Is COVID to blame for today’s insane lumber prices?
Well, yes and no… the pandemic certainly didn’t help, but it’s not the whole reason behind the giant increase in prices.
Over here at Punchzee, we are basically just trained chimps, and we like to break things down so they are a little easier to understand. So let’s see if we can make this a little easier.
So what’s going on?
In just one year, the price of lumber in the USA has increased an incredible 377% to a current price of around 1600 USD per 1000 board feet. The price has increased over 400% from this time last year.
You may be thinking…
”So what... why should I care?”
Well, take a look around your home. How many things are made of wood? Wood is used in couches, bed frames, tables, flooring, counters, cabinets, and so much more. In many countries, the framing and roofing of the house itself is made of wood.
Skyrocketing lumber prices means all of those things, from furniture to housing is more expensive. Just factoring in lumber, the average single family home now costs 36,000 dollars more to build according to the National Association of Home Builders.
If you wanted to build yourself a little picnic table for the back yard or porch, last year that might have cost you about 100 dollars. Today that would cost over 400.
Visual Capitalist put together a very interesting infographic, that highlights the number of homes that could be built with 50,000 dollars of lumber 1 year ago versus today. It is a 5 to 1 difference!
So is COVID to blame or not?
Again, yes and no. The real culprit boils down to basic economics. We had to look up basic economics, but Wikipedia told us that means the difference between supply and demand.
It seems that during the pandemic, when everyone was working from home, they started to look around and realized it was about time to start making those home improvements they had been thinking about for the last several years. A whole lot of them decided they wanted a new home which also increased demand for lumber.
But guess what?! Sawmill workers weren’t on the job either. COVID restrictions meant workers had to stay home, which means production of lumber products was lower than usual. And production was already low.
When lumber prices were very low in 2018, a lot of sawmills shut down permanently, which reduced supply. Lots of other things happened before COVID that reduced supply, but that’s a little too complicated for us to understand.
In simple terms, for my fellow chimps, an already reduced supply, coupled with a sudden increase in demand, means higher prices.
So next time you are about to throw a log into your fireplace, stop and look at what you are holding because it just might be worth its weight in... wood.