Following a few months of moderating prices last spring and summer, lumber prices are soaring once again.
Over the past four months, lumber prices have nearly tripled, causing the price of an average new single-family home to increase by more than $18,600, according to the National Association of Home Builders’ standard estimates of lumber used to build the average home.
This lumber price hike has also added nearly $7,300 to the market value of the average new multifamily property, which translates into households paying $67 a month more to rent a new apartment.
According to Random Lengths, as of Dec. 29, the price of framing lumber topped $1,000 per thousand board feet—a 167% increase since late August. Developers said that this pricing environment is leading them to include escalation clauses in their contracts and more often spec building to preserve margins.
The longer-term picture, though, is worrisome.
Without a solution, developers must adapt to new forms of construction, including manufactured housing, non-lumber-based materials, and higher density of smaller units to attempt to keep the cost to each consumer within an affordable rangeChris Loeffler, CEO and co-founder of Caliber
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As the Wealth Development Company, we are a leading U.S. sponsor with approximately $500 million in assets under development and management. These investments are comprised of alternative investments, which include private funds and syndications, externally managed real estate investment trusts (REITs) as well as public funds. We conduct substantially all business through our Sponsor, CaliberCos Inc., a vertically integrated platform that is strengthened by more than 70 professionals with decades of institutional experience in commercial real estate, capital markets, alternative investments, and mergers and acquisitions.
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