Priced Out of Housing, Some Eye Timberland. Returns Lag.

Institutions have been buying about one million acres of timberland a year, according to Bank of America, even as demand for trees growing on that land remains stubbornly weak. Some younger Americans shut out of homeownership are now asking whether timberland could give them another way to hold wealth. Owners say the payoff is modest, and it takes time.

The appeal is easy to understand. Elevated home prices, higher mortgage rates and limited inventory have made buying a house harder for many millennials, said Nadeem Kassam, chief investment strategist at Marnoa Private Wealth Counsel. “As a result, some investors are looking for alternative ways to participate in real assets and potentially build equity without purchasing a home directly,” he said.

Who Is Buying, and Who Can Afford to Wait

Big money is driving the purchases. Bank of America’s 2026 outlook described the one-million-acre annual pace as a three-year streak of dealmaking, and said it expected that run to continue. Timber managers bought 55% of the acres that changed hands in 2025 and sold 15%, the bank said. They invest for pension funds and endowments that can wait decades, betting on a longer-term recovery in the slumping U.S. housing market and improved lumber prices.

Patience comes with the asset. Pulpwood trees can take 12-14 years to mature. Chip-and-saw trees need a little longer, while trees cut for housing can take 25 years. That timeline works for a pension fund. It’s a tougher fit for a young household trying to build savings.

Ken Shepard, head of specialty asset management at Bank of America Private Bank, said timberland isn’t a tactical asset investors can enter or exit in response to short-term conditions. “We view it as a strategic, long-term investment supported by several favorable secular trends, including the continued expansion of the timber industry in the U.S. South and growing demand for wood products beyond traditional construction uses,” he said. He noted that demand for wood pellets used in bioenergy, though controversial, has increased significantly.

The Numbers Behind the Pitch

So far, returns have been thin. The National Council of Real Estate Investment Fiduciaries’ Timberland Property Index returned 0.95% in the second quarter of 2026: 0.34% from income and 0.61% from appreciation.

Prices for the trees themselves have fallen. South Carolina Forestry Commission data show average statewide pine pulpwood stumpage prices dropped about 33%, from $5.67 a ton in the third quarter of 2025 to $3.79 in the third quarter of 2026. Pine sawtimber fell about 6%, from $22.78 to $21.47 a ton. Hardwood sawtimber bucked the trend, climbing about 40%, from $16.04 to $22.52.

Pat Dorn, founder of Anchor Investment Management in Columbia, South Carolina, and a former chairman of the South Carolina Forestry Association, owns 2,500 acres in the state’s upstate region. He’s pulled back. “Timber is a very low return investment. I have curtailed my investments,” he said. Sluggish housing activity means growers are producing more timber than the market needs. “Supply beats demand, and that causes flat prices. Timber is not an investment I would make currently,” he said. Dorn said pulpwood has historically reached $12 to $18 a ton, and prices could recover if housing does, since pine sawtimber goes into new-home lumber.

The Bureau of Labor Statistics’ producer price index for logs, bolts, timber, pulpwood and wood chips rose slightly in September, but prices have mostly declined since summer 2022, about four years. The index tracks what producers receive, not land values or investment returns.

Not as Passive as It Looks

Michael Martin, a timber owner in western New York and vice president of market strategy at brokerage firm TradingBlock, said the romantic image misleads. Direct ownership is highly illiquid and brings management costs, property taxes, harvesting expenses and exposure to local timber markets. Owners also face risks from wildfire, pests, disease and trespassers who hunt or cut trees.

Owners who don’t shop around can lose out, Martin said. “If you simply go with a small local outfit without getting competing bids, you don’t always know if you’re getting the best price.” Partial timbering every ten years or so has barely covered his property taxes. “At the end of the day, I barely break even,” he said.

Dorn said the real return comes from somewhere else. “The return is in the land, not the timber,” he said, advising buyers to look for prime parcels outside growing metropolitan areas. Recreational and lifestyle buyers have also supported land values beyond what harvesting earns, Shepard said.

A Millennial Appeal, Without a Stampede

Jake Kennedy, a Nashville-based realtor, said younger buyers are curious, though firsthand evidence of a broad trend is hard to find. He noted that his generation has lived through the dot-com crash, the Great Recession, a pandemic, major housing swings and inflation. “One lesson from all of that we have learned is that scarcity matters when it comes to places to park your money,” he said. “But you can’t manufacture another 500 acres of land.” He cautioned that durability doesn’t guarantee profitability.

“I don’t think my generation is suddenly giving up on houses and becoming timber barons,” Kennedy said. “However, I do think we are a lot more interested in alternative places to store wealth than previous generations might have been.”

For people without land or capital, funds offer a lower bar. Kassam cited the iShares Global Timber & Forestry ETF (WOOD), with roughly $260 million in assets, and the Invesco MSCI Global Timber ETF (CUT), with roughly $30 million. Neither owns timberland or trees directly. WOOD took in about $73 million in net inflows over the past year, according to ETF Database. Kassam pointed to “persistent housing shortages across many parts of the U.S. and growing bipartisan support for policies aimed at increasing housing supply and improving affordability” as the basis for the investment case.

Junyi Liu, professor of economics at Soka University of America, said he saw no evidence of a boom. For retail investors, he said, timberland differs from “the simple ‘trees grow while you wait’ investment story.”

Why This Matters:

Interest in timberland is as much a symptom as a strategy. When younger Americans start weighing forestland and thinly traded funds because owning a home feels out of reach, high prices, costly mortgages and tight inventory are pushing people toward riskier, less liquid ways to build wealth. Institutions can absorb a 0.95% quarterly return because they have decades to wait; a household can’t. The bipartisan push to increase housing supply that Kassam cites could ease that pressure, and the article suggests it may also lift lumber demand. Without it, the gap between those who can wait out the market and those who can’t looks set to persist.