Over the years the USA has placed Tariffs on Canadian Lumber. In Canada lumber companies receive subsidies from their government and cut their lumber from public lands. Also, over half of Canada’s forests are certified for logging. A substantial more than in the USA. In the United States logging is primarily on private land and without any subsidies from the government but with more restrictions. This results in Canadian lumber being significantly more affordable apart from tariffs.
So the lumber companies in the USA have regularly appealed to the US government to increase the tariffs. In August of this year the Biden Administration, in particular the Commerce Department, increased the tariff amount from 8.5% to 14.54%. This was reported primarily among lumber related websites in Canada and USA, I didn't not easily find it on any main stream news station. News Article.
As of late July of this year lumber costs per 1000 board feet was at its lowest for 2024. Prices with the new tariff increased and are expected to further increase. The tariff increases the cost of the Canadian lumber so allowing US company to be more able to compete. But not at the benefit of US customers.
For a little perspective, according the the Trading Economics website, in 2021 (during pandemic) the price of soft lumber was at an all time high of $1750 per 1000 board feet. It fluctuated and eventually dropped to pre-pandemic prices in 2023 to under $400 per board foot. But since August of 2024 it began to increase to its present price of $528 per 1000 board foot and is expected to continue its rise.
In a housing market that is already impacted by increases of costs, material shortages, labor shortages and high interest rates, housing starts were at a 4 year low according to Trading Economics They did begin too rise, however, with the shortage of housing home prices remain high.
It is also beneficial to understand that prior to 2009 there was already a housing shortage due to the 2000 recession, then the recession of 2009 arrived and builders built less while the need for housing increased.. Then to add to the injury, the pandemic with all the shut downs, shortages and uncertainty we saw housing starts impeded resulting in higher home prices and even lesser houses on the market.
Here are the issues that need to change. 1) The US government must open public land to be logged. This has a second benefit as many forests are over-grown and increased the potential for major fire. I can get into this more in a later post. 2) Do not provide large sums of money to new home buyers. When government gives these incentives it encourages housing manufacturers to raise their prices accordingly. Instead give any home buyer a tax rebate for buying a home they intend to live in. 3) Interest rate reduction is a big one and there are many ideas how to do this. The Federal Reserve seems to be moving it in the right direction. Getting the recession is another. Government debt, the over printing of US currency, pandemic money giveaway are all culprits in the rise of the cost of living so drying up the savings of many middle class hoping to put a downpayment on a house. 4) The job market is also need of attention. Laws that regulate pay is not the solution but rather keep corporate tax reductions in place and add tax reductions for sole proprietorships. When employees have more money they pay their employees better and they expand their businesses so passing on the benefit to other businesses. Let commerce work.
A little insight. In 1979 my wife and I bought my first house at 8 3/4 % interest. Higher than it is today. Our first house cost $48,000. Was that affordable? Yes with two incomes it was. It was a small 1200 SF 3 bedroom. Over the years of designing homes I have seen tract homes in the 80’s and 90’s in the 1200 to 1800 square feet age, but today they are over 2400 plus square feet. So my last suggestion is for builders to return to building smaller homes. Their new homes will sell to new home buyers and in doing so they possibly could cause smaller older homes to be less expensive to buy. It is worth looking into.
Lastly, have a little faith as things have been worse as in the 70’s with stagflation and 21% interest rates.