We have all heard about it. It is all over the news and across the media. Rising building material prices have caused homeowners considering remodeling or building projects to take heed and listen. Wooden building materials, in particular lumber, have seen exorbitant price increases throughout late 2020 and 2021 over recent years. According to the National Association of Home Builders, lumber prices have risen over 300% since last spring. Although prices have begun to “trickle” down in recent weeks, there has not been a substantial decrease as of late. These results have affected residential and commercial building alike. The question is why is lumber so high? As part of our continued effort to stay abreast of industry trends and changes, Archadeck of Nashville explores the answer to that question.
Before getting too deep into this article, it is probably a good idea to explain how the flow of lumber as a material works. First, a tree is cut down and put into a truck headed for the mill to be made into a finished wood product. This includes lumber, plywood, OSB, among other wood products used for building. Once the wood is finished into a product at the mill, it is then sent out into the world to be sold at building supply centers and lumber yards.
Reason #1 – Supply and Demand
The real estate market is booming here in Nashville, along with new home construction and remodeling. Naturally, when there is an increase in demand of a product, it will affect the supply. In the case of lumber, we have seen such a high demand for it that keeping it supplied to all who need it has become difficult. In turn, to keep supply replenished, the lumber providers have had to pay higher prices. Those higher prices are passed onto us.
Reason #2 – The Pandemic
It is impossible not to note the pandemic as a factor when talking about lumber prices. Covid-19 pandemic brought an onslaught of homeowners adding or upgrading their existing homes. There are numerous reasons of how it helped increase the supply and demand of lumber, and other building materials causing prices to rise. One reason is more time spent at home caused a surge in homeowners deciding to add more space for just that. Working from home, homeschooling and just being at home sparked many to add, remodel and benefit interior and exterior spaces to address their needs and desires. Social distancing and quarantines too, caused many folks considering selling their home to stay in place and remodel their existing homes instead. We witnessed a surge in not only interior space upgrades, but outdoor living space remodels and builds as well. Clearly, the push for more building and need for supplies during Covid-19 was unexpected by the industry. Material shortages began as a result, which was also a factor for an increase in costs.
Reason #3 -- Canadian Tariffs on Lumber
Another reason for rising lumber costs can be blamed on the tariffs on softwood lumber coming out of Canada . The US and Canada are long-time trade partners in lumber. Due to the increased demand for product here in the US, we have had to lean on our reliance on Canada to help satisfy that demand. However, there is currently no trade agreement in place. While the US reduced tariffs on Canadian softwood lumber imports in December 2020, tariffs have still added to the overall cost.
Reason #4 – The Great Recession (AKA the market crash of 2008)?
Remember back in late 2007 and 2008 when the housing market took a huge hit? It is during this time that many lumber providers took a big hit. As a result, they streamlined their processes to minimize the impact of their losses and prevent future loss of revenue. Much of the industry has been on its heels since the Great Recession, and it slowed down production accordingly. This includes closure of sawmills, reduced production and a reduced supply. Sawmill closures and production lines are not easy to reverse quickly. Production of lumber, and manpower on the manufacturing end was cut back as a result of the Great Recession.
All of the reasons noted above led to the current building material situation we are living today. The timing and circumstances that got us here are the result of what can be described as a perfect storm. The culmination of these elements give us the current increased sticker prices.
With higher material costs in mind, you might be tempted to put off your anticipated outdoor living project. Archadeck of Nashville cannot say when (or if) lumber prices will return to normal. Given the proposed infrastructure spending plans, it doesn’t seem likely that costs are going to retreat to pre-pandemic prices anytime soon. Most economic experts predict that it will be some time before the cost of wood normalizes. Some also say we might never see lumber prices that low again.
Here’s The Good News!
As part of our goal to provide the most value and attention to each project we build, you can rest easy knowing Archadeck of Nashville has your back. Our customers are protected against further price increases from the time you sign a contract with us. At that point, we accept all risk going forward that prices may continue to rise. Once you sign a contract with us to build your deck, porch, patio or other outdoor space project, your cost will not increase regardless of an increase in market prices for building materials. We are here for you and here with you every step of the way!
Whether you’re adding a simple deck or a combination of several outdoor living structures, we would love to design and build your project. Why wait? Contact Archadeck of Nashville today to schedule a design consultation for your new outdoor living space.