As I See It
October 16th, 2009 — By Jeff Meyer
If you’ve followed the business news recently, you’ve seen that most economic indicators continue to improve steadily, including those relating to the housing market. For the last four or five months, existing home sales have increased, the stock of unsold homes has decreased, and the average sales price of homes has increased.
However, any optimism that these numbers generate needs to be tempered by the reality that we are starting from extremely low numbers. And, to be fair, this trend is strongest in the market for low to moderately priced homes (driven largely by the first time home buyer tax credit). As we all know, a disproportionate percentage of hardwoods go into more expensive homes. Let’s hope that this part of the market starts to improve soon.
Here are a few thoughts on what we see in various species and markets as we move through the fall and into the winter.
- White Oak continues to strengthen. Extra kiln dried inventory is quickly drying up. We’ve found that higher prices, particularly in 5/4, 6/4 and 8/4 White Oak, are now sticking. Many buyers are finding that their traditional suppliers don’t have inventory to offer. So if you have White Oak, don’t sell yourself short!
- Red Oak seems to move steadily in all grades. Although still not “in fashion,” and with pricing dramatically lower than five years ago, Red Oak seems to be a steady mover. The uppers are cheap enough that people now use them as an “inexpensive wood.”
- The Asian business remains strong. China has the strongest economy in the world, and that certainly shows up in their hardwood purchases. Economies in other parts of Asia are certainly more robust than those in Europe or the US.
- Unfortunately, most domestic distributors and large manufacturers don’t seem any more optimistic about business today than they did two months ago. Although I wish it weren’t the case, my guess is that we won’t see much improvement in this arena until the first quarter of next year. We just need to be patient and get the business that’s out there.
- On the supply side, nearly a month of non-stop rain in certain parts of the south has reduced supply. We believe that we will feel the effects of that over the next several months.
We are pleased to see certain parts of the market improving, but clearly we have a ways to go before we can truly say that things have “turned around.” Until that time, we just need to watch our costs and service our customers like never before.