In a Vancouver market where homes are going for six figures above the asking price, the cost of building a new home has jumped by thousands over a matter of weeks. Ron Rapp, CEO of the Homebuilders Association of Vancouver, points to the high price of lumber as yet another factor driving up the cost of housing in the city’s heated market.
“This is adding an average of about $30,000 to the cost of a say, 2,200 square foot, two-storey, three-bedroom, two-and-a-half-bath home,” he says.
With the price of lumber rising so quickly, home builders can see tens of thousands of dollars tacked on to the cost of their projects in a matter of weeks.
Rapp says demand for lumber is high all over North America right now, and there’s no obvious solution on the supply side.
“There is some optimism that we could be seeing some relief by the fall, but there is a growing sentiment that this is probably going to be the case that we are dealing with well into 2022,” he says.
Brian Menzies, with the Independent Wood Processors Association of BC, says the sector is still subject to the same pre-pandemic pressures, like market consolidation and the U.S. market.
“At a time when you think prices are high, the remanufacturing sector that we’re in everybody thinks it’s easy to operate. Actually, it’s more difficult to operate and it’s difficult to extract the value that we need,” he says.
He says more people demanding supplies for their own projects, especially in the U.S., came as a surprise.
“We were already behind in inventory and now we’re trying to meet that demand,” he adds.
Rapp says some lumber supply is already being allocated, so builders may soon have to wait to get everything they need for a job, and it’s easy to see a point where this starts to impact how many new homes can be built in the short term.
He notes the lumber supply was already low prior to the pandemic and many mills are now running at reduced capacity.