Article by Dan Shell
Managing Editor

There was an interesting note in a recent issue of the Random Lengths newsletter highlighting a report from the National Assn. of Homebuilders (NAHB): Following years of a trend toward larger houses, including square-footage increases from 2009 through 2015, the median size of single-family home dropped in 2018 for the third straight year.

This is a significant trend, for it portends a move toward smaller units, and even more importantly—more affordable housing.

As the lumber industry embarked on its 10-year wild ride from the Great Recession and the lowest lumber prices since the Great Depression to the highest lumber prices on record (and perhaps the most volatile markets ever) in 2018, the housing starts recovery remained slow.

Unlike past recessions, low interest rates and a generally improving economy didn’t deliver the same cure, as housing starts continued to drag. Econo­mists pointed to explanations such as lagging incomes, leftover student debt, and young people getting married and forming households later.

So the recent note from the NAHB is a welcome one. High-end homebuyers will always be catered to, but more builders developing more entry-level inventory is a good trend.

The same NAHB report noted that while building material costs were the top item of concern for builders in 2018, labor is moving to the top of the list in 2019.

However, those same homebuilding labor issues are driving a positive trend that has the potential to develop a whole new category of product: cross-laminated timber. The growing mass timber construction movement has the potential to create truly new demand. In an industry that deals with primarily commodity products, that’s a big deal.

This issue includes a news item on the most recent CLT plant announcement in North America, as Kalesnikoff Lumber in British Columbia is building a $35 million facility in South Slocan that’s scheduled to start up later this year. The news underlines the year 2019 as a big one for North American CLT, as plants are scheduled to start up in Colville and Spokane, Wash. and Dothan, Ala.

The issue also includes a detailed article supplied by Katerra, owner of the Spokane CLT facility and a major player in not only CLT trends but the move toward more pre-fab construction and off-site building to alleviate those same labor cost and availability concerns.

­While some have characterized Katerra as a company of erstwhile Silicon Valley visionaries who don’t know much about the construction industry, the reality is the company plans to drastically disrupt the traditional building industry—whether it’s working with a CLT plant, pre-fab facility or large architectural firm. And Katerra has $3 billion in capital to make it happen.

So whether the trend is housing size or construction labor woes or mass timber growth, there are changes in markets that producers must react to, and it’s the mills and organizations that can bend the trends to their advantage.