Charlotte builders hammered by lumber shortage
Charlotte builders hammered by lumber shortage
'Not even during Hugo was it this bad,' local lumber supplier says
This article was published in The Charlotte Ledger e-newsletter on August 26, 2020. To receive the latest local business-y news and trends straight to your inbox, sign up for free here.
Prices skyrocket as mill slowdowns and rising demand increase delays and home costs
Lumber shortages are hurting homebuilders. Prices have risen 110% since mid-April, and builders are having trouble getting the lumber and other supplies they need to meet homebuyers’ demand. This home is under construction in the Cotswold neighborhood.
by Shawn Flynn
Builders in Charlotte and nationwide are grappling with a dramatic lumber shortage that’s causing delays in projects and higher building costs.
“There’s a big shortage and prices have doubled,” said Web Hatley, owner of Queen City Lumber. “It’s really a bad situation, especially on treated lumber, OSB (oriented strand board), plywood and 2x4s. It’s really hard to maneuver around that and it’s starting to really hurt our business.”
Hatley’s family started Queen City Lumber in 1946. The business has survived wars, recessions, building booms and multiple hurricanes, tornadoes and floods. Hatley said his shelves have never looked this bare.
“Not even during Hugo was it this bad,” Hatley said, referring to the 1989 hurricane that devastated Charlotte. “That’s the only thing I could compare it to, and it wasn’t like this.”
From beetles to mill cutbacks: Several factors are causing the dwindling supply.
Covid forced several major lumber mills to cut back production earlier this year. That was partially due to lockdown orders and expectations of a plunge in demand that never happened.
Overall demand is up because of a strong housing market as well as more people doing renovations as they work from home during the pandemic, said Kevin Mason, managing director of ERA Forest Products Research.
A tiny mountain pine beetle is decimating forests in British Columbia, one of the largest suppliers of lumber to the U.S. The bug, about the size of a grain of rice, is destroying 15 years of log supplies, enough to build nine million single family homes, said David Elstone, owner of Vancouver-based Spar Tree Group.
Massive wildfires, especially in 2017 that charred more than 3.3 million acres of land, also cut the lumber supply.
Tariffs on softwood lumber from Canada are tacking on approximately 24% to the cost, according to the National Association of Home Builders.
Dwindling choices, skyrocketing prices: Distributors warned in May of the potential shortage and what it could mean to prices.
“They said ‘the price is going to skyrocket. It’s so bad we’re not even going to tell you the price when you buy it. You won’t know until it hits your yard,’” Hatley recalls.
Prices for some lumber have doubled, he said, and in some cases, the only products available are the priciest ones. “You can’t get it, but when you do you’ve got something no one wants to buy because it’s so expensive. It’s a double whammy,” Hatley said.
Supplies running out: Distributors thought the situation would get better by late July. A month later, Hatley says the situation is only getting worse and is impacting his bottom line as he turns customers away.
“I’m finally running out of stuff I didn’t think I would run out of. We’re getting bits and pieces to keep us going. We need big supplies. If we don’t (get them) then we won’t have anything to sell,” Hatley said.
Delays and cost hikes: For homebuilders and the customers who buy new homes, the increase in demand for lumber and the short supply are causing delays and driving up costs.
The National Association of Home Builders estimates that lumber prices have risen about 110% since mid-April. And builders have been having trouble getting other supplies, too.
“Lighting and plumber fixtures were examples in early months of the crisis,” said Robert Dietz, senior vice president and chief economist for NAHB. He expects housing prices to continue to rise due to the ongoing shortage.
Impact on home prices: An NAHB report estimates the average cost of a single-family home has increased $14,116 since April 17. For a multifamily home, the increase is $5,322 over the same period due to the surge in lumber prices.
“We are getting hit with significant price increases, backorders and delays which we are being forced to absorb on everything we have in progress,” said Danny Kelly, co-owner of Kelly McCardle Construction and president of the Home Builders Association of Greater Charlotte.
This graph from the National Association of Home Builders shows the spike in framing lumber during the past year. (Source: NAHB)
“Every day we learn of something new that is on backorder/experiencing shortages and there does not seem to be an end in sight. Most of our suppliers are telling us this will continue through the end of the year,” Kelly said.
Affordable housing affected: The shortage in lumber and other building supplies is also hurting efforts to address the affordable housing crisis in Charlotte.
“We have noticed the most significant price increases and shortages in treated lumber,” said Peter Brown with Habitat for Humanity of the Charlotte Region.
Fortunately for the nonprofit, it does not use a large amount of treated lumber, aside from porch railings and a few other components. The shortage, however, is causing other headaches for the organization because of shipping delays and increased lead times.
“We have experienced delays in receiving roof trusses, vinyl siding, cabinets, appliances, electrical breakers and panels, and paint, among others,” Brown said. “These issues have caused significant construction timeline delays on our home builds and remodels.”
Hurricanes pose threat: Builders are keeping their eyes on hurricanes, which would throw yet another wrench in the tight market.
“Hurricanes tend to push up pricing, regionally, for three to six months for items like lumber, PVC, siding, and other exterior materials,” said Dietz of the NAHB. “The fact that there is a national shortage means these regional effects (of a hurricane) have the possibility of being greater in scale.”
DIYers pinched: It isn’t only professional builders who are being hammered by the lumber shortage.
Even four weeks ago, when the shortage wasn’t quite as bad as it is now, I had a hard time finding certain cuts of wood to build a family treehouse, like 6x6 posts and decking. After searching four to five different stores, we pieced together enough supplies to build this monstrosity in our backyard. The overall costs ended up being about 25% higher than I expected.
(You can check out this video of the five-day treehouse construction project, narrated by my son Aidan.)
Shawn Flynn has spent more than a quarter century as a journalist, including the past 17 years here in Charlotte. He is currently a freelance writer who teaches and consults with several nonprofits. You can contact him at ShawnKFlynn@gmail.com or follow him on Twitter @FlynnShawn.
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