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Don’t Forget! You Saw it in the
Adverti$$er
March 2021 #13260 Page #98
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
Lumber Market Forecast Looking Around the Corner
L
EST WE NOT FORGET... the current lumber market condition is the by-product of a major disruption, not a lasting trend. The disruption consists of the following.
• Accelerated millennial transition from urban to suburban areas. This has created another “first ever”...9–12 month new home order file. Builders have encouraged suppliers to have supply available at any price. In effect, builders have short sold their own product and enticed suppliers to play along with them. Builders have historically large order files and suppliers have like-sized inventory to accommodate builder intentions. • Disproportionate dependence millennials, who are totally dependent on a 3% interest rate. This demographic has enjoyed a pain-free economic adulthood. They proceed fearlessly with no marker of what is too much. • The Fed’s dependency on low interest rates to finance U.S. debt and its continued supply of liquidity to business and consumers, ignoring inflation. Housing is the primary driver of the U.S. economy. Inflation in every aspect of the housing sector, combined with rising mortgage rates, undermines housing’s ability to bear its burden of economic pillar. • 10 million: o citizens are unemployed. o home owners are behind on mortgages and are under-employed. Foreclosures on an epic scale are lying in the weeds. o renters are delinquent on rent facing eviction.
There is new found supply panic in the lumber market based upon housing permits, resulting excessive inventory positions. Production will rise as COVID falls. There is a bear lumber market hatching.
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