{"id":138658,"date":"2021-06-21T13:30:00","date_gmt":"2021-06-21T19:30:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=138658"},"modified":"2023-03-29T01:18:15","modified_gmt":"2023-03-29T07:18:15","slug":"why-are-lumber-prices-so-high","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/why-are-lumber-prices-so-high","title":{"rendered":"Why Is Lumber So Absurdly Expensive?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC6355859072&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p>Lumber prices have truly spiraled out of control. Yes, we&#8217;re seeing some drops\u2014<a href=\"https:\/\/markets.businessinsider.com\/news\/stocks\/lumber-price-today-sink-below-1000-plunged-since-may-record-2021-6-1030520545\" target=\"_blank\" rel=\"noopener noreferrer\">prices have dropped 40% since May&#8217;s peak<\/a>. But many investors believe higher prices are here to stay.<\/p>\n\n\n\n<p>While it has inspired some great memes, the at-one-time <a href=\"https:\/\/www.yahoo.com\/entertainment\/lumber-prices-232-could-spiral-090000342.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cueW91dHViZS5jb20v&amp;guce_referrer_sig=AQAAADkJBZk7JKTltfevxz0vh0Kjm4sLfgtOunzKAhEZV47zPS0X4su6clo9t-7SgajtQZeO6h3cbiC9GG_zNYkXRMt1k777ad6Hyqs33SZlvgqW9hjGkva1wI2xEIeUSPQqDx4RpjinMe-szCt1JI4V7hzvnVHGqYlDggAn8PIK0_Hx\" target=\"_blank\" rel=\"noopener noreferrer\">232% (!) increase in lumber prices<\/a> since the pandemic began has put an enormous amount of pressure on rehabbers and developers. Indeed, the explosion in lumber prices adds <a href=\"https:\/\/www.cnbc.com\/2021\/04\/30\/soaring-lumber-prices-add-36000-to-the-cost-of-a-new-home.html\" target=\"_blank\" rel=\"noopener noreferrer\">an estimated $36,000<\/a> to the costs of building a new home!<\/p>\n\n\n\n<p>So what is going on? Why are lumber prices so high? And what should real estate investors do about it?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">First: Why are lumber prices so high?<\/h2>\n\n\n\n<p>One relatively minor component of the increase in lumber prices is inflation in general, which is certainly higher than the <a href=\"https:\/\/tradingeconomics.com\/united-states\/inflation-cpi\" target=\"_blank\" rel=\"noopener noreferrer\">2.6% reported by the CPI<\/a>.<\/p>\n\n\n\n<p>The CPI tends to <a href=\"https:\/\/aoausa.com\/why-real-inflation-is-higher-than-government-reports-by-gary-halbert\/\" target=\"_blank\" rel=\"noopener noreferrer\">underreport inflation <\/a>because it doesn&#8217;t take things like housing or asset prices into account. Money is usually created through credit (bank loans) or the Fed buying assets (such as bonds). This means that inflation is usually seen first in assets and not in commodities. And there has been a lot of money creation over the past year. Something like a quarter of all the money in circulation <a href=\"https:\/\/fred.stlouisfed.org\/series\/MABMM301USM189S\" target=\"_blank\" rel=\"noopener noreferrer\">was printed in 2020 or 2021<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"377\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/FRED-1024x377.png\" alt=\"\" class=\"wp-image-138662\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/FRED-1024x377.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/FRED-300x111.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/FRED-768x283.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/FRED.png 1161w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>And not surprisingly, asset prices have skyrocketed recently. For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>House prices are up <a href=\"https:\/\/fred.stlouisfed.org\/series\/CSUSHPISA\" target=\"_blank\" rel=\"noopener noreferrer\">16.9%<\/a> since the beginning of 2020.<\/li>\n\n\n\n<li>The Dow Jones is at a record high despite the recent recession and is up <a href=\"https:\/\/www.google.com\/finance\/quote\/.DJI:INDEXDJX?sa=X&amp;ved=2ahUKEwjX856gxa7wAhXYLs0KHaYpAR0Q3ecFMAB6BAgTEBo&amp;window=5Y\" target=\"_blank\" rel=\"noopener noreferrer\">77.6% <\/a>since its trough in March 2020 (and up almost 12% since the beginning of 2020).<\/li>\n\n\n\n<li>Cryptocurrencies are <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-05-04\/dogecoin-jumps-50-as-crypto-animal-spirits-kick-into-high-gear\" target=\"_blank\" rel=\"noopener noreferrer\">out of control<\/a>.<\/li>\n<\/ul>\n\n\n\n<p>After the newly created money has increased asset prices, it then starts to filter into commodities, which we are now seeing. Gas prices are up <a href=\"https:\/\/gasprices.aaa.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">62.7% <\/a> since a year ago, and <a href=\"https:\/\/www.nbcnews.com\/business\/consumer\/get-ready-higher-grocery-bills-rest-year-n1263897\" target=\"_blank\" rel=\"noopener noreferrer\">food prices<\/a> are rising too.<\/p>\n\n\n\n<p>And then, of course, <a rel=\"noopener noreferrer\" href=\"https:\/\/www.visualcapitalist.com\/visualizing-explosion-lumber-prices-50k\/\" target=\"_blank\" class=\"rank-math-link\">there&#8217;s lumber<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"971\" height=\"1024\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/lumber-prices-50k-971x1024.jpg\" alt=\"Why are lumber prices so high? infographic from Visual Capitalist showing how many houses $50K of lumber can build over time\" class=\"wp-image-138663\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/lumber-prices-50k-971x1024.jpg 971w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/lumber-prices-50k-284x300.jpg 284w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/lumber-prices-50k-768x810.jpg 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/lumber-prices-50k.jpg 1200w\" sizes=\"auto, (max-width: 971px) 100vw, 971px\" \/><\/figure>\n\n\n\n<p>Lumber is a key input in housing construction, meaning its price will be affected by money creation faster than other commodities&#8217;. But lumber has its own issues that are causing it to rise much, much faster than the rate of inflation generally. And these issues all come down to good old supply and demand<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n  <div id=\"posts_lists-block_60ca271414103\" class=\"  my-10\">\n    <div class=\"\">\n      <!-- Column One -->\n      <div>\n                  <h2 class=\"mt-0 mb-1 js-toc-ignore\">\n            News &amp; Trends          <\/h2>  \n                  \n                  <div class=\"mt-1 mb-0 text-sm mb-2 excerpt\">\n            <span data-sheets-value=\"{\" data-sheets-userformat=\"{\">Stay on top of the latest real estate news, trends, government policies, and more.<\/span>          <\/div>\n        \n                  <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\" class=\"no-underline text-themeBlue-medium hover:underline uppercase font-semibold text-sm\" target=\"_blank\">News &amp; Trends<\/a>\n        \n        <div class=\"grid grid-cols-1 gap-y-4 lg:gap-y-7 mt-5\">\n          \n<article \n\tid=\"post-185235\" \n\tclass=\"content-card mb-0 flex flex-col  post-185235 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-news\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/zillow-faces-major-lawsuit-over-alleged-monopoly\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2025\/10\/lawsuit_canva-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Zillow Faces a New Major Lawsuit Over an Alleged Monopoly\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">News &amp; Trends<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">5 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/02\/cropped-Jeff-V-Garcia-Photography-71788-scaled-1-150x150.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2025-10-17T10:26:15-06:00\">Oct 17, 2025<\/time><time class=\"updated\" datetime=\"2025-10-17T10:26:42-06:00\">Oct 17, 2025<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/jeffvasishta\" class=\"no-underline line-clamp-1\" target=\"_blank\">Jeff Vasishta<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/zillow-faces-major-lawsuit-over-alleged-monopoly\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tZillow Faces a New Major Lawsuit Over an Alleged Monopoly\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">If you want to buy, sell, or rent real estate in the U.S., Zillow appears to be the only game in town. That\u2019s according to the Semrush Traffic Analytics tool,&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"185235\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-185235 -->\n<article \n\tid=\"post-184780\" \n\tclass=\"content-card mb-0 flex flex-col  post-184780 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-news\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/fed-cuts-rates-as-employment-softens-but-real-estate-recovery-remains-uncertain\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2025\/08\/fed_canva-2-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Fed Cuts Rates as Employment Softens, But Real Estate Recovery Remains Uncertain\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">News &amp; Trends<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">4 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/02\/cropped-Jeff-V-Garcia-Photography-71788-scaled-1-150x150.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2025-09-17T13:01:25-06:00\">Sep 17, 2025<\/time><time class=\"updated\" datetime=\"2025-09-17T13:01:29-06:00\">Sep 17, 2025<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/jeffvasishta\" class=\"no-underline line-clamp-1\" target=\"_blank\">Jeff Vasishta<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/fed-cuts-rates-as-employment-softens-but-real-estate-recovery-remains-uncertain\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tFed Cuts Rates as Employment Softens, But Real Estate Recovery Remains Uncertain\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Following a weakening labor market, the Federal Reserve&#8217;s announcement that it will cut interest rates by 0.25% on Sept. 17 comes as welcome relief to the real estate industry, as&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"184780\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-184780 -->\n<article \n\tid=\"post-146041\" \n\tclass=\"content-card mb-0 flex flex-col  post-146041 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-news category-biggerpockets-daily\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/when-will-the-fed-lower-rates-again\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/federal-reserve-1-768x388-1-340x225.webp\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"When Will The Fed Lower Rates Again? Sooner Than You Think\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">News &amp; Trends<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">2 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/secure.gravatar.com\/avatar\/e8ccac5c5e56c35ffe5ca19e1c938129c6a3c884b861fc443e53c35f5ca54328?s=150&#038;d=mp&#038;r=g\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2022-12-19T08:59:28-07:00\">Dec 19, 2022<\/time><time class=\"updated\" datetime=\"2023-08-09T10:43:28-06:00\">Aug 09, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/lindsayfrankel\" class=\"no-underline line-clamp-1\" target=\"_blank\">Lindsay Frankel<svg class=\"h-5 inline ml-2\" viewBox=\"0 0 21 21\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><g clip-path=\"url(#a)\"><path d=\"M19.253 5.25a1.75 1.75 0 0 0-1.663 2.29l-1.42.902a2.188 2.188 0 0 1-2.868-.46L11.91 6.28a1.73 1.73 0 0 0 .342-1.03 1.75 1.75 0 1 0-3.5 0c0 .37.12.732.34 1.03L7.701 7.982a2.188 2.188 0 0 1-2.868.46l-1.42-.903a1.75 1.75 0 1 0-1.816 1.203l1.035 6.205a.438.438 0 0 0 .43.366H17.94a.437.437 0 0 0 .431-.366l1.035-6.204a1.75 1.75 0 0 0-.153-3.494Z\" fill=\"#FFC107\"\/><path d=\"M10.502 17.064c4.108 0 7.438-.98 7.438-2.188 0-1.208-3.33-2.188-7.438-2.188-4.109 0-7.439.98-7.439 2.188 0 1.208 3.33 2.188 7.439 2.188Z\" fill=\"#FFA000\"\/><path d=\"M10.502 17.501c-3.915 0-7.877-.901-7.877-2.625s3.962-2.625 7.877-2.625c3.914 0 7.876.9 7.876 2.625 0 1.724-3.962 2.625-7.876 2.625Zm0-4.375c-4.597 0-7.001 1.137-7.001 1.75s2.404 1.75 7 1.75c4.597 0 7.002-1.138 7.002-1.75 0-.613-2.405-1.75-7.001-1.75Z\" fill=\"#FFD54F\"\/><\/g><defs><clipPath id=\"a\"><path fill=\"#fff\" d=\"M0 0h21v21H0z\"\/><\/clipPath><\/defs><\/svg><\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/when-will-the-fed-lower-rates-again\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tWhen Will The Fed Lower Rates Again? Sooner Than You Think\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Last week, the Fed raised its benchmark interest rate by&nbsp;half a percentage point, a slowdown from previous sprints. Still, the federal funds rate is at its highest since 2007. While&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"146041\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-146041 -->\n<article \n\tid=\"post-145886\" \n\tclass=\"content-card mb-0 flex flex-col  post-145886 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-news category-biggerpockets-daily\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-long-it-takes-to-afford-rent-report\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/for-rent--340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"New Zillow Report Suggests Renters Must Work 63 Hours To Afford Rent In The U.S.\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">News &amp; Trends<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">3 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/cropped-profile_small-150x150.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2022-12-07T14:02:45-07:00\">Dec 07, 2022<\/time><time class=\"updated\" datetime=\"2023-08-09T10:31:18-06:00\">Aug 09, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/annacottrell\" class=\"no-underline line-clamp-1\" target=\"_blank\">Anna K. Cottrell<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/how-long-it-takes-to-afford-rent-report\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tNew Zillow Report Suggests Renters Must Work 63 Hours To Afford Rent In The U.S.\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">A recent report from&nbsp;Zillow&nbsp;highlights the U.S. affordability crisis creatively. Rather than just focusing on the rapid price growth in rents across the country over the past couple of years, the&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"145886\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-145886 -->        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n\n  \n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Supply down, demand up<\/h2>\n\n\n\n<p>Why are lumber prices so high, right now? It turns out that supply and demand are undefeated, and right now, demand for lumber is soaring at the same time that supply is way down.<\/p>\n\n\n\n<p>We&#8217;ll start with demand.<\/p>\n\n\n\n<p>There was a general consensus that the real estate market was going to crash when COVID-19 came around. Turns out predictions are either worth next to nothing, or hindsight is 20\/20 (or both) because the exact opposite happened.<\/p>\n\n\n\n<p>Much of this was because of the money creation mentioned above. But a more long-term issue also exists: The United States has a housing shortage.<\/p>\n\n\n\n<p>One report from Freddie Mac <a href=\"https:\/\/www.wsj.com\/articles\/u-s-housing-market-is-nearly-4-million-homes-short-of-buyer-demand-11618484400#:~:text=The%20U.S.%20housing%20market%20is,Freddie%20Mac%20quantified%20the%20shortfall.\" target=\"_blank\" rel=\"noopener noreferrer\">notes that <\/a>&#8220;The U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country\u2019s demand.&#8221;<\/p>\n\n\n\n<p>This housing shortage has been brewing ever since the financial crisis of 2008. Since that crash, housing construction has been extremely sluggish.<\/p>\n\n\n\n<p>From 2000 to the end of 2007, total <a rel=\"noopener noreferrer\" href=\"https:\/\/www.calculatedriskblog.com\/2020\/08\/housing-starts-increased-to-1496.html\" target=\"_blank\">housing starts were over 1 million<\/a> each year and went over 2 million from 2004 to the crash. That was evidently too much. But even still, the number of starts cratered down to around 500,000 and only slowly increased from there. The number didn&#8217;t even cross over a million per year until the beginning of 2020. Then COVID-19 hit, and the <a href=\"https:\/\/www.calculatedriskblog.com\/2020\/08\/housing-starts-increased-to-1496.html\" class=\"rank-math-link\" target=\"_blank\" rel=\"noopener\">number of starts crashed again<\/a>, as seen on the Visual Capitalist blog.<\/p>\n\n\n\n<p>Many job sites and the like also had to be temporarily shut down during the pandemic. When they started again, safety protocols delayed construction even more. Now they&#8217;re playing catch-up as housing starts have once again increased dramatically.<\/p>\n\n\n\n<p>With <a href=\"https:\/\/themortgagereports.com\/76314\/30-year-mortgage-rates-chart-c1\" target=\"_blank\" rel=\"noopener noreferrer\">historically low interest rates<\/a>, people want to buy houses. But we have a housing shortage, and the market is squeezed with <a href=\"https:\/\/askmcgrew.com\/historically-low-inventory-and-interest-rates-benefit-both-buyers-and-sellers\/\" target=\"_blank\" rel=\"noopener noreferrer\">historically low rates of inventory.<\/a> For example, in Jackson County, Missouri, where I am, there are only <a href=\"https:\/\/kcrar.stats.showingtime.com\/docs\/lmu\/x\/Jackson%2CMO?src=page&amp;fbclid=IwAR2tKycHAiTe4iQqTJss57NeaMtfBDV_pFzh4CN45mGSooum2pRbj6t2FVg\" target=\"_blank\" rel=\"noopener noreferrer\">0.6 months of inventory<\/a>\u2014literally one-tenth of what a &#8220;balanced market&#8221; would be. Delayed construction, low cost of funds, and historically low inventory have sent demand through the roof.<\/p>\n\n\n\n<p>At the same time, supply is down\u2014way down.<\/p>\n\n\n\n<p>Those same shutdowns for housing construction affected the lumber industry even more. As the<em> Deseret News<\/em> <a rel=\"noopener noreferrer\" href=\"https:\/\/www.deseret.com\/utah\/2021\/5\/11\/22429085\/utah-home-buying-market-rising-lumber-costs-covid-19-renovations-contractors-real-estate\" target=\"_blank\">points out<\/a>: &#8220;A lumber industry that saw contraction and consolidation following the 2008 housing crisis and subsequent Great Recession was further hamstrung by forced shutdowns and workforce reductions under rules aiming to curb the rise of COVID-19. Now, even as lumber production ramps back up, a frenzy of home buying and renovation activity\u2026 around the country, driven by consumers throwing off the shackles of pandemic-induced home isolation, has skewed the market and led to price increases.<\/p>\n\n\n\n<p>Many lumber mills are still closed down even today.<\/p>\n\n\n\n<p>The <a href=\"https:\/\/www.builderonline.com\/building\/regulation-policy\/canadian-lumber-tariffs-drop-from-20-to-9_c\" target=\"_blank\" rel=\"noopener noreferrer\">tariffs on Canadian lumber<\/a> (which were 20% until cut to 9% in December 2020) didn&#8217;t help either.<\/p>\n\n\n\n<p>Overall, low supply and high demand mean prices go up. And in this case, it means they go up a lot.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div class=\"wp-block-group alignwide\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<div class=\"wp-block-media-text alignwide is-stacked-on-mobile\"><figure class=\"wp-block-media-text__media\"><a href=\"https:\/\/www.biggerpockets.com\/bp-insights?utm_source=blog&amp;utm_medium=blog%20banner\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" width=\"425\" height=\"425\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/bpinsights.png\" alt=\"\" class=\"wp-image-137046 size-full\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/bpinsights.png 425w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/bpinsights-300x300.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/bpinsights-150x150.png 150w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/bpinsights-200x200.png 200w\" sizes=\"auto, (max-width: 425px) 100vw, 425px\" \/><\/a><\/figure><div class=\"wp-block-media-text__content\">\n<h3 class=\"wp-block-heading\">Upgrade your investing today<\/h3>\n\n\n\n<p>Successful investing requires accurate, easy-to-understand information about your properties and the markets you invest in. <a href=\"https:\/\/www.biggerpockets.com\/bp-insights?utm_source=blog&amp;utm_medium=blog%20banner\" class=\"rank-math-link\" target=\"_blank\">BiggerPockets Pro<\/a> gives you the information you need to find your next great deal and maximize your current investments.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.biggerpockets.com\/membership-types?utm_source=blog&amp;utm_medium=blog%20cta\" target=\"_blank\">Become a Pro member<\/a><\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What should real estate investors do?<\/h2>\n\n\n\n<p>Inflation is here to stay, but in all likelihood, lumber prices will continue to normalize over the next six months or so. As a Wells Fargo <a href=\"https:\/\/wellsfargo.bluematrix.com\/docs\/html\/1776e7f0-bae4-4963-897b-441ae870972b.html\" target=\"_blank\" rel=\"noopener noreferrer\">report notes<\/a>, &#8220;The supply-demand imbalance will eventually remedy itself as operating restrictions are eased, supply chains normalize, and mills more fully reopen.&#8221;<\/p>\n\n\n\n<p>Indeed, much of this was caused by unexpected resilience in housing prices (which is now being accounted for) and the COVID-19 shutdowns (which are abating).<\/p>\n\n\n\n<p>In the meantime, though, it would be wise for real estate investors to target rehab projects on the smaller side. The &#8220;paint and carpet&#8221; jobs conspicuously lack a need for lumber.<\/p>\n\n\n\n<p>Of course, in a tight market like this, avoiding large rehab projects might not be feasible. If so, you need to make sure to fatten up your budget higher than what you had been allocating.<\/p>\n\n\n\n<p>Don&#8217;t be foolish and chase yield. If the deal isn&#8217;t there, it isn&#8217;t there. Don&#8217;t sit on the sidelines, but also don&#8217;t be gung-ho to buy just any deal in a market as hot as this, with lumber prices as crazy as they are right now. At this time, it&#8217;s okay to miss on most deals and only get the few that still make sense.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lumber prices have truly spiraled out of control. Yes, we&#8217;re seeing some drops\u2014prices have dropped 40% since May&#8217;s peak. But many investors believe higher prices are here to stay.<\/p>\n","protected":false},"author":1689,"featured_media":138660,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,5528],"tags":[],"class_list":["post-138658","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","category-real-estate-news"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/138658","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1689"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=138658"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/138658\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/138660"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=138658"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=138658"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=138658"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}