The Race Continues: Economic Growth vs. An Economic Tantrum – Week 6

Factors that Make Timberland an Attractive Asset:

1.  Timberland:

Some clients have asked us about the impact the increased tariff on imported soft wood lumber from Canada will have on the US timberland market. The ripple effects that we see are the following:

  1. The reduction in imports in the face of strong demand for soft wood lumber suggests that timber stumpage prices will increase;
  2. It also suggests that the cost of lumber for housing will increase. We have seen estimates of increases ranging from $1,200 to $3,000 per house.

Home builders tell us that all of their material prices have been increasing steadily over the last several years and they are concerned about the increased cost of lumber.

In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment in land.