Timber pricing has been relatively stable through the pandemic. Compared to lumber prices, which have increase dramatically over the last year, timber prices have only increased in the single digits. However, timber prices are likely headed for a long-term trend due to new demand.

"We believe timber and timberland as an investment are on long-term uptrends. The fundamental drivers are the value of the trees at maturity and underlying land. Both factors currently have upward pricing pressure," Scott Reaves, director of forest operations at Domain Timber Advisors, tells GlobeSt.com. "Sawtimber pricing is benefitting from increased consumption for use in home remodeling and construction. Land is appreciating due to population increases and individuals' growing demand to own parcels outside cities. These trends are especially evident in the U.S. South as demonstrated in the attached map regarding population growth and lumber mill expansions." Reaves says that prices could be headed as high as $35-$40 per ton.

This could be an additional drag on new development. After an already challenging year, additional increases in materials costs will only make new development more challenging and expensive. "Volatile raw material pricing certainly makes bidding on and securing new contracts more difficult," says Reaves. "We could also see lumber prices at this high level eventually having a mild chilling effect on consumer demand for new housing. However, given current sentiment and demographic trends, it may be a while before that occurs."