There are definite signs that lumber prices are on the decline. The past two years have seen a wildly bucking ride of lumber prices. There were two periods during the pandemic when changed lifestyles had people building extensions or completing plans for new constructions.
The price of lumber hit bubbles of shooting upward climbs twice but just as abruptly the bubbles popped and the price of lumber especially soft wood is clearly showing a downward trend.
This is good news for people planning to redesign their floors with wooden planks or
even building new houses with wooden floors. Wood flooring prices are going to be very attractive to home builders and renovators now. The price of plywood and softwood in general has already registered marked declines. This means that engineered wood flooring prices are going to decrease dramatically. In the US market the mortgage rates surge to multi-year highs, with the traditional 30- year fixed mortgage rate still above 5%. The increased cost of home loans has caused a slump in the housing market with both new housing and houses for resale showing no movement at all. Consequently, lumber mills are seeing a glut in their yards as the demand keeps dropping. The natural fallout of this is a sharp decrease in the price of this commodity. According to a weekly report from Random Lengths, cited by The Wall Street Journal, “Triple-digit discounts became the rule rather than the exception.” Canfor, one of the world’s largest lumber producers, is set to extend a reduction in its production schedules as the company deals with the ongoing supply glut. This directly impacts the engineered wood flooring price which will come down markedly as a consequence. Canfor CEO, Dan Kayne forecasts that these supply chain issues will not cease for some months yet.
Even though the price of hardwood is only showing marginal decline, when soft wood prices fall hardwood has to follow. It is conclusively surmised by pundits in the industry that very soon we will see a sharp fall in the price of hardwood lumber as well. So wood flooring prices are bound to see a sharp downward trend as well.
Fortune magazine reports that “Lumber prices are down 62%, amid a ‘Great Reset”.
Where the prices peaked at above $1600 per thousand board piece of lumber and
again at between $1200 and $ 1300, it has fallen and holding at just $ 500 when
checked last August.
“The rapid decline suggests a bubble that has burst, and the question is how low lumberprices will fall,” writes commodities reporter Ryan Dezember for The Wall Street Journal.
John Dupra, co-founder of Rochester, New York–based hardwood flooring
company Revel Woods, feels it may a take a while – “Softwood prices are starting to
break—I would not say ‘plummeting,’ but I would say it’s more like a fever breaking.”
Marina Felix of Business of Home, an authoritative Interior Design news organization, has this to say, “Many in the lumber industry felt the fall was inevitable, but examining the trend over the past year and a half, the price of lumber was an indicator of the market’s overall volatility. Like many other businesses, when the pandemic set in, mills shut down and dealers sold their inventories. It wasn’t long after lockdowns eased that the housing boom arrived—with nowhere to go, “
People the world over suddenly found a new solace in the comforts of home. This led to a flood of home renovation. Even implementation of new construction projects saw a zestful surge. Home owners even began building into attached open spaces. The net result was a clamour for raw material. Suddenly plywood and hardwood were disappearing from mills and ratcheting up the demand everywhere, due to the shutdowns during the pandemic. When the mills could run again the supply had run dry and naturally the prices shot skyward.
Dustin Jalbert, a senior economist who leads Fastmarkets RISI’s lumber team, told Fortune that he expects that lumber’s volatile cycles in recent years is likely over. That is if nothing untoward like an economic crisis erupts. “I think the worst is behind us now,” Jalbert told Fortune. But he feel that there is considerable “concern” about what lumber demand will look like in the second half of the year as recession predictions grow.
So what are the implications of falling prices of softwood and hardwood for designers?
The general feeling is that new constructions demanding softwood are going to be on
the rise and as the price of hardwood gradually follows the downward trend remodeling projects too will be on the increase.
Softwood prices are starting to come down,” says Dupra. “Hardwood prices have not.But typically speaking, where softwood goes, hardwood follows, so it does bode well for the future on the hardwood side.”
So although there is an overall satisfaction with the falling prices for wood, the softwood industry will be much more dynamic just now. But the effect of this new development will only manifest slowly. But for designers building new projects the waiting periods will be shorter and the budget can be spread wider. Things can be said to be looking up for the wooden flooring business.
Is Wooden Flooring Worth the Cost?
Hardwood is probably the best flooring option to add the maximum value to the home. It is hygienic, sophisticated and up-market. While hardwood floors will certainly engage prospective buyers, it needs to be see, to what extent the grand floors can enhance the intrinsic value of the home. Considering that hardwood planking in the floors are generally costlier than any other flooring option, the home owner will want to be reassured that he/she is investing on something that retains its initial expense value if not enhance the price in total. By and large, a home owner can look forward to a 75% ROI by installing hardwood wooden flooring. Both solid and hardwood engineered flooring options can be easily installed.
Working by US national averages, an investment of $18000 on a 2000 sq ft area, will yield an increment of $13,500. This makes the effective cost of installation only $4,500! So, when you factor in the argument that no other cheaper flooring option can add value to the home, your money is much more wisely invested in hardwood flooring. But the home owner should bear in mind other conditions that could sway the expected ROI in the hardwood flooring option.
- Location of the home
- The quality of installation &
- How the flooring complements the other design features of the house.
With the 75% ROI as your target, you have a wide variety of choice of wooden flooring to make sure that your investment is safeguarded. You can make sure that your investment increases its value, by combining the floor installation with an innovative floor heating system, customized fixtures, and commensurate kitchen upgrades.