How lumber prices are impacting homeowners in the Madison area
Will high prices last?
MADISON, Wis. (WMTV) - Extended time at home during the pandemic has homeowners taking a long look at where they live. Many tackling home projects, adding or remaking parts of their home and opting to build new ones.
A poll conducted by the Bank of America found 70% of Americans are tackling home projects during the pandemic. New home building is also taking a big jump coming out of the winter months. According to Market Watch, the increase is a margin of 37% compared to the start of 2020. All this demand is clashing with a limited supply of lumber, resulting in a 250% rise in cost for the material, that according to Business Insider.
“At the start of the pandemic, no one saw this coming,” said Michelle Gille of Midwest Homes Inc., of the demand. “Lumberyards had layoffs to start the pandemic, which put them behind the massive demand that followed soon after the beginning of the COVID shutdowns.”
People began to expand their living space last year as the pandemic kept them from going out for work, school, dinner, or vacation. Gille says she thinks the trend will continue through 2021.
“Lots of homeowners building new homes are going to keep working from home even as restrictions start to ease,” said Gille. “And some people are starting to home school because the virtual learning went really well for their kids.”
She added that lumber prices are expected to get better, dropping 30% over the next six months. However, the biggest impact to cost is the interest rates.
“Interest rates are so low it’s like free money, and it makes it worth building a home, despite the high lumber prices,” said Gille. “And we expect those to stay low for quite some time.”
Mortgage rates started at 3.75% in 2020. Next Advisor lists the mortgage rates from 15 companies, all but one sitting under 3%.
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