I recently received a frantic email from a reader in response to the volatile new construction lumber prices.
Here’s what she said:
‘I don’t know how anyone can build within their budget right now. We are in the process of going over the plans for our new build and the costs keep jumping up. The lumber has increased 2x since we started and all the other supplies have also increased in cost. We are going to have to spend 150,000 more than we anticipated. I am so sick with worry that I am considering backing out. We have the contract in front of us and I don’t know if I can sign it.’
If you’re planning to build a house soon, I imagine you have the same fears and reservations as this reader. I totally get it and I would feel the EXACT same way if I were planning to build a home right now in 2021.
However, I *do* think that things will start to look brighter for lumber costs in the near-ish future. I’ve done a lot of research about the lumber price craziness and I’m sharing everything I’ve learned below.
In this blog post, I’ll cover:
(1) WHY lumber prices are so outrageous (i.e. why this happened),
(2) WHEN lumber prices are predicted to go back down, and
(3) WHAT you can do in the meantime (hint … I won’t allow you to give up on your dream!)
WHY ARE LUMBER PRICES SO HIGH IN 2021?
If you’re planning to build a home right now (or even worse, you’re in the middle of building), you are probably well aware that lumber prices have increased more than 200% since the pandemic started.
But you may wonder WHY this happened.
Most of this lumber cost volatility is a direct result of the Covid pandemic, which has obviously had an impact on just about every aspect of our lives in 2020-2021.
When the pandemic started, sawmills shut down lumber production in anticipation of a housing slump. Well, that slump didn’t happen and there was actually increased demand for lumber as people starting doing home renovation projects and the new construction market really ramped up.
When the sawmills did finally open back up, they couldn’t open at full capacity (just like every other industry during Covid). So, it’s a simple ‘supply and demand’ situation. There isn’t enough lumber supply to keep up with the demand and, unfortunately, this equation has significantly increased the price of lumber.
WHEN WILL LUMBER PRICES GO DOWN?
I am NOT an expert on lumber (AT ALL!) and, honestly, I’m not sure I ever even thought about lumber before 2020, BUT I have done a lot of research lately on the surging lumber prices because it directly impacts the members inside my Building Your Foundation Program.
Here is what I’ve learned through my research …
The good news is that lumber prices are expected to fall over the next 12-18 months as the sawmills start working closer to full capacity and the lumber supply steadily increases.
Lumber supply should hopefully (🤞) catch up to lumber demand by mid-to-late 2022. Pricing might not go all the way back down to pre-pandemic prices, but it should go down significantly from where it is currently.
I have seen some promising articles and predictions that lumber pricing is already starting to decrease, and the drop in prices might be even sooner than predicted. I’m hopeful this is true!
Again, I am NOT a lumber expert (not even close)! These predictions are based on my online research, so don’t take this as the holy grail of lumber cost predictions :).
WHAT TO DO IN THE MEANTIME (hint … PLAN!)
I know that 2022 can feel like a long time away when you’re excited to start building your dream home, but 2022 will be here before you know it.
Yes, the new construction lumber prices are scary right now, and, yes, it might not be the best time to break ground and build your home RIGHT NOW. However, you do NOT have to give up on your dream of building a home … you can postpone it.
While you’re postponing, you’ll have plenty of time to reflect and really think about what you want in your future home … what will make you happy … what will make your family happy … what’s most and least important to you in your future home.
Use this waiting period to PLAN, PLAN, PLAN for your future home build. Believe me, the more you plan BEFORE you break ground, the more likely you’ll end up with a home that you absolutely love (i.e. with no design regrets and without blowing the budget).
By continuing to move forward with your home build preparation and planning, you’ll be ready to go full force and start building your home as soon as the lumber pricing is right again.
Soooo … if you aren’t ready to give up on your dream (I highly recommend that you don’t!), and you want to continue moving forward toward your goal of building your dream home, I encourage you to dive deep into planning for your future home RIGHT NOW.
A great place to start is to register for my *FREE* (on-demand) masterclass, ‘3 Simple Keys to Build Your Dream Home within Budget (without sacrificing your must-haves, no matter how big or small your budget’).
Very informative. I had wondered about this very subject.