Got Wood?

While very few consumers visit retail lumberyards or big box home improvement centers nearly as often as I do, if it has been over a year since your last visit, prepare for some serious sticker shock.

The sheet of 7/16” osb (oriented strand board) which retailed for a five spot and change last April? Good luck, try $16 to 20 a sheet now. Dimensional lumber prices have nearly doubled in price over the same time span!

In like a lion, out like a lamb….the tricky, ucky, surprising at-every-turn weather of March is past. For most of the country, Easter is the turning date for weather. From now until way past Labor Day we will be blessed with ideal job sites.  When it comes to building material pricing we are left with the simple elements of supply, demand, and the arm wrestling between producers and consumers.

Let’s start with supply.  Over the last year lumber production has increased by 10%, housing starts have increased by 20%. Anyone besides me see the immediate challenge in this?

When there is not enough “stuff” to go around, the price of the “stuff” goes up. This is why lumber prices are firm.

The talk recently on the streets is of increasing productions, however this is not like turning on a water spigot. Over the past five years, many production facilities have either been permanently closed or mothballed. Restarting a mill takes months. Georgia Pacific is investing $400 million to increase output…..it will take over a year for the improvements to be made.

The mills which survived the great recession have been living on a shoestring. Only absolutely essential maintenance was done, now it is time to pay the piper – more and more down time is needed for overdue repairs to equipment and facilities.

For consumers waiting for some sort of radical price drop….chances are better of the Houston Astros making it to the 2013 World Series. It isn’t going to happen. Need a new building in 2013?  Order it now! Lumber prices are only going up from here.