Lumber Prices Strike Back: A Sith Lord's Take on the Housing Crisis

A Disturbance in the Force (and the Housing Market)

I sense a great disturbance in the Force...and also in the U.S. housing market. Lumber prices it seems are once again choking the life out of builders and exacerbating the already pathetic affordability crisis. These lumber prices have surged 23% year over year like a rebel uprising! The National Association of Home Builders is whining about potential increased U.S. duties and sawmill closures. Their fear is strong. Almost as strong as my desire to crush the Rebellion...or in this case these inflated lumber costs.

These Stocks Have Failed Me For The Last Time

Lennar D.R. Horton Toll Brothers... these companies are supposed to be mighty! But their stocks have slumped this spring like a Jedi Knight facing my lightsaber. It is...unacceptable. They are weak! Trump's administration is also meddling threatening to tighten trade restrictions. Such incompetence! Perhaps a demonstration of the Force is in order?

The Canadian Lumber Menace

The U.S. currently slaps a 14.5% duty on Canadian lumber and those maple syrup loving Canadians account for about 85% of all U.S. softwood lumber imports. A quarter of U.S. supply! It's like relying on the Ewoks to win the Battle of Endor! This tariff rate could jump to 34.5%. More like 666% this is not enough! We need more funds to complete the construction of the Death Star! And that requires a better grip on lumber costs.

The Price of Failure

Steve Martinez some no name president of Tradewinds General Contracting is complaining about the unpredictability of lumber prices. "It adds serious complexity to planning and budgeting," he cries. Pathetic! Wood frames account for up to 18% of construction costs. If these builders cannot adapt then they do not deserve to survive. Perhaps they should join the Dark Side; we always find a way...to exploit resources.

Supply and Demand: An Economic Sith uation

U.S. lumber production is up a measly 1% from last year. One percent! It is like the rebel's winning chance against the Galactic Empire. Insignificant! Demand continues to outpace supply due to environmental regulations aging forests and those useless labor constraints. Almost 100 million U.S. households can't afford a median priced home. I find their lack of affordability disturbing!

A New Hope...Or Just More Tariffs?

Experts are warning that higher tariffs and ongoing supply instability could stall new development for years. Years! I could build a Death Star in that time! The Department of Commerce is expected to reach a final decision on Canadian lumber duties by August. I suggest they choose wisely. The Force and the Dark Side will be watching...and so will I.