Michigan Lumber Shortage

The construction industry has been under the spotlight with the recent surge of lumber prices (among other building materials). For the first time in a long time, lumber has been the topic of conversation, especially when it comes to Michigan builders and their customers.

Covid-19 wreaked havoc on our nation, and the lumber industry was no exception to this. The demand for lumber increased during the pandemic, and between state shutdowns and lack of workers, timber mills haven’t been able to keep up. Due to the demand, prices have increased and building timelines have been stretched as supplies remain low and costly.

For example, plywood used for sub-flooring previously cost $25 per sheet. According to Bridge Michigan, it now costs $100 per sheet. In an interview with Rich Kligman, owner of Superb Custom Homes, Bridge Michigan reported that one of Kligman’s customers had budgeted $135,000 for lumber for a larger home. As of March 2021, that estimate had increased to a staggering $186,000 in lumber alone.

The National Association of Home Builders (NAHB) has petitioned help from the government during the ongoing lumber shortage.

Bridge Michigan noted the NAHB’s petition included a letter, which stated:

“The potential for housing and construction to grow and lead the economy is limited as long as lumber remains expensive and scarce, and the ramifications for job growth are significant.”

Not only is the construction industry impacted, this lumber crisis directly affects the real estate industry as well. It’s no secret or surprise to anyone that the housing market is unbelievably high right now. It’s a seller’s market, which leaves potential buyers with few options, a restricted timeline, and outrageous home prices. In the past, those struggling to find a suitable home had another option: to purchase land and build their own home. However, with building material prices skyrocketing, those looking to move have fewer options and building limitations like never before.

In Michigan, the summer season is typically a busy one for the construction industry. How will the astronomical lumber prices affect builders as temperatures heat up?

While the hope is that lumber production will increase and prices will stabilize, it’s best to be prepared – not only for the sake of your business, but out of courtesy for your customers as well. According to Bridge Michigan, one way to prepare is to include escalation clauses in building contracts to cover potential lumber increases.

As a construction company, it’s our responsibility to communicate potential risks and price increases with our customers prior to and throughout the building process. While we continue to hope that lumber prices decrease, for now, we’ll work to the best of our abilities to problem solve, remain on budget, and communicate from beginning to end.