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Lumber Prices

Soaring Lumber Prices and What it Means for New Home Construction

Soaring lumber prices? It’s common to hear this term lately. After a year and a half being cooped up indoors, people are restless to have more space, and they particularly want larger homes that offer better access to the outdoors. We’ve been living, working and doing everything from home, so we expect more from our houses than ever before. Homes should foster healthy living and well-being, while representing a worthwhile investment towards the future. 

THE PANDEMIC SITUATION

The pandemic situation, coupled with very low interest rates, has led to a surge in home buyers, whether they be first-time buyers or those looking to leave their cramped urban existences for something more comfortable. This includes people who were planning to buy before the pandemic as well as those that were inspired to make a shift in lifestyle and priorities. The combination of economic forces as well as an unprecedented global pandemic conflated to create a need for housing that we’ve never experienced before.

This placed existing housing stock in high demand, causing very intense bidding wars. So, of course, building a new home might seem like the most appealing option right now. You can tailor the home exactly to your family’s needs from the start rather than having to settle, or undertake renovations that can turn into something more complicated, disruptive, and costly than expected. A new home offers a clean slate with the opportunity to get exactly what you want.

New homes represent a quarter of the homes currently for sale, which is the highest proportion recorded to date—typically, it’s in the range of 1 in 10. However, the rising costs of raw materials, and in particular, lumber, are affecting everything from the price of new homes to monthly rentals.

Between mid-April and early July 2021, changes in the prices for softwood lumber products have added nearly $30,000 to the price of the average new single-family home, and nearly $10,000 to the market value of an average new multifamily home, according to NAHB’s latest estimates. On the multifamily side, this adds nearly $100 a month onto the rent of a typical new apartment. 

Estimates developed from the Builder Practices Survey conducted by Home Innovation Research Labs show that the average new single-family home uses more than 2,200 square feet of softwood plywood and more than 6,800 square feet of OSB (oriented strand board). Sure, you can build homes with metal studs, concrete, and a variety of other materials, but wood has historically been the most affordable option, especially in our area.

The demand for lumber for new home builders and remodelers is not the only reason driving prices upward. When the pandemic set in, lumber production shut down, not anticipating a demand anytime soon. In fact, many lumber producers and others in the housing market anticipated a huge and extended economic slump. But the demand came swiftly, and while homeowners had high expectations, lumber producers weren’t prepared to accommodate them. Meanwhile, the cost of import tariffs has been rising, adding to the surge in lumber pricing. 

Lumber is not the only construction material surging in pricing. Gypsum, which comprises drywall, is also on the rise, as well as steel and copper. The price of land itself is up because of high demand and low supply, contributing to the overall escalating price of new construction and development. The reasons are all the same; it’s a lack in labor, a lack of raw materials, all conflating into an overall lack of finished product.

Although statistics are showing lumber prices are declining slightly since their peak in early April, it’s too soon to feel overly optimistic, given that they are still twice as high as they were the same time last year. The prices of wood don’t just affect framing; other wood products with soaring prices include plywood, oriented strand board (OSB), particleboard, fiberboard, shakes and shingle—ultimately any construction wood products. 

Some potential home builders are choosing to wait it out in hopes that prices will return to some semblance of normalcy over the next year. In some cases, they don’t have a choice, as lead times can be exceptionally high for some products, such as engineered flooring, with many mills scrambling to make deliveries before the new year. Many construction trades are also suffering labor shortages, which further affects construction schedules and costs.

Many people in the industry expect that supply will eventually catch up with demand, and prices will level out to something resembling normalcy within the next year. So, what is the best move if you are planning to build your own home? Do you go ahead and build now, knowing that real estate is always a solid investment? Or do you wait until material prices drop, and construction as a whole is more affordable?

First, it helps to have an expert on your side and Wiggins Construction Company custom home builders can provide insight into lumber prices in Florida as well as how this will affect the cost of your new home. Wiggins is based in Clay County and has built homes all throughout the Jacksonville area and north Florida, including Orange Park, Middleburg, Green Cove Springs, Keystone Heights, Amelia Island, Atlantic Beach, Jacksonville Beach, Neptune Beach, Ponte Vedra, and St. Augustine.

If you do the math and you can’t afford to build a new home and the existing home market proves too competitive, perhaps it’s time to consider renovating your existing home. Consider what is lacking in your current set up—does your family need more space? Perhaps an addition could make a significant improvement in your quality of life. 

During the pandemic many people spent more time cooking at home, so a new and expanded kitchen could be just what your family needs. Also consider adding an outdoor kitchen, which is excellent for entertaining but also practical for grilling for a regular weeknight meal.

If you are considering selling your home at some point in the near future, it might be worthwhile to add a bedroom or bathroom to make it that much more appealing to potential buyers. Of course, you must always check local zoning requirements and engage a construction professional to achieve your goals. Wiggins is a very experienced home builder in north Florida.

Many home improvements are governed by the cost of lumber. Perhaps it’s time to invest in improving the landscaping of your property. Adding open lawn, lush gardens, and/or outdoor seating areas can greatly improve the quality of your life without having to build.

Ultimately, a new home is always a good investment. Real estate prices generally always escalate, as long as you are smart about the area in which you invest. Wiggins is here to work with you to achieve your dream home. Contact us today for an in-home consultation.