Composite decking manufacturers are thrilled to find they are finally price competitive with pressure treated pine. Composite pricing is going up, up, up!
My experience is that once the rush is over, prices will probably no longer go up, but they never really come down much.The construction market is overheated at the moment and lumber producers are dealing with Covid-19 and government enhanced unemployment labor problems as well. Prices will come back into line once the housing bubble bursts and prospective workers are not making more money collecting enhanced unemployment than they would make working.
This supply and demand mismatch is largely a result of the pandemic. At the same time that state-mandated lockdowns caused mills to halt production, bored quarantining Americans were rushing to Home Depot and Lowe’s to buy up materials for do-it-yourself projects. That caused lumber inventory to plummet. It only got worse from there: Recession-induced record-low interest rates caused a housing boom. In March, new housing starts hit their highest levels since 2006. Of course, new homes require a lot of lumber, thus exacerbating the shortage.
I own a fairly substantial amount of Weyerhaeuser stock WY. My basis is $22.58 a share (1/4/2019) and it's $38.78 as of a few minutes ago. I bought it because it was paying a near 5% dividend, not because I expected it to jump this much.Just watched a YouTube short on who's getting rich on this price increase. The land owners, timber cutters, truck drivers, aren't seeing a pay increase. Likewise the retail folks use a margin to price products. Their profits only reflect their cost. SO....... What's happing here? The profits are being scraped in by the large lumber suppliers. This is Georgia Pacific, Weyehaeuser, and their likes. This YouTube guy did a lot of research on this post. It looks like he's RIGHT! ! !
The construction market is overheated due to residential building being affordable as a result of extremely low interest rates.So this is my question......how can the construction market be overheated? I have a pile of masks laying around and reminding me that we are in a pandemic. I vaguely recall, many news articles, just last fall that companies were seeing the value of "Work from Home". It would be highly unlikely that we would ever go fully back to the office setup. And the fallout from this would be a glut of buildings that are no longer needed. And did I not just see several news stories about businesses are starting to re-open but can't find workers, who would rather stay home on unemployment. So if a business does not want to build new buildings, people do not want the jobs that would include building, then can somebody please explain to me how the construction market can be overheated?