2020. Sigh. I'm not sad to see you go. In fact, I may even be a little giddy about it.
"You came in like a wrecking ball..."
COVID-19 presented a a variety of challenges to literally every person in the world. And while there are certainly issues far greater than the price of lumber that COVID-19 has presented, nothing in our industry has caused more shock than the drastic increase in the price of lumber from spring 2020 to fall 2020.
But it's left many homeowners wondering "WHY?" and "when will it come back down?" So let's start with the WHY. Because it's easier to talk about past bad news, than it is to talk about future bad news.
WHY DID THE PRICE OF LUMBER SPIKE IN 2020?
- 2020 lumber prices started the year quite reasonable.
- When COVID-19 hit in Jan/Feb, confidence in the building materials sector decreased. There was a ton of uncertainty that started to creep into the minds of purchasers around the country.
- By March, when the real impacts of COVID-19 starting to be known, any confidence that was left, quickly evaporated. Many dealers in the country reduced or canceled orders which reduced the amount of lumber in market at the retail level.
- March/April mills were forced into lockdown with the restrictions that were implemented. Production of lumber ground to a halt.
- April/May Canadians got used to media stories, and figured out quickly that any holidays and other disposable income spending was going to be non-existent. Plus, they were laid off from work, or working from home - which meant they now had plenty of time to tackle those home reno projects they had been putting off.
- Nearly overnight, the industry went from expecting a MAJOR decline in spending, to a 30% increase (compared to the year prior) almost overnight.
- When mills were finally able to open again, they were only allowed to do so at reduced capacity. But by now, the backlog of orders was through the roof. The supply chain was empty.
- Mills pumped things out as fast as they could, but the demand continued to surge.
- Freight costs surged mid-season as well as the amount of goods being moved in Canada backlogged the trucking industry. Costs of freight increasing means anything being transported also increases.
- Mills were never able to catch up in 2020. The demand remained incredibly high deep into winter, and even stronger in the USA.
- The supply chain remained empty through the winter of 2020-2021. Distribution never got a chance to re-stock it's typical inventory.
SO WHAT ABOUT 2021, WILL WE SEE A PRICE DROP?
- Record high lumber prices in winter 2020 meant the retail channel was hesitant to place large orders for fear of being stuck with lumber bought at high prices, and then the price dropping by spring and taking a big loss.
- Without orders from the retail channel, distributors and treatment plans were hesitant to place orders with the mills.
- Without orders from the distributors, mills wouldn't mill lumber.
- Because they never really caught up to restock the distribution channel, lumber prices remained high.
- When it became obvious that lumber prices were NOT going to drop, the retail channel scrambled to now buy the lumber they hadn't bought - because demand has remained high, and they NEED the lumber now.
- So now the demand on the channel is pressed to capacity again and 2021 is shaping up to look a lot like 2020.
- Prices are expected to INCREASE again as the year goes on.
SO WHAT SHOULD I DO?
If you care at ALL about completing your projects in the next few years, you should act FAST. Lumber is NOT going to drop down again in 2021. In fact most in the industry are speculating that lumber won't even come back down to it's previous levels. Much like fuel used to cost 60 cents a litre, and never will again.
It's become obvious that trying to wait out the lumber pricing is not a winning strategy. We already know that we are going to be seeing price increases in April 2021 as of the time of this article - to the tune of about 20-25%. So buying now in March will save hundreds of dollars on the average deck or fence project.
DO I HAVE ANY OTHER CHOICE?
Frankly, YES you do. As far as decking products go, composites and other maintenance free decking options have remained relatively stable. There have not been any major price increases for the most part...at least not nearly to the extent of lumber. So the gap between a pressured treated deck and a composite deck has never been smaller.
And steel framing! Steel framing has been making great gains over the past couple of years. And with the cost of lumber now, the premium to go to steel framing is almost wiped out. Fortress Evolutions Steel Framing is a fantastic product, and is worth considering for any deck project. In addition to it's many benefits over wood, it now nearly has a cost and availability advantage as well.
So, sorry to be the barer of bad news, but these high lumber prices appear to be here to stay. So it's time to stop playing roulette, and get those projects complete before the inevitable, continued, future increases.
Posted on thursday 29 july 2021 22:05
Prices did drop quite a bit in July, but have started creeping back up a hair in the last week or so, likely primarily driven by forest fires.
Hopefully the retailers don't get screwed too badly, but it looks like they will.