Increased Lumber Costs In Last 5 Months And A New Construction Dwelling

[Zeoph]

I am appraising a condo (FHA) that is newly built ( last 30 days). Condo neighborhood has about 15 houses that has sold mostly from from contract builds with the developer.

In the last 5 months lumber costs have increased greatly from a year ago. From data I gathered from the developer and google searches it is because of the tariffs on lumber coming out of Canada. Per the developer lumber cost has increased 30%

This market is tight to begin with. How do I appraise with closed sales that are 10-20% below construction costs?

There is a condo that sold 7 months ago across the street from the subject for about 20K less. Almost identical.

Any help or thoughts would be great!

 

[Meandering]

Somebody is pulling your leg.

That lumber tariff is less than a month old.

http://money.cnn.com/2017/04/24/investing/canada-lumber-tariff-trump/index.html

So, there hasn't been time for the market to catch up to newer costs.

Closed sales will still need a time adjustment for the cost approach, if they're used as the basis for determining the costs.

.

 

[JTip]

http://extension.psu.edu/natural-re...ts/2017/timber-market-report-2017-1st-quarter

Seem to be stable over the past 12 months according to my sources.

 

[timd354]

http://extension.psu.edu/natural-re...ts/2017/timber-market-report-2017-1st-quarter

Seem to be stable over the past 12 months according to my sources.

Lumber prices have definitely increased since the beginning of the year. I am currently flooring my attice and definitely noticed the increase when I bought materials at Lowe's for this project over last year (when I I finished the basement). Here is an article confirming the increase:

http://eyeonhousing.org/2017/03/lumber-prices-rise-to-start-2017/

 

[Pittsburgh Pete]

http://extension.psu.edu/natural-re...ts/2017/timber-market-report-2017-1st-quarter

Seem to be stable over the past 12 months according to my sources.

Do believe the PSU study addresses Pennsylvania lumber only and doesn't go anywhere near the Canadian situation. You might also note that "spruce" (Canada's main export) is not on most of the PA regional lists.

Prices are up--there is no doubt.

 

[Terrel L. Shields]

Demand has increased over the year although building is not increasing substantially, a lot of people are remodeling and staying put. The tariff is on soft wood and the argument is that Canada is subsidizing the industry hence American lumber is not competitive. This is also a similar spat over dairy products. This has been an issue for some time, in fact, we have had this tiff about four times before, and Trump decided to bring it to a head once a temporary deal expired. They have been negotiating this time and again. The issue really boils down to the Canadian provinces giving away their lumber to lumber companies whereas American lumber is predominately on private land. The Canadians have prevailed on the issue before but this negotiation has been on-going since the previous administration...in fact since the previous five administrations.

 

[JTip]

Do believe the PSU study addresses Pennsylvania lumber only and doesn't go anywhere near the Canadian situation.

It's a national sample, note the four areas on the report, but does not recognize Canada influence.

I'm with Marion; it's too early in the game for stumpage pricing to catch up with the 'news'. I would assume the big box stores do their typical seasonal pricing increases because, well, they can.

 

[Mr Rex]

The proof is in the market.

http://www.nasdaq.com/markets/lumber.aspx

 

[Pittsburgh Pete]

It's a national sample, note the four areas on the report, but does not recognize Canada influence.

I'm with Marion; it's too early in the game for stumpage pricing to catch up with the 'news'. I would assume the big box stores do their typical seasonal pricing increases because, well, they can.

Sorry you're wrong (and not just on the being with Marion part )! Click on "Report Methods" in the upper left hand corner and you will see that the report addresses the PA timber market only.

"The four regions, shown in this map, were designed to more accurately reflect the forest products markets in Pennsylvania. "

 

[Mr Rex]

Per my post from Nasdaq, lumber prices are dropping like a rock.