If you are considering designing and building a custom home over the next year, you should take some time to understand some of the major cost components and how they can impact the overall cost of construction. Over the last few years, most construction cost increases have been driven by substantial regulatory change, and an overall shortage of labor vs. demand. Lumber, which accounts for 10-20% of the overall cost of a custom home has remained fairly steady over the last year or two. We did just get news from our team at Shepley Wood Products that lumber prices are expected to increase over the next year, namely due to lumber agreements between the US and Canada. Here's an explaination:
Softwood Lumber Agreement Information
With the Softwood Lumber Agreement (SLA) between the US and Canada coming to a close and the possibility of a duty being imposed on Canadian lumber imports , we as consumers can expect to see price increases on both Canadian and domestic timber over the next few months. Speculators typically try to create panic in the market place about sharp price escalation to drive impulse purchasing and some mills have already imposed price increases out of knee jerk reaction. However, historically, sharp rises like this have been short lived and adjust quickly as the United States and Canada find compromise in the name of doing business.
We recognize how disruptive economic change like the end of the SLA can be to business, so in an effort to reduce its impact, Shepley Wood Products is making the following commitments.
- We will buy right and leverage our average inventory value to ensure our prices are always better than market. Well planned purchasing allows us to take the edge off of sharp market changes.
- We will buy enough inventory to keep your projects well supplied
- We will not over buy inventory, allowing us to more quickly lower prices as the market corrects
- We will not drop our price hold commitment below 30 Days
- We will always be forthcoming about market conditions and make sure you have the most recent and accurate information.
Bottom Line: IF you are considering designing and building your custom home or retirement home, or even a major renovation project here on Cape Cod expect to pay more over the next year as lumber prices increase in reaction to this news about the Softwood Lumber Agreement.
We are expecting prices to change 3-5% over the next few months, and we are already seeing prices move 1% or so this month.
If you have any questions, please feel free to email us at email@example.com
Once we get more information, we'll issue a new Construction Cost Guide for spring of 2017