- Price of lumber has skyrocketed during COVID-19 📈
- Lockdown boredom and excessive cash stimulus in the U.S. inspired people to buy new homes, renovate old ones and work on DIY projects.
- That caused severe lumber shortages as U.S. mills were caught off guard with almost non-existent inventories 😱
- 40% of North American sawmill capacity shut down in 2020 because they feared a COVID-19 slowdown 👉 yeah, it never happened.
- Create a digital marketplace for reclaimed lumber ♻️
- Reclaimed lumber is popular for many reasons: it contributes to green buildings, looks unique and can be stronger than newly-cut wood.
- See MaterialsXchange for an example of an online lumber marketplace.
- Sky-high lumber prices create market gaps for other alternative building materials, such as steel, composites, concrete and even plastic.
- Build lumber tracking dashboards 📊
- Track prices of stock lumber at local stores.
- Track availability of lumber at local stores.
- Track prices of wooden consumer products.
How to launch
- Build a web dashboard tracking lumber availability:
- Start with local hardware stores in your area.
- Negotiate a deal with the stores which gives you access to their inventory data, at least on a rough level. In turn you promote their lumber products when they have availability.
- Add locations, prices, inventory levels, lumber types…
- Add more stores over time.
- For the customer the benefit is knowing where to drive to buy the lumber → time and effort saved.
- Spread the word with contractors, hobbyists, anyone who needs lumber. Drive traffic to your website.
- Monetize with ads or with a freemium model (partly restricted access to some data or a free trial period).
- Sales of Trex’s composite decking alternative were accelerating already pre-pandemic:
- High lumber prices have helped further supercharge Trex’s growth. The company’s stock price has vaulted 767% in the last 5 years 💵
- As long as the lumber prices remain high, consumers are willing to consider other alternative materials to their DIY projects.
- Other examples of alternatives to wood decking: Nexan Building Products (aluminium decks) and Envision Decking (composite decks).
- Stock prices of lumber-related companies have soared in the last 12 months:
Alt wood products
- The price of 1,000 board-feet (MBF) of lumber increased a whopping +323% from 2020 to 2021. A peak of nearly $1,700/MBF was hit in 05/2021. ↗
- Since then the price has come down to about $1,300/MBF, which is still ultra-high when compared to historical prices during 2000s.
- Raising lumber prices have not resulted in higher profits for timber growers. A large surplus of trees remain. 🌲 Sawmills are the real bottleneck.
- But sawmills are also starting to catch up: 1.4 billion board feet of capacity was added during the last 12 months.
- The craze for lumber is showing signs of slowing down in late May 2021. Future prices fell close to $1,200. 📉
- Nevertheless, it seems that lumber will trade over $1,000/MBF for a large part of 2021. Some analysts predict a fall in prices after the next 18 months.
- General consensus is that the prices will hold up for another 12-18 months so there’s still ample time to capitalize on this trend.
- A Look at Lumber Prices From the Supply Side – An insider’s story of how the situation evolved to record-breaking lumber prices 🪵
- Lumber Bubble – Soaring lumber markets are inspiring TikTok video creators.
- There’s a historical lumber price hike going on.
- That creates a lot of opportunities for solutions that solve either the high price or availability problems: alternative building materials, tracking lumber availability, marketplaces for lumber products and smaller houses.
- It’s hard to say how long the prices will stay up but the limited capacity of mills and shortage in housing are problems that are not solved overnight.
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