Canada

Lumber Executive Sees Prices Falling, Suggests Waiting May Be A Smart Idea

Even lumber executives are now telling people they should wait for costs to fall. Kyle Little, CEO of Sherwood Lumber, told CNBC he expects lumber prices to drop over the next year. The executive even encouraged people to wait before building those discretionary projects. 

Wait For Lumber Prices To Fall… If You Can

Discretionary building projects may want to wait, suggested the lumber exec. He sees lumber prices slipping over the next six to twelve months. It’s not just him telling people it’s okay to wait either. His clients have begun instructing customers to put off purchasing if possible.

For those emerging from living under a rock, lumber prices have recently been soaring. Record demand (especially from housing) and reduced mill capacity combined to make a perfect storm. Since the pandemic, prices have increased by more than 200%. No one could have planned for that large of an increase, and it’s having a disruptive effect. Everything from new homes to toilet paper is seeing higher costs as a result.

Lumber Prices Have Crashed More Than 30% Since Peak

Lumber prices peaked on May 10, and have fallen 30% since then. Despite the steep drop prices have already made, experts think there’s more. BMO’s recent forecast actually sees them falling even further over the next year.

Lumber Prices Won’t Fall To Pre-Pandemic Levels Any Time Soon

Little agreed on the timeline, saying the relief would come in the next six to twelve months. Though he warns lumber prices won’t be falling back to the pre-pandemic level. “We’re in month number 12 of what we believe to be a 24 to 30-month cyclical bull wave,” he said.

Demand for lumber is still very high, but a significant taper has occurred due to prices. It’s not just DIY hobbyists either, but homebuilders are holding back on projects. No one wants to be stuck overpaying for lumber.

With so many waiting for prices to drop, there’s going to be significant support. That’s largely why experts are saying the bull wave will continue, while expecting a drop of over 60% in the near term. People need and want lumber, but not everyone wants it at these prices.

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5 Comments

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  • D 2 months ago

    Average home in Toronto is past $1 million Canadian. Top 10% of Canadian households make over $125,000 cad a year. Assuming they can save half of that income then it will still take 16 years to pay for a Toronto sh*tshack. Obviously longer because I haven’t factored in interest payments.

  • Doi 2 months ago

    Retail price rose real fast but will fall real slow

  • Rodm 2 months ago

    Consumer still have the power. Simple supply and demand.

  • Stephanie Daye 2 months ago

    The price is not worth the debt load or an uncertain job track. This is everyone trying to leverage in real estate.. but where is the benefit on the other end? Doesn’t work if it only applies to the uber wealthy and clear non-compliance from the banks. So I sell my house to only eat away at the profits by attempting to buy and flip in this market?! When you invest in stocks, you buy the good ones during the dip.. not when steady gains eat away at your profit margin.
    LOL I cannot WAIT to read this book!

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