Reporter Tim Glaze looks at all the causes and consequences of insanely high lumber prices, including lumber's chain reactions.
Good afternoon —
One of the vexing constraints for homebuyers, real estate agents and loan originators alike has been the lack of available housing inventory. It's been the subject of much discussion and one of the big questions has been: Why can't we just build our way out of low inventory? Our lead analyst, Logan Mohtashami, wouldpoint out that the builders' business model means they have to see a certain level of demand before they ramp up supply.
But even if that demand continues to grow, builders will have a hard time overcoming one of the biggest challenges of the last year — a lack of Canadian lumber. In a feature article published yesterday, Reporter Tim Glaze looks at all the causes and consequences of insanely high lumber prices, including the chain reaction that raised prices of other building materials, some by 25%.
"Homebuilders had signed contracts and needed to deliver by the end date – usually about three months from the time they began – and could not pass those increased costs on to customers," said Keta Kosman, the publisher of trade Madison's Lumber Reporter in Vancouver.
"So, for new building and renovating that started at the end of the summer of 2020, those higher lumber costs were added into building project costs. In short, when lumber supply is so low while construction activity is so high, it is the end-user — the homeowner or home buyer — who pays those increased costs."
Read his deep dive here, and enjoy the weekend! HousingWire will be observing the holiday on Monday but will send all our normal newsletters this weekend.
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