October 24, 2020

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Wood stock faces high demand, higher prices

Pandemic shutdowns combine with renovation boom to create supply shortage

RUTH BONNEVILLE / WINNIPEG FREE PRESS</p><p>Matt Wickstrom, operations director with Hearth Homes, says price increases to lumber and wood panelling came ‘without much warning.’</p>

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Matt Wickstrom, operations director with Hearth Homes, says price increases to lumber and wood panelling came ‘without much warning.’

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In May, Matt Wickstrom’s company bought the lumber for a new house it’s building in River Heights. It was good timing.

Back then, the wooden materials — oriented strand board (OSB), spruce, pine, fir, a lot of other terms a Free Press reporter hadn’t heard of — came in at around $30,000. If he bought them now, it’d be a different story.

Over the last month, prices for lumber and wood panelling have skyrocketed, local homebuilders and trade groups say: OSB prices have shot up from $12 per sheet to between $25 and $30, plywood from $16 to $30 or more, and spruce-pine-fir two-by-fours up US$760 per thousand board feet.

"The price increases came really quickly, and without much warning," says Wickstrom, the operations director for Hearth Homes.

Professionals like Wickstrom understand the market fluctuates, but normally not like this. And the increased price for materials could spell an equivalent increase in home-building costs: depending on the size, a standard single-family home could cost $5,000 to $15,000 more if it uses a proportionate amount of lumber.

The price increase isn’t localized to Manitoba, and it can be attributed to COVID-19 as well as the market conditions that preceded the pandemic, says Liz Kovach, the president of the Western Retail Lumber Association.

Last year, pulp and sawmills in British Columbia experienced curtailments and closures, drastically decreasing the national supply. There were also widespread forest fires and pine-beetle infestations that significantly hampered production. "All that creates a bit of shortage," she says.

Then, in March, mills were forced to shut down as the pandemic entered the picture. When, and if, they reopened, the mills did so at limited capacity, creating an even larger potential supply chain issue.

"If you had asked in March, the prediction (from the industry) would’ve been we’d need fewer materials," said Kovach. But then, as consumption habits shifted, Canadians began focusing on home renovations and do-it-yourself projects and buying materials from the already-winnowed pool available.

"It was truly that DIY market that nobody predicted," said Kovach.

All those circumstances — high demand, low supply, renewed interest in renovations, a booming housing market — have contributed to the sharp increase in material costs.

"Everyone’s building a fence or a deck, so much so that it’s hard to get our hands on (certain materials)," said Josh Dueck, a co-owner of custom home firm Dueck Builders.

For homebuilders or contractors, it means quotes made two months ago could be inconceivable from a pricing perspective, leading to potentially difficult conversations with clients over costs. Prices are generally stable, but now, those tradespeople are considering whether it’s worth it to buy now or wait and see if prices dip.

Kovach said the situation is dynamic, and that the industry expects it will take some time before it returns to normal. "I think everyone is caught a little off guard with how it’s gone," she said, however, with the pre-existing market conditions, it makes some sense, she added.

As summer winds down, the renovation market generally does, too — very few people want to build a deck in -30-degree weather — so Kovach said the retail market should cool down when snow falls, and the lumber backlog should be somewhat filled by then.

However, for now, the best time to have bought lumber is several months ago.

Wickstrom knows the next few months will come with new challenges for all builders, but said his hope is Winnipeg returns to its usual, level market.

ben.waldman@freepress.mb.ca

Ben Waldman

Ben Waldman
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Ben Waldman covers a little bit of everything for the Free Press.

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