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Housing Is Increasing

Started by GeneWengert-WoodDoc, February 20, 2013, 09:54:01 PM

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GeneWengert-WoodDoc

The news has indicated that the housing market is increasing and starts are at the highest in four years.  So, what does this mean for our industry and for your mill?  Will we see higher demand and higher prices as a result?

Here are some thoughts.

Over 85% of the furniture sold in the USA has been and is made outside of the USA with non-USA wood.

In GA, which has more syp than any other state, close to 80% of all framing lumber sold is from Canada.  Similar numbers are found in lots of states.  One exception is lumber for decks, but ipe has made big inroads.

A large percentage of millwork in houses is from West Coast species.

OSB uses a lot of wood from the East and South, but low quality.

Red oak flooring is strong, but a lot of flooring is now bamboo and foreign woods like ipe.  Solid wood flooring is likely to grow, but maybe not USA species.  Maybe floors with USA wood will be made in Mexico, or Canadian species with the floor made in Canada.

Cabinets mostly use frameless construction which means less wood.  I am not sure about species used and sources for this product, but maple, oak and hickory have been popular.  Will more cabinets come from Canada, China and Mexico?

Here is the real question:  Why should someone use USA woods and wood products made in the USA in a new home or when remodeling?  Are these woods better and are the products better?  Or are they lower in cost than foreign?  If we in the wood business cannot answer this question with overwhelming reasons, how can the consumer?  Plus, a lot of people buy foreign made cars and even sawmills, so why not buy foreign made wood products?  Why should they buy USA?

Bottom line:  Will this housing rebound help our industry and help your mill?
Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

SwampDonkey

Gene with the two currencies pretty much on par, I do not see why the US would buy hardwood flooring and trim from Canada. Our wages are usually higher. The advantage a few years ago was to import from Canada because the dollar was worth 40 cents more. It just made sense. With par, it doesn't because the wages tend to be higher in Canada to produce them to begin with. If your importing it's because people want cheap, expensive furniture sits for months with no sales. The middle class wage is dropping and not keeping up or increasing like the baby boomer era. Those boomers are pretty much retiring and the main buyers. And being on a pension means less income to spend. The people with money to spend lavishly are a very small number. And how many well built tables, that last for a couple centuries or more do you need.? ;) The Chinese have it figured out because your always replacing the junk. And our society has grown to love tossing stuff out. The throw away society.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

GeneWengert-WoodDoc

Really good comments.  The difference might be that the down turn in Canada was not so severe on the manufacturing plants as here in the US.  You have more plants that are still running.  We have a lot that have closed.  Then there is also the allure of buying foreign as it is better.  It is amazing how many tv ads feature someone who is an expert in cooking or car sales and who has an English, or other, accent.  Someone has figured out that foreign is good for sales.

I wonder if the cost of timber in Canada is the same as in the US?  I know Canadian maple flooring is not more expensive.

Also, in the US, the remodeling market is now the same size, dollar-wise, as the new house market
Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

mesquite buckeye

With prices rising rapidly for just about everything (food, fuel, clothing, tools, etc.) and wages stuck, we are seeing the inevitable results from the disappearance of disposable income. Hard to buy nice stuff if food, fuel and utilities eat up your whole paycheck. ::)
Manage 80 acre tree farm in central Missouri and Mesquite timber and about a gozillion saguaros in Arizona.

SwampDonkey

The advantage of the licensing system we have is that the companies know where it is, when they can cut it, and how much they can cut. They don't have to go scrounging for timber. Also, here in NB, the licensee writes the management plans. DNR monitors and rubber stamps. All the silviculture is free to the companies and the seedlings. They also hold freehold land in timber reserves and basically, they can cut woodlot owners out all together if they need wood. Might mean they close some mills, but they can survive. The move by DNR has been to let the industry self regulate and they have continued down sizing since the 80's. Every change in government means more ranger offices close. In this last collapse, it just sped up the downsizing of the industry. We had too much capacity and not enough growth rate to feed it sustainably.

As far as all the other costs, I would say machinery, fuel, wages and infrastructure all costs more up here. You take a forwarder, the same one here as in Maine can be thousands of dollars more. Same thing with a pick-up truck, can be $10,000 difference, same truck. You have to look at everything, just not the stumpage.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

beenthere

The hype is to get us to believe that the economy (and housing) is on a rebound very soon. Been much the same story for the last several years, as we see the actual results going the other way. Any slight upturn and the 'Media' is poised to pounce on it as "the sign" that all is working in our gov't stimulus packages.
I think we all know otherwise, if we lift up the corner of the carpet to see what is happening.
New taxes and health care costs will un-stimulate much of the spendable income available to future new home buyers.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

SwampDonkey

I think I saw a glimpse of that news last night. And the growth was only in one segment of the housing, where as in another it was declining. And even the growth wasn't that big and still half the number of starts as the boom times, by a million. The segment of society that couple afford 2 cars 10 years ago, can hardly afford just one. And most working people I know and work with only buy used. I heard one report that the average vehicle age on the road is 11 years old.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

mesquite buckeye

Where I live, you can see the results by the number of people WALKING, who can't afford a car at all. :( >:( :(


How much fine furniture, real wood flooring and houses will these people be buying? If we don't get the whole economy functioning, the thing is headed towards collapse. You all knew that already though, no???
Manage 80 acre tree farm in central Missouri and Mesquite timber and about a gozillion saguaros in Arizona.

Ron Wenrich

The hardwood market has been married to the European markets for quite some time.  That's where all the higher grade material is going.  The reason is that they aren't shipping waste.  Most American markets use a lower grade of lumber, mainly 1 Com because it is cost efficient.

In a few years, the Panama Canal will be reworked and open it up to Far East markets.  I was on the Canal last year, and the amount of containers is amazing.  Right now, they take big container ships to Panama, offload them at port, then send them across Panama by train, then reload them for China and other Far Eastern markets. 

What that will mean is that China will have more access to the east coast ports, as well as Brazilian ports.  That could open markets for higher grade material to the Far East.  It should put it comparable to Russian woods, and will make it even better than European products being transported by rail. 

I talked to someone who had toured China a number of years ago.  The Chinese government is allowing them to build and own houses, with a 99 year lease from the government.  Most of their woods are white, and they used walnut as a trim accessory to offset that starkness.  That's why the walnut market boomed.  As the Chinese become more affluent and can afford more middle class goods, that might open markets for things like glued up stock for making solid furniture, for example.  Markets has transitioned from West to East in the past 30 years.  Japan is about out of it.  Korea and China are the shining stars, for the time being.

When we get to a housing "boom", the house will probably be downsized and cheaper.  The high end housing market never went away.  They have always had the financing.   
Never under estimate the power of stupid people in large groups.

GeneWengert-WoodDoc

I was at a meeting last month that predicted a large increase in lumber exports.  China is expected to be the main market.  They also,indicated that white oak was popular.

  I know from experience that smaller mills cannot export unless they use a wholesaler, which means less profit for the mill.
Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

Ron Wenrich

Everyone has there place.  You can pay a wholesaler his dues if he makes you more money or opens up markets.  Landowners pay foresters to market their timber.  Loggers sell to veneer buyers who market the logs overseas, as do many large mills.  The Chinese are not easy to deal with.  I'd rather deal with someone in the States than being stiffed by someone overseas.  Its a market that can be addressed by small mills, just through different channels.
Never under estimate the power of stupid people in large groups.

Leigh Family Farm

As far as housing is concerned, my wife and I are looking into buying our first home soon so we started looking at houses in our area. Sellers are still pricing homes above what the average income for our area can afford safely. It seems to me that sellers don't want to come to terms that their homes are no longer worth the high price tag.

With the question "Why buy USA products versus foreign?", I see it this way. I like American products mainly becuase they are made better and in the long run I don't have to replace them as much. I don't like buying things from China or Taiwan or India or where ever else it comes from. Is it possible to do this? No. I like Apple products, and they are 80% made in China.

I think that Americans will be reverting back to the days of old when we produced most of the goods on the planet. Why? Because Americans in general tend to thrive when the chips are down and the biggest moments of innovation came from these times. Look back at history, the Industrial Revolution, Antebellum Expansion, and the Space Race. All of these time periods of great innovation were during a huge trying time for America. Poke a bear long enough into a corner, and soon you have a raging bull on your hands.

Yes, I purposely referneced the bear bull market icons
There are no problems; only solutions we haven't found yet.

mesquite buckeye

Well, that all sounds good. Hope it happens. If the Far East market buys a lot of our materials, it will raise all our wood prices, even those to people not selling overseas. The rising tide lifts all boats.
Manage 80 acre tree farm in central Missouri and Mesquite timber and about a gozillion saguaros in Arizona.

Cedarman

I use a broker to ship cedar overseas, mostly to Europe, but did send some to China a few years ago.  China is cheap and will take low quality.  Europe pays well, but wants good material.  You have to be able to stuff a container.

For 6 years the pine in the south has been growing like crazy and harvest is way below growth.  There is a wall of pine sawtimber in the south.  So, stumpage will be low and lumber should be low cost for a while.  There is talk of a European company putting in a couple of very efficient big mills to use that pine.

The shortage is in small pine for pulp and  pellets. 
Will people replant if the return on pine isn't what it used to be?
I am in the pink when sawing cedar.

harrymontana

Quote from: Ron Wenrich on February 21, 2013, 11:53:05 AM
The hardwood market has been married to the European markets for quite some time.  That's where all the higher grade material is going.  The reason is that they aren't shipping waste.  Most American markets use a lower grade of lumber, mainly 1 Com because it is cost efficient.

I wish to reply to Mr Ron Wenrich, I do not agree, as an exporter of hardwoods based in Bolivia exporting ipe, massaranduba I can tell from my own experience that the prime markets are USA, Germany and Japan. So not 'Europe' and 2nd quality goes to the US. I have been talkign several times with American clients to accept inferiour quality or shorter lengths in order to be more competitive. Not accepted. Selling ipe decking to the US is always 12% more expensive due to the required quality and long lengths.

Then if the market does become better, all over the place (both exporters and importers) are low on their inventories so once there is an increase in demand, supply will very rapidly fall short as had happened in 2009. Prices will be even higher then before. A smart importer therefore orders NOW. I am talking about South American hardwood species sold overseas.
everything on hardwood

SwampDonkey

Around here the housing spurts are pretty much tied to what the government does. By this I mean all the new nurses, doctors and teachers and all those retiring. The non unionized working stiff, gets by on old dwellings or rentals around here. There are a few that take the chance and finance a new home outside of those mentioned. Like next generation farmers and maybe a new house in rural areas once every ten years in 10 miles. On my road, there is nothing less than 10 years old, except for one. And they were missionaries.

The banks are not so free at lending and they know the employers who they can depend on for the mortgages to get paid.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Larry

In my area what I see is an increase in housing starts.  It's not back to boom times, just normal which is good.

When I look at most new houses being built, I no longer see any sills, casing, or jams at the windows.  It is all drywall returns.  When I look at doors I see some kind of pressed composite.  Not even veneer.  When I look at baseboards I see MDF, foam, and sometimes paint grade poplar.  Same at the crown.  When I look at decks I see pvc and plastic deck boards.  When I look at floors I see engineered wood.  Solid hardwood is dominate in corporate housing and commercial.

When I look at new furniture for those houses most is China with some kind of foreign wood I don't recognize.  I do see a steady improvement in quality which is another bad sign for domestic.

I would not put money on the hardwood market showing much improvement, no matter what kind of rebound housing shows.
Larry, making useful and beautiful things out of the most environmental friendly material on the planet.

We need to insure our customers understand the importance of our craft.

Den Socling

There have been a lot of new houses going up in my area. I took a walk through one fancy design. Like Larry, I didn't see wood. I couldn't believe drywall wrapped windows. How have people been "trained" to accept this? Those with money for a new house need a change in attitude. Back to wood!!

Goodndusty

White seems to be in.  It's white pvc outside window trim and same inside. Can make that out of anything and paint it white! 
I personally don't like it.  I like wood even if it's painted.  My son finished his reno with pressed wood painted white.  Looked great until the humidity set into the fiber and swelled and had to be replaced.  Wood would have taken that better.
I think that we are going through a phase when wood is out (in most designs) and painted is in.  We have to get through this period best we can. 
Personally, I am struggling with logs being exported to the US.  I think Manitoba is the only province that permits this.  I can't figure out how the border can stop a load of finished dimension lumber from entering the US because one board has a bit of bark and yet there are loads after loads of pulp wood and logs going through with no restrictions as far as bark is concerned! 




Goodndusty

Timberwolf 24' 2" band mill, logosol planer/molder, 3 sided planer/sizer, Oliver 1850 front end loader, Barko 60, H3 crawler w/1066 loader with wood clam, home built dryer, Dino semi auto setter, cat claw sharpener, Timberjack 230D.

SwampDonkey

The border crossing can be real interesting at times. If a box of potatoes is marked with 70 on the box, there had darn well better be 70 and not 72. This was solved by marking the box as approximate count.

Nothing but nonsense.

Logs leave New Brunswick into Maine all the time. In fact for years our veneer hardwood log market was Maine mostly. Spruce veneer to, used to get $1000/mbf 14" top end. Used to be that no logs could leave crown land to be exported. They had to be value added, not raw logs. Not so any more.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

GeneWengert-WoodDoc

Used to be, prior to 1776, that certain trees (eastern white pine) marked with the "broad arrow" blaze of the King had to be exported to England for use by the Royal Navy.  It was too bad if the marked trees were in the middle of the land you were going to use as your farm field.  It is reported that the early settlers would dress as Native Americans and cut down these trees at night.
Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

Po-Jo

I don't believe the market is rebounding as the news would lead you to believe. I very close friend 30+ yrs in real estate said the majority of buyers are actually investment firms that are buying the houses for .30-.40 on the dollar and if a house is in good shape they flip and the rest are turned into rentals, renters wont be doing any renovation. And any renovations at all will be done in the cheapest way possible. I actually believe what my friend was predicting that there will be another downturn , a bad one, when inflation kicks in, if anything our gvment will be selling/giving our natural resources to foreign countries that we now owe so much money too.

black spruce

Doc, regarding the hardwood floor market,  in canada we have a lot of very efficient mills that send lots of their production to the us 80 of quality hardwood is coming from the us for this production.

Like donkey is saying the dollar been on par with the us it is less attractive for the American to buy our finished product I work with oem who are designing turn key hardwood floor mills and they have been doing a lot of project in the us to upgrade manufacturing in the us so more finished product will be made in the us in that market ....



SwampDonkey

Quote from: Ron Wenrich on February 21, 2013, 11:53:05 AM
I talked to someone who had toured China a number of years ago.  The Chinese government is allowing them to build and own houses, with a 99 year lease from the government. 

60 minutes reported that the Chinese middle class are investing in housing and taking a huge risk doing it. Right now you can go to new cities all built up and not a soul living there. Of course the government is behind it, but sooner or later it will collapse because when a false economy is created by a government, it falls apart when the government ends the dishing out. And there will be some angry investors. Even the building contractors interviewed said it will all come crashing down some day, but they are enjoying it while it lasts. The problem is, the people they are trying to attract to new housing are poor and could never afford to live there. You can see the poor, which are mainly farmers, who have been driven off land to create these ghost cities.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

GeneWengert-WoodDoc

Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

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