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Soaring lumber prices affecting new home buyers, renovations | Money Smart

If you’re thinking about building or fixing a home, be prepared to pay more. The pandemic has affected demand for lumber and prices have soared to all-time highs.

SAN ANTONIO — If you’re thinking about building, renovating or repairing your home, be prepared for higher costs. The coronavirus pandemic has affected demand for lumber and prices have soared to all-time highs.

The coronavirus pandemic impacted just about every industry including sawmills. During the shutdown, lumber companies reduced production due to low demand. When the economy reopened, they couldn’t get back to the same level of production. According to Random Lengths, a wood products company that tracks data, lumber prices are up 340% compared to a year ago.

“We’re seeing lumber prices go up literally, 5 fold since the pandemic. You’ve seen corn prices, wheat prices, oil prices go up. There is a supply disruption and demand going on at the same time,” explained Karl Eggerss, senior wealth advisor and partner of Covenant. “When demand came back faster and quicker than anybody thought would happen, there was a shortage.”

The high cost of lumber for builders trickle down to home buyers who will eat up the extra cost. According to the National Association of Realtors, the price hike has added $35,872 to the price of a new single family home and $12,966 to the price of a new multi-family home, which means an extra $119 per month to rent an apartment unit. Eggerss addressed the concerns regarding high commodity prices and inflation.

“We saw high inflation in the 1970’s. I don’t think we’re going to see that type of inflation. I don’t think what we’re seeing in the last several months will persist,” he said. “One of the things our viewers can do to protect themselves against higher inflation and prices going up, is simply invest in those things that benefit from that, whether it’s energy companies or commodities.”