•Consumers wait for cost of lumber to come down; •Prices have soared to all-time highs
In his final year of working at Beisser Lumber Co., Scott Otto got quite a shock when lumber became one of the hottest commodities in the country with prices soaring to all-time highs.
“The strangest part of all was spring of 2020, economists were predicting a recession,” said Otto, an estimator and sales manager. “Our business took off. It did the opposite.”
Otto’s last day at Beisser was Friday. He worked 21 years for Beisser. Prior to that he worked at Payless Cashways for 18 years.
During 2021, Otto watched as prices soared and supplies were hard to come by.
“The main effect we have seen is shortage of materials,” Otto said. “Extremely high prices and it’s harder to source materials. Harder to find them. COVID’s effect on labor force has impacted the entire supply line.”
Joe Kayser, Fort Dodge branch manager for Beisser Lumber Co., said an increase in the amount of people working on their homes during the pandemic was a huge factor in the demand for lumber.
“That’s kind of what drove the price up was everybody was at home doing work and that created a shortage,” Kayser said. “COVID affected every facet of our life, which we had no idea would happen.”
From January 2017 to June of 2021 the cost for a framing package for a 1,700 square foot ranch almost tripled, according to online information.
“August of 2020 was the big jump,” Kayser said. “That’s when everyone was at home from COVID and the material was becoming extinct.”
“Demand was very high,” Otto said. “Supply was low.”
Transportation of goods also largely contributed to the price hike.
Earlier this spring an average of 30 container ships a day were been stuck outside the Ports of Los Angeles, the Wall Street Journal reported. That has also led to delays in not just lumber but a variety of other products.
Experts say COVID-19 caused the backup. With more people at home, people began ordering more products online. Additionally, many of those items are not made in the U.S.
Shipments peaked in February when 177 container ships carrying more than 800,000 containers arrived at the southern California ports, the WSJ previously reported. That represents 41% more containers than what arrived at the same time in 2020.
From ports to warehouses to distribution centers, each get overwhelmed with cargo. The longer it takes, the more it costs and that cost is passed on to the consumer, according to experts.
And the cost keeps adding up on land, Kayser said.
“Fuel costs being up, trucking costs, rail costs,” he said.
Otto said shingles were hard to come by in the spring of 2021.
“Shingles was a big one,” Otto said. “In 2020, we ordered 40 truckloads of shingles for the whole year. This spring our supplier said we would only have 10.”
In terms of lumber, Kayser said pricing is starting to tame, but the future remains unclear.
“The market goes up fast and comes down slow in my experience,” he said. “It’s been extremely crazy. I’ve been doing this 40 years and we have never seen what happened this year. Kim Beisser (owner) has been doing it for 50 some years and he’s never seen anything like this, either. We have seen ups and downs but never the extreme climb like this.”
Mike Doyle, owner of Doyle Construction, said lumber prices have slowed the new housing market down. His firm builds between five and six houses a year. He’s working on three right now.
“The houses we are building now, we started them before the (big increases),” Doyle said. “We buy all of our materials at the time of the order, not as we go. Our prices are locked in, so we got lucky. Anything new, everything went up.
“A board that used to cost you $3, costs you $12 and that adds up in a house,” Doyle said.
In terms of acquiring other building materials, Doyle said the wait has been nothing short of a pain.
“I’d order material and couldn’t even get it,” Doyle said. “We waited three months for siding. We couldn’t do any work at a house for three months. That’s all kind of coming out now. The price is leveling off too.”
The cost of about everything is seemingly higher in these times, Doyle said.
“Everything is more money,” Doyle said. “Plastic is higher, siding. It’s all gone up. Pella windows are really expensive now and it’s a long wait to get them.”
Doyle said when workers at saw mills became ill with COVID, that also slowed production.
“When those workers were out for two weeks, that slows everything,” he said. “Lumber is hard to get anyhow. It was bottlenecked for a while, but I’m thinking it will clean itself up.”
Kayser said it could still be a while before the Beisser lumber becomes cheaper for the consumer.
Otto believes normalcy is on the way.
“At the mill level, lumber prices have gone down quite a bit,” Otto said. “I would think by next year’s building season, it would be a more normal price season.”