Archimedes,
"You'd have to go back to 1991 to find lumber prices this cheap"
If so, the prices aren't being reflected at the retail level, at least not where I am. Dimensional lumber prices are within a few cents of what they were 2-3 years ago which was a good 50% above what they were 2-3 years before that. The price of sheetrock has nearly doubled from 5 years ago and wafer board is up about 20%. This may not be true in all areas of the country, so consider the information as anecdotal.
On the topic of logs costing more than the finished goods produced, my instant reaction would be to question the source. I've seen more absurdly slanted articles on just about every topic lately that sorting out hard facts is getting to be more guess work than anything else. My guess is the FUD factor should be discounted by about 70% on most recent news items.
I live in the Northwest, so maybe I can fill in a little bit on that angle. It has been an unusually dry winter so far, but one thing I can guarantee is that going for a period of time without rain is not a permanent condition.
It'll rain again and everything will go back to normal. In the mean time it will affect manufacturing in the area. Generally there is so much extra electricity produced from the dams that the power companies sell it very cheap to the major users in the area, at a sharp discount, on the condition that if there is a shortage the extra is cut off. These companies rarely run at full capacity, but if they need to in order to make up for lost time, they can pick up the slack pretty quick. The workers get laid off for a few weeks and then work a ton of overtime when they go back. The bottom line is that it all averages out after everything is said and done.
I think there's another factor to consider and that's that in many areas of the country, it just plain isn't practical to build houses in the winter. For one thing, building codes won't allow a concrete foundation to be poured when forecasts suggest below freezing temperatures before it has time to set. And too much rain makes the lumber rot. The entire industry is seasonal and doesn't have nearly the exposure to current power shortages as the news would have us believe.
None of this really has anything to do with whether or not construction stocks are a good value right now but I'm always amazed when I hear I'm in the middle of some kind of disaster area when everything looks the same when I look out the window. |
