Special Edition: Lumber and Real Estate

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Lumber and Real Estate – I just wrapped an interview on NBC 5 Dallas. My notes that might give you some context:

Futures on lumber 52-week trend: now at $750 a board foot – low around $350 board foot and as high as $1600.

Homebuilders estimate this can add $25K to 35K in costs to the average home.

Some builders say appraisers aren’t considering lumber prices in their analysis, and therefore are undervaluing new homes, creating loan-to-value issues.

As suppliers across industries get their acts together, shortages fade… yet the five main reasons that created it are:

  1. Labor shortage – safety protocols, more $$ to stay home
  2. Increase in demand for remodels and new construction
  3. Canadian Lumber Tariff – Canada = 36% of supplies to the US
  4. Wildfires In The West (a few news cycles ago)
  5. Pandemic – mills shut down and new safety protocols

Supply and Demand

Less demand as Americans started to go on vacations again instead of taking on renovation and building projects.

Household wallets are not unlimited, and at some point, demand shrinks amid a reluctance to shell out extra $$ for home projects and remodeling.

Consumer hesitancy around some home improvement projects given sticker shock from the rapid rise in specific commodity prices.

Speculative trading action cooled

Yet here is what we know:

A recent survey of “Consumer Finances” released by the Federal Reserve reveals the net worth of homeowners is forty times greater than that of renters. 40X.

The Federal Reserve Bank of New York noted that 93% of Americans believe buying a home is definitely or probably a better investment than buying stocks. I suppose it’s kind of hard to live in a stock certificate.

Persistence is the word of the day. Affordability is a challenge for the new home buyer – more savings, better credit, is the game to play.

 

About the Author
Mark is the Chief Executive Officer of JPAR Real Estate, a rapidly growing full-service transaction-based real estate brokerage, the host of "Success Superstars," a weekly show that highlights the blueprint of agent success, and the co-founder of CoRecruit. He has invested decades in understanding the inner workings of high-performing real estate companies, managers, teams, and their leaders in major markets across the world. Mark has served as a business coach in progressive leadership capacities for one of the largest US-based real estate firms, in sales and customer marketing leadership capacities for a major consumer goods company, and served in the US Army. Mark is a father of 3, a lifelong learner, Spartan, and adventure athlete. He earned his MBA from California State University and a Behavioral Change Certification from the National Association of Sports Medicine.