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Home›Price index›As lumber costs skyrocket, OSU professor develops option to predict value modifications

As lumber costs skyrocket, OSU professor develops option to predict value modifications

By Susan Weiner
April 6, 2021
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CORVALLIS, Ore. (KTVZ) – At a time when lumber costs are skyrocketing, an Oregon State College researcher has developed a brand new option to predict future log costs that makes use of available financial info.

“Log costs are actually variable,” mentioned Jeff reimer, professor of utilized economics on the State of Oregon. “That makes it a troublesome enterprise whether or not you are a land supervisor, a manufacturing facility proprietor, a forestry investor, or as we’re seeing now, a house builder.”

The timber business is crucial to the financial system of many components of the world, together with the Pacific Northwest. The well being of the timber business could be measured in numerous methods, together with harvest ranges, employment in timber harvesting and sawmills, and demand for timber. Nonetheless, costs for minimize and delivered logs often is the most direct option to monitor the state of timber markets, Reimer mentioned.

Reimer’s research, just lately revealed within the journal Forest Coverage and Economics, specializing in Douglas-fir, probably the most commercially essential wooden species within the Pacific Northwest.

He discovered that simply figuring out the variety of housing permits issued in a month can clarify about 46.8% of the variation in log costs over time. Including further info – together with month-to-month house stock, mortgage charges, the trade charge with Canada (additionally a serious lumber provider), and the Case-Shiller Residence Value Index – explains about 74.3% of the value change.

“These variables are simply observable and due to this fact can be utilized by business resolution makers to make higher predictions about future values ​​of logs and woodlands,” mentioned Reimer, professor on the Oregon State Faculty of Agricultural Sciences. .

Within the paper, Reimer cites knowledge which reveals that the typical value of Douglas fir logs between 2005 and 2020 was $ 631 per MBF (a forestry time period per 1,000 board ft of lumber) of sawmill logs in southern Oregon. A board foot of wooden is 1 sq. foot and 1 inch thick.

Nevertheless, this common masks a big variation in value. From 2005 to 2020, the value ranged from $ 346 per MBF to $ 924 per MBF. The distinction between the minimal and the utmost was $ 578, virtually as massive because the 15-year common value itself.

Because the writing of the doc, wooden costs have elevated additional, reaching the $ 1,000 per MBF vary. Nationwide Affiliation of Residence Builders just lately revealed a report That mentioned, lumber costs added a median of $ 24,000 to the price of a brand new house.

“Proper now, log costs are extremely excessive,” Reimer mentioned. “It could sound like a celebration or a famine on this business, however there’s a logic behind the modifications. The benefit of this doc is that now we have recognized just a few simply observable items of data that permit individuals within the lumber business to make strong predictions about what’s going to occur within the subsequent six months or so.



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