What we're seeing locally is the house has the financing done, the builder pours the slab and they go to order the lumber package to be dropped at the site and it's gone up $20,000 - $40,000 on an average home, so they have to stop. We've seen builders with multiple slabs and foundations poured and ready but the lumber has escalated so much that they can't proceed IF they can even find the lumber somewhere. The bank won't loan any more money because the house won't appraise any higher. So the owner either has to go secure additional financing somehow or just stop and wait for the prices to come down. Since they usually already have one mortgage, they usually can't get any additional financing and they are now paying two mortgages. At some point that's not going to work and people are going to start filing bankruptcy.
Right now the market analysts are saying lumber prices most likely won't come down until some time in the 3rd quarter at the earliest. They think that's when China will begin to approach normal historical production of lumber products for export to supplement the domestic inventory here in the states. I think a lot of people are going to get hurt through all of this and we could see another crash like we did in 2007-2008.
It's gotten to the point that over the past 6 months we've even seen some large regional builders buying lumber yards just to secure lumber for their homes and even then they can't get enough lumber, nor can they offset the escalated prices.
We're going to be facing a ton of problems over the next several months with any resilient products as well. That deal down in Texas has our whole industry in a bind and it's just really only starting in the past few weeks. So, if you haven't heard about it yet, you will be hearing about it a lot very shortly.
When those refineries down there went down due to the power grid failure all of the petroleum gelled in the lines and storage tanks. They are talking weeks and months before they can even flip the switch back on and get things flowing again. Combine that with reduced work force due to the pandemic and it's going to take some real time to get the supply chain restored.
The whole vinyl flooring industry is on allocation here in the US for the next 60-90 days. At some point, as much demand that we've had for remodeling during the pandemic, it's going to catch up and you won't be able to get product. We're already having significant delays in sheet, and beginning to see issues in raw materials for LVT, wall base, vinyl transitions, and even laminates are being impacted to a lesser degree. Combine that with rising fuel prices (rising fuel prices = rising freight prices) and I think we're all in for some struggles for the rest of the year. I'm already having vendors coming back for a second round of increases because the shortages of raw materials and the freight costs are out of control and they didn't take enough of an increase the first time to cover the escalations.
We're also seeing a lot of consolidation and acquisition in the marketplace. Some of it's being done simply to secure raw materials, it's that big of a deal.
Sorry for the negativity but it's better to be realistic now and prepare for the worst than to get caught short down the road like many did when the last bubble burst..