The Expert Podcast

Certainly, lumber prices are nowhere near the astronomical highs they were last year. However, the temporary slowdown in building and higher interest rates is starting to have not much more effect on the prices. In fact, lumber prices had a little pop in the numbers over the last week or so—they went up about 10 percent. They're still well under a thousand per thousand board feet and are in the five to six hundred range. But this decrease in value may be short-lived, and you're not going to see them down in the three or four hundred dollar range as we did many years ago. Five to six hundred is probably going to be the norm.

In fact, once the real estate market stabilizes in the next year or so, they may pop back up into the six or seven hundred range. In reality, as a builder, this is maybe an opportunity because the demand for remodels, additions, and even new homes is still there. There are people holding off because of the higher interest rates and the astronomical prices of resale homes, but building a new home right now still may be an opportunity for a builder to realize a profit. The lumber prices are still low, although they're popping up a little bit.

The 5 million potential homeowners that want to buy a house are still out there. They couldn't buy a house in 2020, 2021, or 2022. They still need a house to buy. They're starting to get used to the rates even at five or six percent. The mortgage payment on a house is still less than what most people would pay to rent, and most people still have pretty good jobs, so they can qualify for a mortgage.

In two or three years, the demand is going to be even worse. There won't be that many new houses built because a lot of builders are pulling back. As a result, there will be even more people needing a house in the market. Lumber prices are just part of the equation. If you can put together the labor and the capital to build a house, there may be opportunities to put something on the ground that will meet the demand 12, 18, or 24 months down the road.