Institutions Buy Timberland as Housing Buyers Are Shut Out

Institutional timber managers bought 55% of the timberland acres that changed hands in 2025. Younger Americans priced out of housing are considering the same land as another place to hold wealth. Bank of America said institutions have been buying about one million acres a year, and expects that pace to continue. Timberland is a long-term asset, while people seeking a foothold in housing face elevated home prices, higher mortgage rates and limited inventory.

Who Holds the Land

Bank of America’s 2026 outlook reported a three-year streak of dealmaking at roughly one million acres annually. Timber managers sold 15% of the acres that changed hands in 2025. Large managers buy for pension funds and endowments, which can wait decades for a recovery in the currently slumping U.S. housing market and improved lumber prices.

The National Council of Real Estate Investment Fiduciaries’ Timberland Property Index tracks privately held U.S. timber properties owned at least partly for institutional investors. It returned 0.95% in the second quarter of 2026. Income accounted for 0.34%, and appreciation for 0.61%.

Pat Dorn, founder of Anchor Investment Management and a former chairman of the South Carolina Forestry Association, owns 2,500 acres in South Carolina’s upstate region. He said sluggish housing activity has left more timber growing than is needed. “Supply beats demand, and that causes flat prices. Timber is not an investment I would make currently,” Dorn said. “I have curtailed my investments.”

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. The index measures prices producers receive for those products, not timberland values or investment returns.

Returns Depend on Land and Time

South Carolina Forestry Commission data show average statewide pine pulpwood stumpage prices fell from $5.67 a ton in the third quarter of 2025 to $3.79 in the third quarter of 2026, a decline of about 33%. Pine sawtimber fell about 6%, from $22.78 to $21.47 a ton. Hardwood sawtimber rose about 40%, from $16.04 to $22.52.

Trees take years to mature. Pulpwood trees used for paper towels and notebook paper can take 12-14 years; trees cut for housing can take 25 years. Pine sawtimber becomes lumber for homebuilding, while hardwood sawtimber includes oak used for flooring, furniture and pallets. The products have different buyers, so their prices can move in different directions.

Dorn said pulpwood prices historically reached $12 to $18 a ton and soft timber was $35-$40 twenty years ago. He said prices could recover if housing does, because pine sawtimber used for new-home lumber tends to follow homebuilding. “The return is in the land, not the timber,” he said, advising investors to look at parcels outside growing metropolitan areas where populations are spreading.

Michael Martin, a timber owner in western New York and vice president of market strategy at brokerage firm TradingBlock, said direct ownership brings management costs, property taxes, harvesting expenses and exposure to local markets, wildfire, pests, disease and trespassers. He said 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.

Housing Policies, Investment Proxies

Nadeem Kassam, chief investment strategist at Marnoa Private Wealth Counsel, said elevated home prices, higher mortgage rates and limited inventory have made homeownership more difficult for many millennials. Some investors are seeking other ways to participate in real assets and potentially build equity without directly purchasing a home, he said.

Kassam cited bipartisan support for policies aimed at increasing housing supply and improving affordability. If those efforts lead to increased homebuilding, lumber and wood-product demand could benefit, he said. The proposed route links affordability to more construction; it doesn't give buyers direct ownership of timberland through the funds discussed.

The iShares Global Timber & Forestry ETF (WOOD) has roughly $260 million in assets, and the Invesco MSCI Global Timber ETF (CUT) roughly $30 million. Neither directly owns timberland or trees. Instead, they hold publicly traded companies involved in timber, forest products, wood manufacturing and other parts of the housing value chain. WOOD received about $73 million in net inflows over the past year, according to ETF Database.

Jake Kennedy, a Nashville-based realtor, said younger buyers are interested in alternative places to store wealth, but he added, “I don't think my generation is suddenly giving up on houses and becoming timber barons.” Junyi Liu, professor of economics at Soka University of America, said he saw no evidence of a boom. Returns can come from biological growth, timber prices and land appreciation, Liu said, and owners may delay harvesting when prices are unfavorable. For retail investors, he said, timberland isn't simply a “trees grow while you wait” investment story.