What do the following percentages have in common?
50% 208% 323%
At one time or another this past year, these numbers reflect how much lumber prices have increased. Although, it’s hard to determine just how high lumber prices have climbed because the numbers seem to increase daily, and they drastically vary by source. (Which makes an article like this a bit challenging to write.) It also depends on if we’re talking retail prices or future cost indices, and softwood or hardwood lumber. Regardless of the percentage increase or the source, it’s safe to say lumber—and many other building materials—are more costly than ever. But even with material prices and construction costs as high as they are, savvy real estate investors can still make money on their renovations, flips, and even new-build projects.
At the time of this writing, material costs included in new multifamily construction were up 30 percent over the past year, according to CoStar Advisory Services. That increase—not just in prices for lumber but for other commodities like fuel, copper, and steel—was the largest since 1988. The cost of softwood lumber, often used for framing, is now at a record, up over 83 percent from this time last year, according to CoStar.
The Bureau of Labor Statistics puts the price of retail hardware up a whopping 31.4 percent and even cut stone like granite is up more than six percent. Plywood is up more than 19 percent. Millwork—a category that includes materials used in cabinetry, vanities, flooring, trim, molding, and wall paneling—is up over seven percent.
You get the idea. Everything needed in home building and remodeling costs more than it ever has before. This is caused by simple economics—an increased demand and decreased supply. The reasons for that gap, however, are not as simple. Pair the pandemic and a lack of labor with increased demand and a hot housing market, and you get a supply-and-demand gap in building materials that, according to fortune.com, isn’t expected to be filled until early 2022, which means consumers will not see cost savings until then.
According to the Thomas Index Report, “The recent sourcing surge surrounding lumber is really a case study of the market-wide effects of COVID-19 across the industrial sourcing landscape–limited supply coupled with soaring demand has led to a perfect storm of lumber availability. This surge is being caused by three main factors: COVID-related supply chain disruptions and unpredictability, a spike in building material demand driven by the resurgence of construction and infrastructure projects, and growth in consumer demand for lumber for use in home improvement and DIY projects during quarantine. As a result, lumber prices have gone up 130% since the start of the pandemic.”
Luckily for Think Realty members, you can save money on your investment projects in other ways. One way to be smarter about your REI deals, is through your business operations and management. Knowing that sometimes it’s not what you make, it’s what you save that can put more profit in your portfolio, savvy real estate investors take advantage of any discount that could enhance their real estate deals.
The Think Realty Supplier Program is one of many perks available to Think Realty members, and this program is one of the deals destined to save investors like you time and money. By partnering with companies that have a nationwide footprint and that offer quality products or services beneficial to real estate investors, Think Realty passes savings on to its members.
This year, we have added several new partners to this program ensuring Think Realty members can redeem even more savings from valued national brands. Read on to find out about these companies and what they offer that could help you do business more effectively, taking you down the path of higher profits.
Only those who join Think Realty, including the FREE level of membership, are eligible to participate in the program. Visit thinkrealty.com and click on Discounts.
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