It is official, summer is here. Pulpwood prices are dropping as the woods dry up and one of the wettest winters on record is now behind us. We are seeing Timber prices drop as we move into the dryer months in Alabama across the board. If you had a winter logging tract and were able to take advantage of the spike in the pulp markets then good for you, if not, then there will be other opportunities as mills scramble for wood. It is my opinion that landowners have become comfortable with higher prices and this will have an effect on our local pulp mills ability to procure low priced wood. Although, Georgia Pacific is in the process of buying the largest pulp mill in the Southeast, Alabama River Pulp Mill, we will still see higher prices then what we saw for the latter part of this decade. Saw-timber prices are another story. With the end of the first time buyer tax credit, we have seen lumber prices drop dramatically as there were no other real indicators for such an increase.
One interesting thing to note is that timberland prices have not seen the decrease that we were expecting. They are holding firm as most investors in timberland are stable and can hold on during low points of a cycle. We are optimistic that as timber prices increase we will begin to see more volume in the transaction of these properties.
Where we are seeing big price shifts are in what I call Transitional Properties. These properties are on the fringe of development and are usually agriculture or timberland properties that are on the path of growth. These are speculative in nature and can be very lucrative if bought at the right price, time and with the proper financing in place. When I say financing, it is important to note that several of these properties have become available from over leveraged companies or individuals who took advantage of loose lending practices and were not able to afford the interest after the bubble burst and buyers dried up. Keep in mind when purchasing a transitional property it is very important to research the property, along with several external factor’s that will contribute to the future value of the property.
Thanks again and keep Delaney Land and Realty, LLC in mind when you are considering an investment in Real Estate.
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