Soaring lumber prices affecting Calgary home renovations, thefts on the rise
CALGARY -- A surge in lumber prices over the last year has left many Calgarians scratching their head over whether or not to build or renovate their homes.
Benchmark prices according to the Chicago lumber futures at the start of the pandemic were just over USD$400 per thousand board feet, but hit the $1,700 mark just last week.
The news is concerning for developers and realtors like Puma Banwait with Century 21.
He ordered a lumber package for a new custom-made luxury home at a price of $108,000 back in November, but the price for a similar home today has now skyrocketed to $173,000.
“Now we’re paying $75,000 more for the same house just in the cost of lumber and then steel has gone up 20 per cent, we have labour costs going up, drywall costs are going up and the margins are very thin,” Banwait said.
“It makes us debate whether we want to continue to build right now or wait for the lumber prices to come down.”
Banwait added that in some cases, builders have had to give cash deposits back to clients because of the unforeseen costs.
Liz Kovach with the Western Retail Lumber Association agreed that the industry is experiencing unprecedented times due to the COVID-19 pandemic.
She said orders made in November before the pandemic were able to be supplied, but with Canadians staying home due to an inability to travel, the DIY market has increased exponentially.
“This is something that we’ve never seen, product is on allocation and mills are working at full capacity to meet the demand, but as the demand increases so does the value,” Kovach said.
“The low interest rates are also propelling the housing market and we’ve really figured out a lot of people have the disposable income to purchase a new home and are doing so.”
AVAILABILITY OF LUMBER
Although it’s not just the high demand to build. Kovach added that availability of lumber products are an even bigger issue.
Most notably, engineered wood products in plywood and OSB have skyrocketed in price because the vast majority are harvested in areas affected by hurricanes in the gulf coast and in Texas, which recently experienced a deep freeze.
“When you have 160 plants that are damaged due to the unusual freeze in Texas and they’re not back to full operation, it means that the resin plants are not expected to recover until July,” Kovach said.
“That just continues to add more pressure onto those products as well.”
POLICE NOTICE INCREASE IN LUMBER THEFTS
The Calgary Police Service has noticed an increase in the theft of lumber and other building supplies from construction sites as the price for materials increases.
Investigations are ongoing as several incidents have been reported to officers.
In a statement from Nick Wilsher with the CPS Crime Prevention Unit, he stated that the police are aware of an increase in lumber theft activity most notably in the north-central and deep south and southeast areas of the city where new construction activity is high.
“The cost of lumber is increasing as is the price of other construction materials due to supply issues related to the impacts of COVID-19,” Wilsher said.
“We are working with the construction industry to address these thefts and determine when investigative steps can be taken
If Calgarians see any illegal activity, police ask you to report it to the CPS non-emergency line at (403) 266-1234. Tips can also be reported anonymously through Crime Stoppers at 1-800-222-8477.
LUMBER PRICES LIKELY TO REMAIN HIGH: ATB FINANCIAL
As COVID-19 restrictions ease in the United States, the spring construction season is now well underway which has increased the demand and price for lumber south of the border.
At the same time, Canadian residential construction is also expected to do well this spring. According to the latest data from Statistics Canada released last week, the value of residential building permits has cleared the $8.0 billion mark for the first time and is now 61 per cent higher in March than two years earlier before the pandemic.
ATB Financial Deputy Chief Economist, Rob Roach added that this is once again a classic case up supply and demand.
“Demand went up right when supply was waning so you put those two things together, fast forward now to the spring of this year, there’s a bit of a U.S. housing boom, it’s spring time and producers still haven’t caught up,” Roach said.
“Another factor in this is really low interest rates, not for everybody, but those that can afford it, which has really spurred new home construction in the U.S. that had been relatively slow since the great recession of 2009.”
Roach said lumber prices will likely remain high at least in the short term for most of the rest of 2021 as lumber production aims to catch up with demand.