Conventional wisdom is cute but its a figment of the past, under $300 buy, above $400 sell - or that’s what the timber trading experts used to say. That was the conventional imparted wisdom of the timber markets but we’re living in the post-timbalyptic world where the only thing less stable than wood is the price of a Bitcoin. As Stinston Dean, timber expert explains, we’re experiencing the most volatile timber market of our lifetime and its not because of COVID, it’s because we’re experiencing the perfect storm of factors that involves blue beetles (rotting), wildfires (destruction), artificial political bottlenecks (tariffs) and insane demand for home improvements. Lumber prices are off the rails.
The US is dependent on British Columbia for its timber stock. Due to the protective lands acts and other economic reasons, the US is not self-sufficient for the raw material most impactful for new housing starts, wood. In fact, we’re not alone, a lot of the world looks to the Canadian forest for its timber supply and China proved to be the largest importer of Canadian timber in the world after the Great Recession of ’08.
I’ve experienced this volatility first hand. My business partner Cliff sent out a construction cost update to his various partners last week and opened the books to show the widely varying costs of timber for framing on his handful of Philadelphia projects. My project barely skated through the cost increases whereas other projects saw nearly double the price that mine experienced. Timber is the largest material cost for a housing project so this price discrepancy is extremely meaningful for the outcome of a project.
As climate change, political limitations and demand continues to create challenges for the timber harvesting and market conditions, buyers are in a position of weakness. What once represented a reasonably predictable input cost has now created a frenzy that leaves the consumer at the whim of an inflationary tidal wave.
When will this market stable and what will be the solution be? Will we find timber-alternatives that are of build ready quality? Will we radically adjust the AAC level and open up new supply pathways to create new supply? Or, is this our new normal where we have to contend with attempting to time the market and buy wood even when it may rot from the inside out?