Lumber is up about 93 percent since then, slightly less than the Standard & Poor's 500-stock index. But there's good reason to believe that timber will continue to grow, assuming the housing market improves.
And the housing market has been doing just that the past 12 months. New home starts have grown at a seasonally adjusted pace of 23.5 percent since June 2011.
We've been down this road before. Housing starts jumped in 2010 as well, and then fell back, bringing lumber prices with them. But housing is incredibly affordable today.
The current average 30-year fixed-rate mortgage rate is 3.55 percent, according to mortgage giant Freddie Mac. That's a tad above last week's 3.49 percent but still in the holy-smoke-that's-low category.
Home prices, too, are low. The S&P/Case-Shiller home price index gained 2.2 percent in May, but that's still where they were in the summer of 2003.
Low rates and low prices make houses more attractive to buy than rent in many cities, says Mark Zandi, chief economist for Moody's Analytics. And even though home prices have risen in many areas, rents have risen, too. "In some distressed markets, it's a screaming buy," Zandi says.
The inventory of new homes is at a 50-year low, says the National Association of Realtors. Should the housing recovery continue, demand for new houses — and timber — should rise, too.
In the meantime, timber producers have cut back their production. "The thing about a tree is that it keeps growing," says Stuart Benway, senior analyst at Standard & Poor's "If you don't cut it down today, next year it will be bigger. There's no hurry for these guys to cut down the trees."
And, says Benway, it takes more than a saw to produce lumber. You also need people and trucks to cart it to sawmills and to market. "Truck drivers have gone on to other jobs," he says.
For those who prefer to own their timber via stocks, there are real estate investment trusts, or REITs, that are primarily in the timber business. REITs, by law, have to pass nearly all of their taxable income on to investors. For that reason, these timber REITs typically have above-average dividend yields — a reward for being patient.
But wait, you say. I don't want any stinking stocks. OK. You might consider a direct investment in timber. Hardwoods such as walnut, for example, are extremely valuable. A walnut tree with a 36-inch girth in good condition can be worth as much as $30,000, says Mike Saunders, professor of silviculture at Purdue University.
You'll need sandy, well-watered soil that doesn't flood often. You'll need to mow around the trees for the first five years or so, so weeds don't choke them out. You'll need to prune and thin your trees to get the best prices. And you'll need to keep the deer away.
And you'll need patience. A good walnut tree — or most good hardwoods — needs about 60 to 80 years to get the right color and grain for prime veneer. "Some people plant them for their grandkids' college," Saunders says. How long to produce that 36-inch tree? About 120 years.
If you want, you can invest in timber REITs for current income and hardwoods for the generations a-comin'. And you can always eat the nuts.