News Treehugger Voices Will the Spike in Lumber Prices Hurt the Mass Timber Movement? These timber towers are built of the same wood as single family houses. By Lloyd Alter Design Editor University of Toronto Lloyd Alter is Design Editor for Treehugger and teaches Sustainable Design at Ryerson University in Toronto. our editorial process Facebook Facebook Twitter Twitter Lloyd Alter Published May 7, 2021 04:18PM EDT Fact checked by Haley Mast Fact checker Harvard University Extension School Haley Mast is a writer, fact checker, and conservationist with a certification in sustainability. Our Fact-Checking Process Article fact-checked on May 08, 2021 Haley Mast Alan Schein Photography/ Getty Images Share Twitter Pinterest Email News Environment Business & Policy Science Animals Home & Design Current Events Treehugger Voices Lumber prices are higher than they have ever been. According to Madison's Lumber Reporter, the industry bible: "Experienced players expounded that they’ve never seen anything like it. Buyers who held off in hopes of some form of correction were cursing that decision now as inventories were leaner and prices significantly higher." And in case anyone thought the increase in the price of lumber in the average single-family house (about $36,000, according to the NAHB) would reduce demand, nope, the market is too hot. Madison's Lumber Reporter writes: "Folks looking to buy a home are increasing their bids without blinking; to them, whether the price is up nominally due to the cost of materials or due to a very competitive housing market makes no difference. The inventory of new homes for sale keeps dropping. To the real estate customer, these increasing lumber prices don’t matter. Another bout of triple-digit price leaps did nothing to deter desperate buyers." Demand for wood is high thanks to the demographic and pandemic-induced housing boom, along with the do-it-yourself types of building decks and rec rooms; supply is constrained by COVID-19, fires, pine beetles, and a lack of capacity thanks to the closure of so many mills over the last few years. Houses are built of SPF, or spruce-pine-fir, lumber that comes from the coniferous trees of northern forests. So is mass timber, the big slabs of cross, nail, and dowel-laminated timbers that are replacing steel and concrete in many midrise buildings. When made from sustainably harvested wood, mass timber has a far lower carbon footprint. It takes a lot of wood, but according to Tim Buhler of the Canadian Wood Council, “Sustainable harvesting methods ensure that more trees are planted than harvested.” What is the dramatic rise in prices doing to the mass timber industry? Cross-laminated timber (CLT) as a material was never cheaper than concrete, but was faster and required a lot less labor. What happens when the price of the wood that it is made of goes through the roof? What are People in the Industry Saying? DLT being assembled at StructureCraft. Lloyd Alter We have been asking this question for a while. In February, when lumber prices were only twice as high as last year, Lucas Epp of StructureCraft, the maker of dowel-laminated timber, told Treehugger: "The run on lumber has increased mass timber costs, but not substantially enough to cause significant problems – and so far I would say in many major markets the increases are in line with the increases we’re seeing in other materials (e.g. steel which is up 20%)." He had previously told Treehugger that in commercial buildings, the proportion of the cost that is due to structural materials is far lower than it is in housing. "The material cost is only 15-20% of the cost of supplying and installing a mass timber structure," said Epp. Larger mass timber office and residential buildings are also financed differently than houses, with the costs spread over the long term, whereas in a house, it goes to the bottom line and is passed on immediately in a hot market as we have now. But some are worried. Mike Yorke of the Carpenters District Council of Ontario (and producer of the new website Mass Timber Today) expressed concern: "I had a similar question earlier this week. In part it was driven by headlines, but also from speaking with contractors/ builders who’ve told me clients are looking at switching from timber back to a concrete/ steel design on some projects. Granted, these are projects that are pretty early in the pipeline and much can change before it’s all confirmed, but it’s still to me, a negative message about the timber sector that’s floating around." Marketwatch Screen Capture Greg Howes, the founder of Mass Timber City and CutMyTimber, is also worried. He points to the Marketwatch numbers—they are up two bucks to a nice round $1,700 since I did the screenshot a few minutes ago—and tells Treehugger: "A growing number of projects are being delayed because of high lumber prices. And of course, mass timber is being heavily impacted because it uses so much fiber. Even contracts for May 2022 are over $1,100 and it takes a lot of time for new production to come online. " Others are not nearly as worried, noting that the lumber industry is cyclical. Anne Koven, Director of the Mass Timber Institute, is not overly concerned, telling Treehugger: "Lumber prices have a very long history of being volatile and spikes such as those we see today may affect short-term decisions. But in the long term, supply and demand come into balance so short -term spikes, either way, should not affect the long -term prospects of mass timber as a building material." Tim Buhler of Woodworks! agrees, telling Treehugger: "We have seen very few cancellations that I’m aware of, mass timber continues to march on. I think they are committed to the projects for the right reasons, and other building materials are not immune to the price increase. Further lead times are high for these timber alternatives." But We've Seen This Movie Before Back in 2009 housing wasn't so bubbly. Ethan Miller Getty Images Prior to writing for Treehugger, I was in the housing business in some form since I got my first job after University at a firm designing production housing, and have seen serious booms and busts, usually about every 10 years. These lumber prices are driven by the single-family housing market, which is booming everywhere in North America. There are people buying houses because they can get out of the city and work from home. There is the demographic bump of millennials in prime family-raising age with cash not spent on avocado toast burning holes in their pockets. There are low-interest rates to keep the economic engine going during the pandemic. When that all happens at once, there is FOMO (fear of missing out) and irrational exuberance. And every single time, it is followed by overbuilding, inflation, interest rate increases, and a collapse of the market. Add in all the houses that will go on the market when everyone happily working from their homes a long commute from the office is told to come back, which seems to be in the cards for many. The lenders and the builders are saying, "It's different this time." But it never is. And every time the housing industry crashes, the lumber industry crashes harder. So, taking off my Treehugger hat and putting on my old architect/real estate developer hat, I tend to agree with Koven: It is cyclical. But this time, it might well be demand from the mass timber market that keeps the fellers felling and the sawmills sawing, making more affordable materials for low-carbon construction.