You may have heard some rumblings about how lumber prices are sky-high right now.
We’re here to give you a brief summary as to why and also let you know why it doesn’t have to be a deal-breaker.
So first off, lumber prices are high because demand is high, and supply is low. We’re not economics professors but that’s basically how it works. If a lot of people want a specific building material and suppliers can’t keep it stocked, the price goes up. And it’ll keep going up until supply and demand level out.
The reason for such high demand is likely due to multiple factors, but one is the current real estate market. We know that interest rates on mortgages are low; so people are trying to buy! Buy! Buy! This is relevant for both the new construction market and the existing homes market.
The supply of existing homes for sale in our market is currently low. If people can’t find the home they’re looking for, they’re more likely to build a home to meet their needs and still take advantage of the low interest rate.
Now, why is lumber supply abnormally low? We can thank COVID once again. Lumber mill production was cut-back during the height of the pandemic, much like other manufacturing industries, due to COVID workplace regulations as well as some speculation that demand for lumber would decline due to COVID’s anticipated effect on the economy.
In short, lumber supply has not been able to keep up with demand. Are the resulting escalated costs a big deal?
Well, it’s inevitable that these lumber costs directly affect the price of a home, but here’s why this doesn’t have to be a deal-breaker.
First, let’s refer back to interest rates. Many consumers are moving forward with the decision to build a new home despite the elevated costs because interest rates are low enough to provide an attractive incentive and even offset a higher construction cost.
Secondly, we’re a custom home builder with a focus on distinguished design. We specialize in thinking “outside the box”. Lately, this has manifested in researching and implementing alternative building materials and advanced building methods. For instance, now may be a great time for you to explore Structural Insulated Panel (SIP) construction.
We are currently building a SIP home on a nearby Minnesota lake. This construction method utilizes a prefabricated, panelized wall and roof system composed of rigid foam insulation sandwiched between two sheets of OSB (oriented strand board). There are no traditional “studs”! This happens to result in a dramatic decrease in the amount of lumber used, although the main
benefit is an extremely “tight” and well-insulated home.
So while we are all waiting for lumber supply and demand to even out, it’s proven hard to forecast when that may happen. And in our opinion, that doesn’t need to be cause for you to put your dream home on hold. Demand for new homes is staying strong, and we will continue working and innovating to ensure your home is designed and built uniquely for you and to fit your budget.
Now is a great time to start the process.
Do you have questions about lumber prices or building materials in a custom home? Want to know more about our process? Contact us! We’re happy to help you out 😉