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Lumber mania is sweeping North America
- RickJWagner 6y agoConsider the pandemic-enabled material disruptions, the massive amount of money printing, and legislative motions like raises to the minimum wage. Conditions have not been so ripe for inflation in a long time.
- axaxs 6y agoIs it still considered inflation if it's rather temporary? I agree whole heartedly with your comment, was just curious about the terminology since inflation usually seems to imply a...longer term trend.
- fnord77 6y agoit's "supply shock" inflation. it is temporary.
- shockeychap 6y agoDo you really think there can be this much government-doled money, money printing, and wage raising without permanent inflationary consequences? I can’t hire anybody right now because so many people not working are getting more from unemployment than they would in a job. This is going to unwind at some point.
- DubiousPusher 6y agoNormally no but given the almost complete lack of inflation during the post financial crisis years, despite continuous predictions of its eminent arrival it's become a lot harder to say. It's honestly one of the big mysteries in contemporary economics. It's possible this current wave of anecdotes of price increases is indicitive of a large wave of inflation. It's also possible it is just a short lived mismatch between the demand economy ticking on slightly before the supply economy does.
- lotsofpulp 6y ago> It's honestly one of the big mysteries in contemporary economics. I assumed it was due to the increasing income/wealth gap. You have automation and cheaper labor from other countries reducing the price of labor for a substantial amount of people, seen in the lack of meaningful rise in wages for decades. You also have the US splitting into very desirable areas seeing lots of increase in prices, but more of it seeing price decreases due to lack of demand. Concentration of businesses that offer higher paying job opportunities contributes here, as well as people’s preferences.
- imtringued 6y agoIncome/wealth gap is just a result of the increased savings rate in the corporate sector. There are a billion reasons but most of them are caused by an unwillingness if companies to invest their savings to grow the business. If you don't employ anyone, the unemployed still have to eat which means corporate savings grow at the expense of the unemployed. Of course, investing your savings into growth is fine, because that will both employ people and net a return for your business. Why aren't companies growing their business? One problem is that there is not enough consumer demand to justify it. Why is there not enough consumer demand? Because people are unemployed or underemployed. It's a vicious cycle.
- lotsofpulp 6y ago>Income/wealth gap is just a result of the increased savings rate in the corporate sector. I do not see the connection here. It seems more direct to say that the supply and demand curves for labor have shifted in such a way that the price of labor has gone down for the labor many people are selling. >Of course, investing your savings into growth is fine, because that will both employ people and net a return for your business. That’s one of those how to draw an owl things. Maybe if the whole country got behind it as an effort, it might work if properly executed. But one or a few companies doing it (without the caliber of organizations like Apple) are probably just going to end up with worse financials, and get punished for it by investors.
- ClumsyPilot 6y agoIt seems to be all going into inflating house and stock prices, i am way more concerned about the asset bubble
- shockeychap 6y agoI’m concerned both about an asset bubble and runaway inflation - the kind that destroys savings and triggers class mobility in the wrong direction.
- imtringued 6y agoJapan managed to have 30 years with unreasonably low inflation. Remember, the purpose of that money printing is to add money back into the economy while various factors are removing it from the economy. By "economy" I primarily mean the productive part, namely businesses and workers doing work on behalf of a customer. Somehow the money is not reaching the productive part of the economy. Of course that is changing in 2021, governments finally decided to hand out money directly to those who actually want to spend it and that is a good thing. If it works, then money printing no longer becomes necessary.
- andrepd 6y agoIf you are printing money why would you give it to banks and financial institutions, and not to the people themselves? (Assuming good-faith and not the obvious explanation, of course).
- TOSSAWAY_1 6y agoWhat evidence do you have that its temporary?
- axaxs 6y agoAssumptions based on contributing factors. You had people more or less hold off on everything for a year, which tanked suppliers. Now that there's light at the end of the tunnel, everyone is buying making up for lost time, while supply hasn't recovered and realistically aren't going to double their capacity for what is seen as a short term spike. With lumber prices where they're at, you'd see mills popping up like oil wells if they had any hope those were permanent increases.
- Loughla 6y agoSo it's anecdotal at best, but where I live, anyone with an old portable sawmill sitting in a barn collecting rust has been getting them out, cleaning them up, and have started sawing again. I'm talking people who retired 20-30 years ago, or people who bought property with a mill on it and have literally never used it.
- bidirectional 6y agoInterest rates are near 0%. If inflation appears it can be combated incredibly easily.
- TOSSAWAY_1 6y agoUnless of course we've missed the time to raise them :)
- prepend 6y agoInflation is just the change over time. If you’re measuring a month or year it’s still inflation. Trends in inflation are just that, trends. So it’s certainly possible to have high inflation for short periods.
- DubiousPusher 6y agoRight now I'd say we don't know what it is. We have some anecdotal evidence from various industries but until we get some updates from the wider indices used to track inflation there's probably not much point in speculation.
- koolba 6y agoInflation is like sitting at a bar. Have a few beers and feels nothing special. Then halfway through the fourth round, get up to pee, and suddenly it will all hit.
- edoceo 6y agoit's Cinco de Mayo, so, maybe time for the "1 tequila, 2 tequila, 3 tequila, floor" joke? (which only work with English sounds for numbers)
- throwkeep 6y agoAnd labor costs are already going up, as employers are competing with unemployment stimulus.
- heavyset_go 6y ago> legislative motions like raises to the minimum wage. Doubt that has much if anything to do with it. According to this study[1], increases of 10% to the minimum wage are correlated with only a 0.36% increase of prices, and minimum wage increases may decrease prices. [1] https://www.upjohn.org/research-highlights/does-increasing-minimum-wage-lead-higher-prices https://www.upjohn.org/research-highlights/does-increasing-m...
- chrisseaton 6y agoIs the shortage of lumber getting Americans to try other materials like brick and stone?
- MisterBastahrd 6y agoBrick and stone are still more expensive than lumber and require more technical know how to do it right.
- ClumsyPilot 6y agoBut they stay in place for 300 years. They withstand hurricane winds, floods and crowbars.
- lazide 6y agoYour average American moves every 5 years [https://www.google.com/amp/s/www.mymovingreviews.com/move/how-often-and-why-americans-move/amp/ https://www.google.com/amp/s/www.mymovingreviews.com/move/ho...] with most Americans moving 11 times over their lives [https://www.census.gov/topics/population/migration/guidance/calculating-migration-expectancy.html https://www.census.gov/topics/population/migration/guidance/...]. The people who built the house aren’t going to care if the house lasts 40 years or 300. They will care if it costs 5x more to build/live in/buy/rent.
- ClumsyPilot 6y agoThe idea is that if something js 5z as durable but is 2x the price, its more economical. Secondly - there are areas like SF and London where house prices are like 5x the national average because of land. Surely they can afford better materials?
- spenczar5 6y agoIt's more economical only if the original buyer is there to reap the benefits of the durability. Because American houses change hands so fast, durability is the next guy's problem. This is exacerbated by the fact that a huge number of homes are built by developers who want to sell the thing as soon as it's built, and then move on. In a long-term, societal sense, you're right that it's kind of irrational. It's really unfortunate.
- PragmaticPulp 6y agoThere are multiple contributing factors, but the supply-side limitations are very real. Sawmills slowed down in anticipation of a housing slump that never came, and now they're stuck playing catch-up. Wildfires destroyed huge swaths of trees and even equipment last year, especially in Oregon. Oregon officials estimate that they lost 4X more harvestable trees last year than the state produces in an average year: https://www.ofic.com/after-the-fires-timber-industry-faces-generational-losses-and-longer-term-supply-questions/ https://www.ofic.com/after-the-fires-timber-industry-faces-g... Even various policy changes from timber harvesting quotas to required sawmill safety retrofits have contributed. If you were a sawmill looking to upgrade, what better time than to do it during a pandemic? Turns out this wasn't such a great time.
- cmrdporcupine 6y agoWSJ youtube had a segment the other day on the price increases and shortages but pointed out that this isn't necessarily translating into increased prices paid for trees, and interviewed a couple who own a wood lot in Georgia (for 40 years) who sounded like they were barely getting by: https://www.youtube.com/watch?v=m_5MkGbXXKc https://www.youtube.com/watch?v=m_5MkGbXXKc So yeah, problem is at the mills.
- deleted 6y ago[deleted]
- mcphage 6y agoAh yes, the proverbial "trouble at mill."
- xyzzyz 6y agoAdditionally, the wildfires in the Northwest also contributed to glut of timber. The wildfires kill the trees, but usually don’t destroy the timber, which is still good for harvest — however, it must be harvested quickly before it rots or gets infested by insects. Thus the owners of burned timberlands are scrambling to harvest the timber ASAP. This results in plenty of cheap logs, but since sawmills aren’t keeping up, its a double whammy to owners of burned timberlands: not only they have to harvest at less than optimal time, they also have to pay top dollar for logging crews as everybody else is also scrambling to harvest their burned timber, and selling the logs for cheap, as there are so many sellers and too little milling capacity.
- digitalsanctum 6y agoI picked the wrong year to start my woodworking hobby. I've resorted to stalking FB marketplace and Craigslist for cheap/free lumber.
- cmrdporcupine 6y agoYeah same; I'm thinking of investing in a simple chainsaw mill as I have plenty of trees on my property I could use. In the past I had someone mill stuff that I cut down but he is no longer doing it and I suspect that is getting hard to do anyways.
- YZF 6y agoYou probably know this but unless you have a kiln or can access one it can take a really long time to dry the wood. IIRC 1 year per inch of thickness. Also make sure you seal the end grain... There's some people on YT demonstrating how to cut a log with a chain saw... For the very adventurous ;)
- cmrdporcupine 6y agoYeah my last batch of milled wood sat in my shop for 3 summers before I started using it. Measured the moisture and everything, but the table I had made still split after a dry winter inside :-(
- swader999 6y agoYou need the right chain and an exceptional saw to make those mills work and it is very tedious work to get wood out of those.
- sen 6y agoI've been doing woodwork for a long time, and get most of my wood from used single-size bed frames on Gumtree/Marketplace. People effectively throw the beds out (or at most want AUD$20-50 for the entire thing), and they're generally made of some pretty decent wood, especially the older ones.
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- tedunangst 6y agoThe Odd Lots podcast had a good discussion of some more details about lumber futures, trading, and delivery.
- HenryKissinger 6y agoAre we at risk of running out of trees?
- spenczar5 6y agoNo.
- tengbretson 6y agoNo.
- pmorici 6y agoNo, in fact prices for raw logs haven't moved at all. The US government subsidized the planting of trees on farm land in the 80's to boost the price of corn and soybeans and there is an over supply of trees. Supposedly the shortage is all due to mill capacity.
- reportingsjr 6y agoUnrelated to forestry, but you make a point that I'm curious about. If or when electric cars take over, what's going to happen with all of the farmland that's planted with corn for ethanol production? It looks like around of 1/3rd of planted corn in the US is used for ethanol production for cars. https://afdc.energy.gov/data/10339 https://afdc.energy.gov/data/10339 I have a feel a lot of farms are going to turn in to more sprawling suburbs when some monster subsidies get passed to build out these abandoned farms.
- pmorici 6y agoThe cost of land is not what is keeping farmland from being turned into housing. Most farmland is very far from urban and suburban places people want to live. If it doesn't make sense to plant because of low prices they will simply let it lay fallow.
- dejv 6y agoMeanwhile in many countries in Europe there is bark beetle epidemic that is destroying our spruce forrests and lumber is currently cheapest and most abundant ever.
- choeger 6y agoBut sawmills are running at full capacity, prices are increasing massively.
- corty 6y agoThere are various bottlenecks (harvesting capacity, environmental regulations forbidding harvesting in over half the year, sawmill capacity, transport capacity) that make the market very weird: If you have the capacity to harvest, you can get "pluck it yourself"-lumber really really cheap. In regions where sawmills are at capacity, you can get timber very very cheap (currently basically everywhere). But harvesting machine rent and labour as well as sawing are extremely expensive, as are sawed products.
- hnbad 6y agoWe also had the heatwave a few years ago that killed a lot of forests (at least in Germany) and probably contributed to the damage bark beetles are now causing. And I'm sure the massive wildfires in Australia and North America in 2019/2020 destroyed a lot of timber, too. But the problem doesn't seem to be the timber supply, weirdly enough.
- Freak_NL 6y agoLovely how an article about lumber in the US opens with a stock photo of a German lorry. Must've taken a wrong turn somewhere.
- corty 6y agoWell, in Germany there are complaints that lots (I think 50%) of our lumber goes over the atlantic. Making prices skyrocket out of proportion over here.
- Freak_NL 6y agoI'll say. The cost of a board of birch ply 18mm × 2500mm × 1250mm is over €90 in the Netherlands and Germany alike now (that's about $110). It's been creeping up for a few years in my experience. A quick glance at one of the big box diy-stores shows a the similarly sized ¾" × 4' × 8' birch ply costs some $60 in the US.
- jedberg 6y agoMoney is ridiculously cheap right now. I just refinanced my house and my mortgage went down 20%, and I just refinanced four years ago. When the appraiser came he told me that he's been working non-stop since April 2020 because there are so many cash-out refinances. There are a ton of remodels near me, many of who got the money with cash out refinances. It's not a surprise that there is a demand for lumber.
- throwaway88483 6y agoInflation really is here
- quixoticelixer- 6y agoIt really isn't
- georgeplusplus 6y agoWhat would convince you that inflation is here? https://markets.businessinsider.com/news/stocks/warren-buffett-mohamed-el-erian-janet-yellen-inflation-risk-federal-reserve-2021-5-1030389981 https://markets.businessinsider.com/news/stocks/warren-buffe...
- jartelt 6y agoMuch of the available data is only pointing to inflation being on the order of 2.5% in the coming years. This is hardly the runaway inflation scenario many are predicting and is close to the target inflation rate of 2%. https://fred.stlouisfed.org/series/T5YIFR https://fred.stlouisfed.org/series/T5YIFR https://www.clevelandfed.org/our-research/indicators-and-data/inflation-expectations.aspx https://www.clevelandfed.org/our-research/indicators-and-dat... Yes, some things (housing, lumber, used cars, etc.) are experiencing quick increases in price. Some are saying this is a sign of runaway inflation. Many others are saying these price increases are a result of pandemic related supply/demand issues and temporary shocks to supply chains.
- pengaru 6y agoI just paid >$60/sheet for a pile of 19/32" 5-ply cdx plywood sheathing. They want nearly the same price for OSB. The T&G 1-1/8" subfloor I paid ~$40/sheet for in 2019 is currently $110/sheet at the same Home Depot. If you're looking to share some quality bitching time with a rando, go grumble aloud about the prices in the lumber aisles of your nearest store. If there's anyone around, I guarantee you'll find vocal company for your misery. I've never had so many conversations with Home Depot customers in my life...
- nemo44x 6y agoI’m happy I did by renovation 6 months ago. Contractor told me it’d cost more today. People he quoted a year ago are coming back looking to start their project and I’m done cases he’s having to revise quotes up 30-40%.
- canadianfella 6y agoI don’t understand your second sentence.
- wil421 6y agoSome trees hit my deck after a hurricane last fall. When we rebuilt it in December composite was about $500 more than lumber. The price since December has almost doubled for composite from $3.80 a linear foot to almost $8.
- cmclaughlin 6y agoDamn... I was planning to build a deck this summer and was optimistically hoping/assuming composite prices didn’t go up too. Thanks for sharing this.
- wil421 6y agoMy father in law is a General Contractor and said right now is the worst time to build a deck. He’s scoped a couple deck jobs but they all backed out due to cost increases. If you can wait until next summer you will probably save a lot depending on the deck size. Compare wood with composite decking and you might get a favorable composite price.
- deleted 6y ago[deleted]
- otikik 6y agoAs an European I'm always amazed at how much lumber North Americans use in their houses, with their timber frames. I didn't know that was a thing until I stared exploring Youtube. Where I live all houses are brick homes. Wood is something that one might use in a "forest cabin"; a "real house" will have wood perhaps on doors, window trims and and maybe to pave the hard cement floors. And that's it. I assume bricks are also more expensive, but perhaps not as much? Perhaps North Americans will start building more brick homes.
- thecopy 6y agoEurope is bigger than where you live. Scandinavia builds a lot with wood.
- makomk 6y agoEven UK housebuilders seem to be putting up a lot more timber framed houses than they traditionally used to, just often with an imitation brick facade.
- unglaublich 6y ago> Europe is bigger than where you live. Scandinavia builds a lot with wood. OP is likely aware of such anecdotes. Masonry is popular in (central and southern) Europe because forests were already cut down centuries ago so lumber prices are generally high. The abundance of lumber in Scandinavia and previously in N.A. thus explains why wooden structures are/were popular there. So, the hypothesis that N.A. will build more with masonry and less with lumber is an interesting one. http://masonrydesign.blogspot.com/2014/01/european-construction-versus-north.html http://masonrydesign.blogspot.com/2014/01/european-construct...
- CapitalistCartr 6y agoWood is still extremely common here in North America. Much of our construction lumber comes from "tree farms", intentionally planted forests growing trees as a crop.
- baybal2 6y ago> Lumber futures contracts as far out as November remain above $1,000, Whoa! Why not to try steel? https://en.wikipedia.org/wiki/Self-framing_metal_buildings https://en.wikipedia.org/wiki/Self-framing_metal_buildings Even at current high steel price of $700/t you will save a lot.
- jcims 6y agoI was planning to build a timber pole barn this year but am now thinking of switching to a steel building. Steel prices are also up but from what I'm seeing here not as much as lumber.
- whatever1 6y agoPerfect! Maybe now they will start building real houses. You know ones with foundations and concrete that can sustain some wind, do not rumble from footsteps, and have way longer longevity.
- tomrod 6y agoBamboo.
- bluGill 6y agoPeople keep bringing that up. I get the impression none of them have a background in civil engineering. Most foundations in the us are concrete. Most of the structure is wood and not concrete for several good engineering reasons.
- whatever1 6y agoThen US civil engineers need to travel to see what proper foundations looks like. My European house foundations look nothing like the thin slice of concrete that I got here in the US. Please do list the engineering advantages of wood over concrete, because from my experience a US house was a structural (and efficiency) downgrade compared to my European concrete & brick house.
- bluGill 6y agoWood is a lot better in an earthquake, is easier to modify later, and is a lot easier to insulate.
- hourislate 6y agoI don't buy this Sawmill BS/Supply side shortage. This industry is controlled by a handful of big players that used lobbying/tariffs to raise prices because they could, the pandemic is just an excuse. Timber is still being cut and arriving at sawmills, still being processed and shipped. Housing starts in the US and Canada are down, RENO's in Canada are up (because you can't afford to sell and buy). You can also attribute some of the rising cost to Inflation, it's coming at us in a big way. Look to see where the money is going and you'll find the folks who orchestrated this.
- lftl 6y agoAre housing starts down? The article included this graph[1] that shows starts taking a brief dip in Q1 of last year, but bouncing back to above pre-pandemic but not pre-2008 levels. Anecdotally, I see plenty of new construction going up in our town, I assume mostly on the basis of low interest rates since the prices they're selling for definitely aren't low. I've heard the same from a realtor friend in a larger city, saying that builders are signing plenty of contracts, and are even telling people there's no guaranteed delivery date as part of the deal. [1] https://cdn.vox-cdn.com/uploads/chorus_asset/file/22481706/New_housing_starts_2000_to_2021.png https://cdn.vox-cdn.com/uploads/chorus_asset/file/22481706/N...
- deleted 6y ago[deleted]
- medium_burrito 6y agoIt is a supply shortage. Get out and talk to a carpenter or a general contractor. Sawmills closed, surviving ones have less capacity due to health precautions, and then demand exploded.
- drocer88 6y agoHousing starts are up: https:/ /www.census.gov/construction/nrc/pdf/newresconst.pdf
- deleted 6y ago[deleted]
- farco12 6y agoSince the current bottleneck is lumber mill capacity, I wonder how many new mills are being planned and how long it would take for them to start producing. Are there any disruptive technologies out there that might allow for smaller new entrants to enter the industry more quickly?
- not1ofU 6y agoin related news, Bill Burr is devastated.