Hardwood Sawmills Cut in Half
Wood Week: Jasper kiln fire, big wood investments

The sharp decline in demand for housing has produced trying times for everyone in the forest products industry.

By some estimates, our hardwood industry of “thousands” of small mills and end-users has been cut in half. During these past few years we have been frequently asked when the housing recovery will begin.

In the past, expanding population, low interest rates, and home affordability were guaranteed drivers of higher housing demand.

During this housing recession, however, the impacts of tight credit policies, declining housing values, a glut of foreclosures, and underwater mortgages have outweighed traditional demand drivers and kept residential construction in the tank—despite rising population, record-low interest rates, and affordability conditions not seen in decades.

In fact, according to a recent study by RISI, the current housing situation has no historical precedent. Like none before, this housing crisis was driven by easy monetary policy, easing of Fannie Mac and Fannie Mae lending standards, and over-confidence that rating and oversight agencies could manage risk.

Hardwood Sawmills Cut in HalfThat said, there seems sufficient evidence to support the beginning of a solid recovery within the next 24 months. Residential construction in 2012 will move slightly above current levels. In 2013, increased household formations, improved credit conditions, and stronger consumer demand will all stimulate residential construction and push total home starts past 1 million units. For the hardwood industry and the whole country, that eventuality cannot come soon enough.

Hardwood Publishing offers Hardwood Review, Hardwood Leader, WoodLogics and other services  for lumber buyers and sellers in the wood manufacturing industries.

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