This Is Why Lumber Prices Will Fall In 2021 — Greg McKinney Mineola TX
This is an unprecedented time in history. Lumber prices are at an all-time high. What brought us to this point and will prices drop? We will take a very practical look into what caused the rise and when will it drop.
All commodities go up and down with supply and demand. Last year for the first time in history the world basically shut down for months. Demand for lumber dropped substantially. As the economy started to wake back up home construction resumed. Many people were also stuck at home doing their DIY projects they had been putting off. They couldn’t go anywhere for months so those projects were finally getting done but that also started to put pressure on the lumber supplies. In May of 2020 lumber was $348 per board foot. Today that price is $1670 per board foot. Prices are up approximately 280%. In November 2020 the prices started to climb. As the country started to open up people started shopping for homes all at the same time. Home prices started to steadily climb. Many people are now getting above listing price for their homes with multiple offers. Demand can basically create momentum and drive demand. People are in a frenzy now that fewer homes are available. They believe they will not be able to find a home. Then they start paying too much for homes. Then at some point people will just say “I think I’ll wait a little longer”. Then it starts to happen. Prices for everything start to fall. People will go into their local Home Depot to buy lumber and notice it is a few dollars cheaper than it was last week and they decided to wait one more week. Those wanting to build a new home will hear lumber prices are starting to fall and decided to wait another month or two before starting that project. As prices start to peak and hopefully slowly come down the current frenzy of home buying will subside. Homes on the market will start to stay on the market longer. Home prices will start to drift down. Lumber prices should drop by the end of the year. Real estate markets and lumber prices have gone up and down for 100+ years.
Forgot to introduce myself. I’m Greg McKinney from Mineola, TX. I’ve been remodeling homes in East Texas for 25+ years. I’ve seen this happen a few times over the past 25 years. I believe we are at or close to our peak. I believe the second half of 2021 will see a slow decline in lumber prices and home prices. The demand for both will drop allowing the supplies to increase. This has happened for decades. If you absolutely do not have to have a home just wait. Prices will come down or at the very least stabilize where you can get the home you want at a price you can afford.
We are also seeing the same thing happen in the automotive industry. Auto makers have very few cars to sell because of the microchip shortage so 13% of all new cars sold last month were sold above sticker price. The price of used cars has increased drastically as a result. It’s the exact same mindset. People are in a frenzy thinking they will never be able to get the car they want so when they do find it they are paying too much.
Everyone just needs to take a deep breath and wait at least 6 months. You will be able to get the home you want at a price you can afford and you will be much happier knowing you did not overpay.