What soaring lumber prices mean for your home renovation
TORONTO -- Lumber prices in North America have reached levels unseen before, driving up the costs of home renovations and general contracting services across Canada.
Ian Dunn, president of the Ontario Forest Industries Association (OFIA), says there are a variety of factors amid the COVID-19 pandemic that have contributed to this increase in cost.
"Lumber is ultimately a commodity and it responds to commodity-type pricing," Dunn told CTV's Your Morning on Tuesday.
Dunn explained that supply and demand has helped increase the price of lumber by roughly 170 per cent in the last six months.
"On the supply side of things… and as a result of the health and safety concerns, we scaled back operations in the mills. There's fewer people working the mills and that's contributed to a bit of a supply gap that we continue to see today," Dunn said.
He added that some sawmills were closed altogether for a period of time at the beginning of the pandemic as well as intermittently due to outbreaks.
On the demand side, Dunn said an increase in the renovation market is heavily contributing to current lumber prices.
"People are working at home, this is a great time to get a new fence, a new deck, and home-buying in general is doing quite well and actually better in some situations than we might expect under normal situations," Dunn said.
A real estate survey conducted by TD Bank in October found that home renovations in Canada had increased by nearly 40 per cent, while 37 per cent of respondents said they were planning some kind of home renovation in the near future.
The soaring lumber prices have caused home renovations to become more expensive as some of the most common building materials for projects like decks and fences have tripled in price over the past year.
According to Natural Resources Canada, Eastern spruce-pine-fir two-by-fours were selling for $1,400 per thousand board feet in March 2021, and Western spruce-pine-fir two-by-fours for $1,200.
In March 2020, these prices were between $550 and $600 per thousand board feet.
Dunn explained that this means the price of a square foot of lumber jumped from about $11 to $35 within a year.
For those looking to renovate, Dunn said consumers should factor lumber prices -- not just labour and delivery -- into their budget before building.
According to the Canadian Home Builders' Association, the increased price of lumber can add about $30,000 in additional costs to renovate a 2,500 square foot home.
In addition, Dunn said consumers are trying to be more environmentally responsible with their renovation projects, and wood is at the top of the list for sustainable and energy efficient materials, also adding to the increased prices.
"Consumers have realized that forest products are really critical to a sustainable bio economy, and there's a really good sustainability story here in terms of low carbon renewable and sustainable forest products," Dunn explained.
While Dunn said mills are doing what they can to catch up to the demand, he says they "can’t really just flip a switch to increase lumber production."
"There needs to be a supply of the raw material, the timber, and we're very fortunate here in Ontario, we have a healthy, abundant and productive crop forest that provides timber to our mills, but again it takes time," Dunn explained.
"You cannot just change forest management planning direction in the province."
As well, Dunn said capacity at the mills is also hampering the ability to meet demand.
"We are seeing more an increased investment in our facilities in Ontario specifically, but again it takes time, it can take months to years to install this equipment, but ultimately capacity will increase and we will see an easing of prices over time," Dunn said.
When those prices will ease, Dunn isn't sure.
"It's very, very difficult to say how long these prices will last. Inventories of homes remains quite low, so that would indicate to us that the demand is going to continue to be there for quite some time," he said.
While Forest Economic Advisors (FEA) told CTV News Toronto it expects lumber prices to remain high into the fall of this year, Dunn said sawmills are working to address the problem as quickly as they can.
"I would say for the foreseeable future consumers can expect high prices. However, as I mentioned, you know mills are going to ramp up their production, and we will see an easing of prices over time," he said.