Is Home Depot The Cheapest Place To Get Lumber?

construction costs income & expenses lumber market research market updates real estate market Jan 25, 2022

Building a house or an investment property? We've been working with builders on our multifamily projects and have had a lot of conversations about the recent rise in lumber costs. What trends are we seeing and where are the best places to purchase lumber? Our Thoughts.

We're going to keep complaining about lumber because actually there's some new news about the lumber market and recent rises in lumber costs. 

Just within the last week --to remind everybody-- lumber peaked in May and it was crazy all summer and then trickled down a little bit and everybody forgot. 

Sherida Zenger: Then December it started creeping up a little bit more, cause it went up to like in the nine hundreds, and guess who's back?

Lumber. Lumber is back.  

Steve Olson: This is from the National Association Of Home Builders, just a headline from January: Latest Wave of Rising Lumber Prices Adds More Than $18,600 to the Price of a New Home

And I would add that this is since December,  

Sherida Zenger: That's a ton. That's going to kick any builder in the teeth.  

So this is what was interesting. And we didn't talk about this before. So as you're talking about this, it's prompting me to think of something... 

I met with a builder last week, a different builder. We were going over a project and they said that they're the first ones in the country that had started a pilot program with Home Depot and Home Depot's lumber is a lot less than what they could get from like a BMC West. Which I thought was interesting.  

He said he was going to give you the numbers to kind of see the difference. Part of me wonders if some of this lumber hike is due to the fact of material, right. I know that we've had fires and some crazy stuff that has affected that, but I also sometimes wonder is the supplier knows that people are going to pay more, do they keep inching that up a little bit too? Why is Home Depot able to give such a better price?  

Another example of this is one of the guys that work in our home office was building an accessory building in his backyard. He went to the builder and said, Hey, can I use your account and go get some plywood, went and got some plywood. He then walked into Home Depot. 

A couple of days later it was $15 a sheet less at Home Depot.  

I get that we want to talk about this, that it keeps going, that it keeps rising and it does, and there's nothing we can do, but I almost wonder if somebody like a Home Depot that can buy it in a bigger bulk than you and I are or any builder can.  

Maybe they have their own lumber mill. I don't know what the backstory is, but I thought that was interesting. So I think that's something we need to keep our eye on. Is Home Depot trying to get into this game? 

Steve Olson: I had heard that places like Home Depot and Lowe's sell lumber as a loss leader. They make hardly any money on it. It's designed to get you in the store.  

Sherida Zenger: Yeah, but to a big builder, that's doing a big project? 

Steve Olson: Does a big builder order an entire lumber drop from Home Depot? I don't even know if that happens.  

Sherida Zenger: They did. It was in California. And that's the Home Depot that they were using and Home Depot's, I think headquarters or somewhere back east or Midwest. 

They did this pilot program in California and they were building it was either a clinic, like a medical clinic cause that's what they build, or a hotel. I don't know which one, but they were doing one or the other anyway.  

Steve Olson: That's crazy. Do you wonder how much lumber you could order from a home Depot before they say, "uncle"? 

Yeah. We've done projects where we buy, hundreds of doors, worth of lumber at a time. And I had just, I don't think we can roll down to Home Depot and talk to Bob at the desk and get that much lumber.  

Sherida Zenger: I think this is a separate division that they're trying to open up. Like this was a pilot program. 

Regardless of my little weird theory and trying to figure out this Home Depot thing, the increase is there and people it's affecting us right now.

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