The pandemic has wreaked violent disruptions to the nation's economy, with prices tumbling or skyrocketing depending partially on how COVID-19 is impacting business at any one time. Construction companies and lumber yards are no exception.
These businesses are hurting as the cost of lumber and other construction materials continue to rise. Chuck Gabbert from C.T. Gabbert Remodeling and Construction in Peoria says that the increase in price has caused his inventory to vary.
"In order for us to, you know, have supply of lumber built back up, I think that the economy has to cool down. They're going to get to a point where prices are so high that people pull back," Gabbert said. "And when you see people pull back and building slow down, that's when the market will correct itself. And that's when we'll see some lower prices coming."
That raises the question: Why have prices increased so dramatically in the past year? Gabbert thinks the reason is major shifts in supply and demand.
"No one knows the bottom line of why we're seeing what we're seeing. We just keep seeing price increases."Christian Lewis
"Well, one is the demand initially went way down," Gabbert said. "When people are trying to sort out what was going on, and then the people, with the COVID, this was shut down, and that was shut down. Some of the lumber operations shut down. And then the trucking industry, they can't hire people. They are paying unemployment. Plus over to that. And that's part of a lot of this stuff, too."
Christian Lewis, project manager for Scott Lewis Construction, said the answer isn't clear on exactly why the prices have increased. He believes it's more than just basic supply and demand.
"I don't know the answer what's behind it. I think a lot of it is labor. A lot of people have chosen to be at home or chosen not to go back to work when opportunities have arised. So I just don't know if we're fighting that more than anything," Lewis said. "And those have made the lead times extend. So I mean, I'm seeing most of our products take 12 weeks to get to our lumberyard, where in the past, you know, three to six weeks was a more realistic timeline to receive something."
It's not just lumber prices that are increasing. Other materials essential for construction are more costly, too.
"It's really across the board. My painter is stressed that all his paint and supplies have grown in cost. My brickyard and all their stone and brick material is going up in price," Lewis said. "The price is going up and the lead times are going up. So even if you are buying things ... we're having a really tough time getting appliances. So we're closing projects, and we're getting a lot of scratched and dented appliances put in so people can move in, because we just don't know when they're gonna come."
Lewis said the construction industry is actually doing quite well right now. But he fears how long that success can last with inventory and materials dwindling fast.
"Really, everywhere I look at people I talked to no one knows kind of the bottom line of why we're seeing what we're seeing. We just keep seeing price increases. I mean, I talked to my lumber salesman two days ago and a lumber is up 237%. And it's hard to consult owners you know what to do," he said.
"But when there's not a lot of inventory out there and they want to renovate their home, or they want to build a new home because they've outgrown where they're at, it's hard to say, like, 'is it gonna be better later this year? Is it gonna be better in '22?' We just have no idea, but the industry is booming itself. I mean, there's new construction everywhere. Still lots of demand. It's just gonna be how long can we keep building with the inventory we have."
As more of the nation's population is vaccinated, a greater semblance of normalcy is expected to return. That could prove to even out the rough and tumble conditions in the lumber and construction trades.
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