Those who have kept up with the news in the Bend, Oregon real estate industry will have heard that the housing prices have been rising due – in part – to the price of lumber. Lumber costs are moving on up, and new homes in Bend, Oregon are feeling the pinch. For some, estimates have been given for a new building project or home remodel a few months ago, but those estimates are likely to have changed quite dramatically. The cost of lumber has shot up, with current lumber priced higher than it has been for some time. Clients are being informed that their quotes may no longer be valid, which is pushing some aspiring home buyers to limit or cut back elsewhere in their home building plan. Of course, lumber is available, but the costs have changed and the specialized finishes that can be captured from other countries can be much harder to purchase.
Growth in recent years
The average house prices in Bend, Oregon have gone up by about 5.7% compared to a year ago. The demand for lumber increased exponentially once the stay-at-home orders were implemented. The number of home projects on the rise has also gone up, and this is the other price of the pandemic we’ve been in the middle of for a year now. As the demand for lumber increased, mill production went down. Social distancing requirements and the stay-at-home orders for non-essential workers have had a huge impact on home building projects. Lumber, as you know, is one of the main components of homebuilding. The problem is that people couldn’t see this coming. The pandemic has caused an explosion in the number of people starting and completing DIY projects, which has pushed a huge demand up with producers and buyers alike scrambling to ensure that they meet the demand.
Today, a 1000-foot board of lumber is coming in at $800. This is a massive cost, as the same lumber would have cost $300 pre-pandemic. This is an increase on the average house building project of between $15,000-$20,000. If you are in the market for a new custom home in Bend, Oregon, you may be shocked to find that lumber is now out of your budget and you have to either put off the build or change the size of the house to fit the new lumber prices.
The cost of the pandemic
When the pandemic first happened, it was toilet paper, hand sanitizer, and meat that were the hot commodities. They still are when lockdowns are fresh, but it’s lumber prices that have suffered since. The DIY enthusiasts can’t be entirely blamed, however, as people need something to work on during quarantines and home lockdowns to keep their mental health straight. The issue now, though, is that with lumber mills still being largely closed and workers required to social distance, lumber has been bought by the thousand feet. It’s also become harder to find the spare parts for the equipment that was produced overseas. Plenty of manufacturing businesses have been hit hard by the pandemic, and lumber is no different.
Without labor, production has slowed and factories have shut down. This has caused a large gap in supply and demand for lumber. There has been a record-setting demand in real estate and the lower interest rates have ensured that lumber manufacturers are struggling to keep up.
The lumber industry is making good progress, but the schedules are still behind as they attempt to meet the growing demand. Pre-pandemic levels of production are way off right now, and mills have been impacted all over Oregon.
Improving construction efficiency
The costs of lumber may be higher, but the construction efficiencies are being improved, and working with the right supplies has helped somewhat to control the costs. Negotiating on larger volumes has become the norm, and while the prices continue to climb, the demand for homes in Bend, Oregon is unrelenting. Other factors that have impacted the costs of homes include low inventory, increased demand, and increasing costs of purchasing land. Most of what is under construction has already been pre-sold and the demand is strong enough that builders are even selling on model homes. The prices of the homes in Bend, Oregon will continue to shift upwards until the market for timber cools off. It’s been predicted that this should happen towards the end of 2021 but it all depends on which way the pandemic takes the world. Once imported lumber production ramps up, the supply will be bigger for the market and the prices should dampen down – it remains to be seen!