The Expert Podcast

Look We're all trying to have a crystal ball on what's happening with lumber prices because it affects all of us whether we're a builder . Contractor . Homeowner . Lender . Or even in the lumber industry . Where the prices are going it's going to affect . Our future and what plans we make . So here's a recent article from fortune saying that lumber prices warned about inflation are trying to tell us something What is it trying to tell us ? And here's the very volatile . Chart of lumber prices of where they've been And obviously we've talked about for many decades they always stayed in the , you know , roughly three to 400 range now . they've been up over a thousand back under a thousand . What are they saying Well buried in this article is a very interesting fact Let's take a look . Here it is right here . The way lumber prices behave in the fall When commodity prices traditionally rise could be a big signal in how bad the economic contraction will be That's the question . It will be interesting to see if lumber starts to move back up . It will tell us that the U S economy starting to sift through the interest rate hikes and the inflation and the economy not be as bad as what people think it will be . That's the key . We're already starting to see people get used to the , the higher interest rates . Especially in real estate and the . Real estate sales volume . Although it's lower the prices haven't gone down . There's already been some job numbers that have come out . 300,000 some odd new jobs formed . There's certainly a , an an I guess an emotional reaction to inflation and lumber prices and interest rates and gasoline prices that happened in you know may beginning of June middle of June . So people pull back and they put , took a breath The . is going to be what happens after the summer . Once people get over their vacations and over there . out of quarantine for Corona and all the other factors that have kept us distracted for years . And decide what are we going to do now ? Are we going to . Buy a new house . Are we going to add onto our house ? Are we going to spend more money or is the economy kind of collapse further ? Right The economy zipped up and leveled off a little bit Now the question is does it dive or does it continue to climb ? Regard . It's certainly not going to climb at the same . Rate that it did before . But the fact that there's inflation there's a fact that employment numbers are still looking good Could indicate that The next move could be slightly higher . And if real estate moves higher than . The lumber prices are going to follow suit . If you think about it . There's been a pullback on the retail side . Because people are staring at $6 gas 6% mortgage rates . Higher . food bills And so they pull back the lumber industry did the same . Emotional pullback . The question is once the fundamentals kick in . What's going to happen So , you know here it is basically the middle of July Let's all keep an eye on it . And maybe in September October circle back again and look to see where we're at . Compared to the lumber price then to what it is now and the overall economy It can be a leading indicator in some cases but also when it's emotional it can be a lagging indicator . It . be that people get scared and don't buy the lumber futures . A lot of builders who build more in the summer in the fall . have already bought their lumber . There's some parts of the country that don't do as much for lumber framing construction in the cold winter months and parts of the country You just can't build . So when that pull back naturally happens . We'll see how far back it goes If it stays the same or creeps up a little more . That means that we're probably Kind of in line . And being prepared for a higher move up . It's kind of like the Groundhog . If you see a shadow . He's going to . Run back for six more months of winter So if you see a pullback . In the fall That probably means there's more downside to happen On the other hand . If the lumber price . Groundhog does not see a shadow of a downward move in the fall . That means that consumers . Are at least holding strong for now . And the future might be higher lumber prices or at least . Lock them in at six or 700 . And then that may be the new range for years to come .