Let’s Talk… The Price Of Lumber!

What’s going on with lumber prices going through the roof is a microcosm of what happens when too many dollars chase too few goods. The hot housing market driven by low interest rates has driven lumber to stratospheric levels. Here is why I don’t think it will last. 

First, with the hot inflation reading this morning, we can expect the Fed to act sooner rather than later with regard to rates. As rates drift up, that cheap mortgage becomes an all too distant reality. 

Second, you have people canceling/putting building projects off until lumber comes down. Basically, we are at a point where in some cases a project doesn’t make sense financially. 

Third, back in March, Fannie Mae put restrictions on buying a second home. The thought is there were people taking advantage of low rates to buy or build that dream second home. If you make it harder to get a second mortgage, it would make sense that the sector would eventually cool off. 

Keep in mind, this is my opinion. In this type of market, where information is immediately available, prices adjust swiftly and rapidly. You can expect the era of cheap money to come to an end in the near future, but realize this is the after-effect of an economy that has either recovered or is nearing a full recovery.

The content in this material was created for educational and informational purposes only and is not intended as an investment advice.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.