Lumber prices may be in the stratosphere, but construction is still booming, home builders say
'This year was like no other,' says local president; high prices expected for months to come
Sticker shock over lumber prices that have soared over the last year does not seem to have beaten down a desire to build or do repairs in Newfoundland and Labrador homes, a trade group says.
The Canadian Home Builders' Associations says supply and demand are driving the skyrocketing prices of lumber, although it also says the industry is still booming.
A key factor: the COVID-19 pandemic, which affected supply last year and inspired consumer demand, particularly among many people who have been working from home.
CHBA executive officer Alexis Foster told CBC News the pandemic shut down lumber mills across Canada and the United States, and they have yet to fully return to pre-pandemic levels stateside.
Rising transportation costs, Foster added, are also fuelling high prices.
Then there is the demand.
"We have people looking to do renovations to their homes, new home builds. You're in your home a lot more, you're finding out what's bothering you more, so you want to fix that," Foster said Tuesday.
Home renovations are up 26 per cent over the last year across Canada, Foster said. In Newfoundland and Labrador, she said, work has been driven by the provincial government's residential construction rebate program.
CHBA-NL president Grant Cooper said the rebate program has done wonders for the construction industry over the pandemic. The program offered a 25 per cent rebate for renovation projects up to $10,000, and the same for new home construction.
"We've been hurting for a number of years leading up to this. It was quite slow — the demand was down," Cooper said.
"In May to June last year, things started to pick up, which it typically does in the summer. But this year was like no other and we're getting more and more calls from homeowners that despite the increase in prices are still inquiring about getting work done on their house."
Not predicting a drop this year
Art Hicks, owner of Home Hardware Building Centre in Witless Bay, told CBC News lumber prices today are three to four times what they were before they started climbing in 2020.
Pre-cut 2x4 was $3.39 before the pandemic, but now it's about $13, Hicks said. Oriented strand board, or OSB, was once $13 and now costs around $62. Plywood has tripled, from $21 to $65. Hicks said retailers have had no choice but to pass on wholesale hikes at the cash register.
Cooper said he feels for anyone looking to complete renovations and home projects right now, but said there are silver linings for those looking to build a new home.
"Interest rates are at an all-time low. They may be saving more than they ever have because travel is restricted. They're not spending money that they used to spend," he said. "So this may be a great time to save up that deposit and put that toward the new build."
For those who are willing to wait, Foster said, the CHBA predicts lumber prices will not drop this year, and maybe not even next year. Cooper said prices might never return to pre-pandemic levels.
"This is something that we're seeing in our national office, [this] lasting until at least 2022," said Cooper.
"At the end of the day, it very much is supply- and demand-driven, and until demand comes off, we're still going to see shortages and price increases. This may be the new norm going forward for quite some time."
With files from Carolyn Stokes
