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April 23, 2021 | Gerald Vander Pyl

New homes and renovation services now come at a premium, as lumber shortage drives up construction costs

Anyone who has walked into a hardware store lately is aware of the current price of lumber, a situation that is creating issues for the homebuilding and renovation industries in Calgary and across the country.

"The story we're hearing in Calgary is similar to stories across Canada," said Brian Hahn, CEO of BILD Calgary Region, which represents members of the local homebuilding industry. "There's pressure on the lumber supply."

Hahn says the resulting price increases for building materials have added between $15,000 and $20,000 to the cost of a new single-family home in the Calgary market.

When the pandemic started a year ago, many lumber mills in Canada shut down and then took a while to reopen to full capacity.

"That supply situation got compounded with the fact that housing demand in the U.S., Canada and here in Alberta all went up, so supply went one way and demand went the other," said Hahn.

Hahn says other materials, such as aluminum and vinyl siding, are also seeing supply pressure, as are plumbing fittings, due to the freezing February weather in Texas. The broad nature of the supply situation means builders have some options to switch materials, he adds, but these swaps can't make up for the overall shortages.

"And it's not just new-home construction that has increased the demand," he said. "There's also been a significant amount of activity in the renovation sector."
"That supply situation got compounded with the fact that housing demand in the U.S., Canada and here in Alberta all went up, so supply went one way and demand went the other." - Brian Hahn, BILD Calgary Region CEO

Barry Johnson, co-owner of Dependable Renovations, says demand for renovations is high, and in talking to fellow contractors, "some are struggling to find lumber. Other guys are finding it and paying exorbitant prices for it – and everything in between."

Johnson says he talked to someone recently who went into a local home improvement store where certain 2x4s were $7 each, compared with $3 a few years ago. "He came back the very next day because he had to get some more lumber and a 2x4 (from the very same bundle) was now more than $9."

As another example, Johnson cites the price of 4x8 sheets of 3/4" plywood, something he uses quite frequently in renovation projects, which has gone from $40 or $50 a year ago to more than $100 today.

He has even seen people selling their leftover lumber from projects on Facebook Marketplace and Kijiji for much more than they bought it for.

Both Hahn and Johnson say these increased costs must eventually be passed on to consumers. "I think it's important for them to understand that costs have gone up dramatically," said Johnson.

Hahn says Calgary builders have dealt with adversity in the past and will continue to be innovative when it comes to building the homes people want at a competitive price.

He says with housing starts in the first three months of 2021 up 15 to 35 per cent in various areas of Alberta, the supply of building materials needs to catch up with demand before the current cost situation can change.

When that will happen remains unknown. "But there will be a supply response, I have little doubt about that," said Hahn.

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