SPRING/SUMMER LUMBER MARKET ANALYSIS
A PEEK AT THE MARKET
This is the most uncertain market I’ve ever bought in. Lumber prices definitely dropped over the last four weeks, and you’ve been seeing that in your bids. As soon as I think the complete floor is going to drop out, a number of mills shut down or reduced production and prices stabilized. Over the last week, there has been a change in dimensional Doug Fir. Sales have started to surpass production and some product, especially studs, have started to go up. I think this will continue; as soon as there is real momentum, more production will come on. I think we will be looking at these prices for a while.
The OSB market is a little more predictable. Production on the east coast came to a standstill. As they open, the retailers over there will be scrambling to refill their inventories. While on the west coast, production continued and there was a steady drop, and by all indications there will be a steady rise. Prices did go up this week, with last week being the bottom of the slide. I don’t think we will see major gains though until the surrounding SF counties open. Once that happens, I feel prices will move quickly to where they were before the shutdown.
In conclusion, I think we are just passed the bottom of the market. It is still a great time to lock prices, but if you are not starting to frame, you do have time. It may be wise to hold off a bit as I think there will be a spike when construction in SF picks back up, and you don’t want your bids to run out during that spike.
KRIS’S TWO CENTS
“Hello Spring, we meet again! However, the conditions under which we meet this season bring us feelings rather in contrast to the excited enthusiasm we so emphatically welcome when spring finally arrives. The industry feels like it’s under a bit of an identity crisis, wondering what kind of role it should play in the coming months. Contractors are kicking tires, feeling timid and unsure of the market and many of you are asking, should we pull the trigger or hold off until this thing blows over?
The recession in 2008 has us all a bit frigid about our business endeavors but the pandemic doesn’t mirror the financial crisis of the Great Recession that was brought on by something really fundamentally wrong with the country. The financial crisis of the pandemic struck when the economy was doing fairly well.
In addition to economic health, in ’08 people lost their jobs and had nothing to come back to and the light of an indefinite tunnel was dim and unpromising. Today, millions are displaced but, for the most part, have jobs to come back to – Americans aren’t fired, they’re furloughed. Economists believe to see more of a “V-shaped” recovery than the “U-shape” of the Great Recession.
So what does that mean for our industry? After weeks of being cooped up in our homes, it has never been more apparent how much home really matters. Home is where we are eating, sleeping, parenting and homeschooling. Many people will continue to work from home as our new norm means more telecommunications and mobile work practices. People are desiring a better space in which to function and with outdoor spaces becoming the choice for our gatherings we can expect to see a demand for better exteriors, decks and patios.
The housing industry is expected to fare better than other industries, largely due to the shortage for affordable housing. As one article stated, “You cannot shelter in place without shelter.” The Sierras in particular could benefit from a heightened desire for clean air and owning property in places with a healthy lifestyle. Robert Dietz, National Association of Home Builders’ (NAHB) chief economist noted in his most recent economic outlook update, “the demand is there, leading NAHB to forecast that housing will play its traditional role of helping to lead the economy out of a recession later in 2020.”
Additionally, the home building industry can help an economic rebound because it generates jobs in a mix of industries – engineers, architects, real estate agents, mortgage brokers, skilled workers and the list goes on. We are not only essential, we are crucial to the recovery of our economy.
While “normal” has forever been reshaped and we’re not entirely sure what that looks like yet, it does feel like we will be getting back to it fairly soon. Fortunately for our customers we have adapted quite effectively in a way that has not only allowed us to continue serving you but has even improved how we serve you. With free delivery and will-call pickup, you and your workers are spending less time getting materials and more time on the job. We keep hearing our service is better than our competition and even better than ever.
So in short, we say go for it. The market is leveling and the economy needs you and we are more ready than ever to serve you. Call your orders in and let’s get this season shaking”!
-Kristine Keck Truckee General Manager