Lumber Prices Record Biggest Weekly Drop Ever

[rawhide]

My wife and I are so lucky to finish (almost) our house when we did. Several factors including covid put us about 8 months behind, but we just beat the soaring lumber prices. However, projects we delayed and shouldn't have are front porch cover, utility room porch/steps, and backyard gazebo. The front porch was going to be cedar and last I priced materials was nearly $5k more than budgeted.

My niece took out a loan nearly a year ago to do a major renovation and her contractor tells her it will be this fall at the earliest to do all that she planned.

 

[Preacherman]

I hope the price comes down fast. I've been holding off on a few projects that I need to finish. I also vote that the price of metal comes down as well.

 

[SoonerP226]

Lots of logging going on down here in Alabama. We see log trucks throughout the day and just about every day. Some are going to sawmills for lumber and some are going to paper mills to make paper.

We have seen quite a bit of lumber (both dimensional and sheet) in mills and on trucks being shipped out.

When I was working in Mississippi a few years back, I saw lots of cultivated forests and trucks hauling trees to mills. From what I saw, they were primarily going to paper mills (which do not smell like roses), being turned into utility poles (which also do not smell like roses), or being ground up into wood pellets. I got to see huge piles of the pellets next to the Tennessee-Tombigbee waterway.

The cultivated forests are weird to see, especially when you're driving down the highway and your view suddenly aligns with the rows--I kid you not, there were some where you could look down the rows and see clear through to the other side. They use fire to clear out the underbrush, so there's no scrub brush or irregular patterns of trees like there are in the natural forests you see here, just lines of trees. In the satellite imagery, they look like carpets that have been combed.

It's just...weird. Though probably not quite as weird as passing the sign for the Tombigbee National Forest and having the first thing after it be a logging operation...

 

[tyromeo55]

If all goes well concrete for my shop will begin next week. I'm holding off a little bit to see where lumber prices go before I order anything.

 

[dennishoddy]

It appears we need to get MIL’s home on the market pretty quick.

 

[1shott]

I hope it drops as well and soon, and I sell the stuff daily.

How fast and how much it drops are the questions of the day. I doubt we see more than a 10-15% drop tho. I will shocked to see more.

Which brings up another question, how will this effect the latest trend of home prices shooting up. Will this effect the market and house prices drop, if so by how much? Then you have the issue of folks buying at inflated prices, now seeing that what they bought is no longer worth what they paid for it, do they walk away like in 2008 when the bubble burst, or ride it out and pay on a mortgage thats higher than the homes actual value?

 

[Oklahomabassin]

Local hardware store manager expects another drop in 2 weeks.

 

[SoonerP226]

Then you have the issue of folks buying at inflated prices, now seeing that what they bought is no longer worth what they paid for it, do they walk away like in 2008 when the bubble burst, or ride it out and pay on a mortgage thats higher than the homes actual value?

I wonder how much of that inflated value is in the mortgage, though. How many banks are going to loan money above the appraised value? So if you pay, say, $125K for a house that appraises at $100K, presumably, the bank is going to sell you a mortgage for less than $100K, and you'll have to cough up the difference on your own. As a result, ifwhen the bubble bursts, unless it goes completely nuts, the mortgage shouldn't be as completely upside down as it could've been in '08, when you had lenders selling 30-year mortgages to 90 year old men (a realtor friend of my dad actually saw that one happen)...

 

[BobbyV]

Good . . . I have several projects I've been holding out on doing due to current costs.

 

[1shott]

I wonder how much of that inflated value is in the mortgage, though. How many banks are going to loan money above the appraised value? So if you pay, say, $125K for a house that appraises at $100K, presumably, the bank is going to sell you a mortgage for less than $100K, and you'll have to cough up the difference on your own. As a result, ifwhen the bubble bursts, unless it goes completely nuts, the mortgage shouldn't be as completely upside down as it could've been in '08, when you had lenders selling 30-year mortgages to 90 year old men (a realtor friend of my dad actually saw that one happen)...

Good point, not sure on that.

I honestly hope theres not another bubble like 2008, but I do have a un easy feeling that when the moratorium is lifted on evictions and all that back rent and mortgage payments actually come due its going to get uglier than it has been.