Lumber prices are soaring so quickly builder Vince Roth is concerned it could start scaring off customers.
At Laebon Homes, spiking lumber prices are adding as much as $10,000 in lumber costs to new home builds. And some materials, such as flooring plywood, are scarce, said Laebon managing partner Steve Bontje.
The Western Retail Lumber Association said North American lumber prices have hit a record high. Two-by-four lumber that sold for $282US per thousand board feet a year ago cost $1,120 per thousand board feet earlier this month.
Skyrocketing prices are blamed on a number of factors. Supply was interrupted by fires, pine beetle infestations and temporary lumber mill shutdowns because of the pandemic, says the association, which represents 1,200 Western Canada companies, including hardware stores, manufacturers, suppliers and lumberyards.
On the demand side, a surge in house building, especially in the U.S., as well as a growing enthusiasm for renovation and do-it-yourself projects has put pressure on inventories.
Pull all of those issues together and you have a challenging construction season for central Alberta builders.
“It’s having a phenomenal impact. It’s a problem,” said Bontje on Tuesday.
“Obviously depending on the size of the house, you’re probably looking at $8,000 to $10,000 a house (in extra lumber costs).
“Now, the problem we’re having is supply. You can’t buy floor sheeting in the next month because there just isn’t any.”
The issues around pricing and supply are faced by builders is not a provincial, or even a Canada-wide issue.
“This is a North American issue,” he said.
Not only lumber is affected. The price for PVC piping used in homes went up 15 per cent at the beginning of March and nearly 20 per cent again at the beginning of April.
That price spike has largely been driven by demand — pushed even higher by the huge amount of pipe replacement required following the Texas winter storms, which cracked thousands of pipes in a state not used to that sort of onslaught.
Vince Roth, who specializes in renovations, garages and other projects for individual homeowners, is not impressed by the pricing he is seeing.
“Ridiculous is my favourite word for it,” said the owner of Roth Contracting.
So far, he has been able to complete his jobs without his material costs changing dramatically halfway through. He has kept his labour costs the same.
“But (the prices) are moving fast, to the point where I’m telling customers now that I can only guarantee my quotes for seven days on the material side of things. That’s kind of been the case since the middle of last summer.”
In less volatile times, his suppliers could give him a 30-day price guarantee that he could pass on to customers. For customers thinking of tackling a project this summer the window is narrowing to make a decision without risking paying more later.
“I think it’s making tough on my customers in that sense,” he said.
The price spike also threatens to put a damper on a business that had been going well, as people who are unable to travel because of COVID restrictions, tackled projects on their home renovations wish lists instead.
“My ultimate fear with the way things are going, is eventually — and I’m sure it has already started to a degree — it’s going to price people out of doing the kind of work that I do on a big scale.”
In some cases, a project such as a deck will cost double what it did last year.
The Central Alberta chapter of the Building Industry and Land Development Association (BILD) said surging lumber prices remain a “top concern” for its members, who represent everyone from home builders and renovators to tradespeople and lenders.
“The increased prices are adding thousands of dollars to the costs of new homes and renovations which in turn translates to higher costs for consumers,” said Tyler Hansen, BILD’s development manager for the Red Deer region.
“Prices are also fluctuating which is creating an unpredictable sales environment for our members who are already navigating through the effects of the COVID-19 pandemic.”
BILD is working with its national association, the Canadian Home Builders’ Association, to lobby the federal government to seek resolutions in any softwood lumber trade disputes while working with lumber producers and governments to ramp up supply and production to offset rising construction costs.