One industry that has been impacted positively by the COVID-19 pandemic is the housing industry, which is resulting in a boom in houses selling extremely fast for well above the asking price. This seller’s market has caused many potential homebuyers to consider remodeling their existing homes rather than compete in the current market. The combination of these two factors has put increased demand on resources such as lumber and driven their prices to an all-time high.
Real Estate and Remodeling Trends
Despite a difficult year faced by many individuals, 2020 saw the housing market grow substantially, reaching all-time highs. This was partially a result of decreased interest rates that were dropped during the pandemic to encourage buyers to purchase homes and spend money. This was highly successful with first-time homebuyers, but competition quickly stacked up for promising properties as investors stepped in with all cash overs that were well over asking prices.
Many potential homebuyers have decided to consider building a home or remodeling their existing one as an alternative to competing for a new house. This increase in demand for residential construction services has put a strain on the lumber industry, both in terms of supply and pricing.
Lumber Supply Shortages
The lumber industry is struggling to keep up with the demand created by the real estate and remodeling industries. The COVID-19 pandemic has caused a strain on supply chains of all types, and lumber is facing one of the worst shortages ever. Because it is used by so many industries for so many different things, wood inventory is either very low or entirely out of stock everywhere, and every lumber yard is currently working under a backorder.
As the demand for wood increases, the law of supply and demand kicks in, and prices ultimately start to increase. The price of some lumber has more than tripled since 2019. Many shiploads of wood are being sold directly to large corporations willing to pay even higher prices, making it difficult for small or independent contractors to gain access.
Is This Forever?
Fortunately, experts believe this is a temporary trend caused by COVID-19 and the volatility of the market that came along with it. Financial experts believe that lumber prices will drop drastically by the end of 2022 as supply chains have access to more reliable transport lines.
What Does This Mean?
As a potential homebuyer or remodeler, it’s hard to know what all of this information means for your personal projects and decisions. Many people want to take advantage of the additional free time they have had during the pandemic to take care of home projects but the increased prices or sheer lack of lumber available has been a turn-off.
The good news is that as restrictions are lifted and transportation becomes more accessible, real estate interest prices should go back to where they were before, and lumber prices should drop accordingly. It may be worth holding out on some of your projects until next year to save yourself a large chunk of cash in the long run.
Oak and Broad Has Wood Plank Flooring Available!
Here at Oak and Broad, we are still supplying wide plank flooring to our valued customers. Contact us today and let’s talk about your next flooring project. We’re happy to answer your questions and walk you through the process of finding beautiful flooring for your home or office.