticed that lumber prices are up by 2-3 times what it used to be.
So when will lumber prices go down? That’s hard to say. Like I said, we’ve already seen a little bit of a cooling off as homeowners realize they can no longer afford the addition or the new home. I am hoping that within a couple of years, the cost of wood will return to “normal” but I don’t think we will ever see the prices that we used to before the Coronavirus.