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  • Alex Pettee, CFA

Timber REITs: Lumber Shortage Inflames

  • Reignited by the red-hot U.S. housing market, timber REITs and lumber producers have "caught fire" since mid-2020 as lumber prices have soared to record highs amid a historic supply shortage.

  • Caught flat-footed by the velocity of the rebound in lumber demand from homebuilding and remodeling activity, sawmills are scrambling to catch-up as producers invest in building immediate and long-term capacity.

  • Overheating concerns? Soaring lumber prices - and the outright inability to source lumber - have added fuel to surging home values but also has forced some builders to delay projects.

  • Recent commentary suggests that bottlenecks may be beginning to ease, which is good news for these REITs and the broader housing industry. Q1 earnings results showed that timber REITs are starting to fire on all cylinders.

  • For investors that can tolerate volatility and value inflation-hedging attributes, long-term fundamentals look compelling amid historic levels of demographic-driven housing demand and record-low housing supply.

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Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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