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Record lumber prices adding thousands of dollars to new home building costs

Lumber prices soaring

Soaring lumber and wood panel prices are adding thousands of dollars to the cost of building a home in Canada as strong renovation and new housing demand meets a shortage of supply.

The latest price list from research firm Random Lengths shows SPF (spruce, pine, fir) two-by-four boards at a "mindboggling" record level of US$760 per thousand board feet, up $82 on the week, according to Kevin Mason, managing director of ERA Forest Products Research.

The run-up over the past several weeks has demolished the previous North American record high of US$650 set in mid-2018, he said, adding prices for other building products are rising just as quickly.

Homebuilders say the increases this year to date will translate into $8,000 to $10,000 more to build a typical single-family house in Canada.

Dave Desormeaux, chief operating officer of Jayman Built Homes in Calgary, says it will have to consider passing on its higher costs to customers when lumber supply contracts expire at the end of August. It aims to build about 700 homes this year in Edmonton and Calgary.

But Bobby Richardson, whose Woodlands Mountain Homes builds five or so custom homes per year in Bow River Valley communities west of Calgary, says he has no choice but to pass his higher costs on to current customers.

"You've got buyers who care more about just getting product than they do about the price," said Mason.

"The companies have purchase orders sitting on the desk and it's, like, when you get product, send it to us, and just tell us what we owe you. Buyers don't care. Right now, it's an absolute panic, a scramble to get product."

Mason says the rise in demand comes from increased interest in renovations by people working from home during the pandemic, along with a strong housing market in Canada and the U.S. fuelled in part by people's renewed appreciation of having their own homes.

Meanwhile, a shortage of wood fibre in British Columbia due to forest devastation wrought by a mountain pine beetle infestation and recent wildfires has led to closing several mills over the past year that aren't likely to reopen soon.



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