The Rising Influence of Rising Affluence

[DewDiligence]

Re: WY update

I listened to the replay of WY’s 4Q19 CC held on 1/31/20. WY expects flattish growth in US housing starts in 2020 to a rate of slightly more than 1.3M vs 1.29M in 2019.

The flattish slope of US housing starts described in a 2016 WSJ article (https://www.wsj.com/articles/u-s-home-construction-lags-behind-broad-economic-rebound-1481914669 ) has persisted—despite renewed growth in the US household formation, refuting the main bearish thesis of that article. According to WY, US housing starts are being held back not by anemic household formation, but rather by: 1) a labor scarcity in the building trades; 2) onerous local regulations.

WY’s international (i.e. export) business is likely worsening. US Pacific Northwest exports to China (and Asia in general) are almost certainly going to take a hit from the Covid-19 outbreak. However, since WY’s 1/31/20 call predates (barely) the widespread media attention to Covid-19, there was not a single comment or question on WY’s CC about Covid-19.

WY’s exports to China from its Southeastern US timberlands have been negligible because of China’s 25% tariff on US southern yellow pine.

p.s. The chart in #msg-138999395, though somewhat out of date, remains a handy reference in any discussion of WY and the US housing market.