US Market Update

Posted by Dave Farley
March 1st, 2012

A few comments, suggestions, and ideas that may be of interest to the industry…

I tend to be a glass half full kind of guy; an optimist by nature, which incidentally has been a necessity for my choosing the forest industry as my sector for employment. It is with this optimism in mind that I honestly believe that the US may have finally turned the corner and that their economy is on the rebound. I know, for those of you who have read my comments over the past few years, I can easily be accused of saying this every few months – but this time I mean it.

I was down in Northern California this past week and met with a number of builders, architects, and distributors in the region. The feedback and general consensus was that the construction market is improving and they were busier now than they have been in the last two years. I usually can get a pretty good gauge on the activity in a given market by first talking to the architects. They are the first link in the distribution chain and if they are busy, it is a fair assumption that the builder and distributor will benefit from the work in the following months. Of the three architects that I met, two had five or more projects that they were working on, primarily in high-end residential construction , and the third architect had two residential projects and one light commercial project on the books for 2012.

On the builder and distributor side, things seemed a little less busy; but that I was told was due to it being winter months and that construction activity is generally slow during this period. That being said, numerous builders were gearing up for a decent spring and summer construction period. Upcoming projects were evenly split between new home construction and renovations. During site visits with builders, I counted over 115 residential and light commercial projects underway in the Lake Tahoe region which I validated with a quick check at the local planning commissions. Many of these projects were of high dollar value, with residential construction in the $400/square foot and above range.

On the distribution side, the general manager of Tahoe Truckee Lumber Company (TTLC), commented that business is up 22% over this time last year and about 28% over the previous few years. He commented on the market, suggesting that many of the projects were for Silicon Valley entrepreneurs who have cashed out stock options and were investing in real estate and secondary vacation homes in the Tahoe region. Silicon Valley and the San Francisco Bay area is approximately a 2.5 hour drive from Lake Tahoe, up the I 80 highway. Similar results were discussed with the sales crew at Tahoe City Lumber and Reno Building supplies.

While this is but a snapshot of the construction sector in the Western US, most analysts and industry insiders believe that the US market is on the rebound and that residential and light commercial construction is expected to grow over the course of the year. It will be interesting to see if the same optimism and construction activity is being experienced in Southern California when BC Wood and member companies participate in the Wood Solutions fair this week in Long Beach, California. I will keep you posted. For more information on the US market, email me at dfarley@bcwood.com

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