Home renovation savings prove elusive as wood prices at record highs
CALGARY – Canadian consumers have many ways to save money on home renovations despite a pandemic-driven surge in demand that has jolted lumber and construction panel prices to all-time highs.
However, such advice usually falls on deaf ears, experts say.
Instead, customers are doubling down, switching to more expensive materials as the cost difference with wood shrinks, adding extra elements to their projects and pre-ordering lumber to lock in price and ensure supply.
*LUMBER FUTURES EXTEND RECORD RALLY TO TOP $1,500 FOR FIRST TIME
— *Walter Bloomberg (@DeItaone) May 5, 2021
“If their plan was to build a pressure-treated deck in their backyard, then a lot of people are now saying, ‘You know what? For about the same price, I can get a hardwood deck or a composite deck or a heat-treated lumber deck,”’ said Brad Swanson of Swanson’s Home Hardware Building Centre in Kitchener, Ont., a family owned operation since 1982.
Lumber limit up pic.twitter.com/78AqkVRunL
— IGSquawk (@IGSquawk) May 6, 2021
?? U.S. #lumber futures rallied as much as 4% to $1,541 per 1,000 board feet Wednesday, the highest ever for a most-active contract – Bloomberg pic.twitter.com/pKLe7MeuGJ
— Christophe Barraud? (@C_Barraud) May 6, 2021
Almost forgot my daily #lumber update! Up 530% since the last in March last year. pic.twitter.com/b4E9IPB2tE
— jeroen blokland (@jsblokland) May 6, 2021
“They’re a little bit more (expensive) but they’re within people’s budgets. If they’re going to spend $5,000 on a pressure-treated deck and a composite deck is only $5,500, or maybe $6,000, they’re thinking, ‘That’s not a bad investment.”’
Customers are starting to have “almost a hoarding mentality,” Swanson said, adding many are ordering lumber months ahead of construction.
When a hundred dollar bill buys you just one sheet of plywood, you know lumber prices have gone through the roof.
Art Hicks at Witless Bay Home Hardware explains how much prices have soared, and some of the reasons why. Read our full story: https://t.co/mdkkfbhHir#Covid19nfld pic.twitter.com/jOLMsC9W2p
— CBC Newfoundland and Labrador (@CBCNL) May 5, 2021
As home prices in many markets rise, renovations are being seen as a smart way to use pandemic-era savings from missed vacations or skipped events to enhance and preserve the value of the family’s largest asset, he added.
Two-by-four wooden studs used in framing walls are 40 per cent more expensive compared to a month ago and three times as high as a year ago, said Allan Janzen, manager of the Windsor Plywood store in northeast Calgary.
A 12-foot-long, two-by-six-inch pressure-treated wooden board for a deck costs about $27 now, up from about $12 a year ago, he said, while his most popular composite decking board is about $44, up only slightly from last year.
“When you’re comparing one board to another board, $12 versus $44, that’s a $32 spread. Today, the spread is much lower (about $17),” he said, noting that many consumers are opting to spend a little more for the look and feel of composite decking, as well as its low maintenance needs compared with wood.
Lumber 1700, 3 days away from catching up with gold
— zerohedge (@zerohedge) May 7, 2021
Lumber is up 34 of the past 36 days
— zerohedge (@zerohedge) May 6, 2021
Lumber vs gold pic.twitter.com/4AQVKNL53y
— zerohedge (@zerohedge) May 5, 2021
The rise in the price of wooden studs has made the price of steel studs, mostly used in commercial buildings, more attractive for homeowners, said Ben Hildebrandt, one of the principal researchers with the Green Building Technologies department at the Southern Alberta Institute of Technology in Calgary.
When eight-foot wooden studs were $3 or $4 each, steel studs seemed uncompetitively pricey at $6.50, he said. Now that wooden studs are around $8.50, steel makes more sense.
When Hildebrandt built a garage last summer, he paid about $15 for each sheet of oriented strandboard or OSB, he said. Now, with OSB at $53 a sheet, more builders are considering using alternatives such as exterior fibreglass-based panels that sell for about $26 a sheet.
The use of recycled material is another money-saving option that also has environmental benefits, he added, although finding and preparing the materials for reuse adds uncertainty and labour cost.
“We do see lots of people looking for those items now that it’s even more expensive to get them brand new,” said Gui de Souza Rocha, operations manager for Habitat for Humanity’s ReStore in Regina, Sask.
“All of our items, either used or gently used, are in good condition and we price them accordingly. You’ll always be saving money coming to the ReStore.”
He said he’s seeing an increase in customers looking for recycled building components and materials, which are usually sold for half or less of the retail price, but there’s also been a decrease in donated material, possibly because builders are being more cautious about worksite waste.
With historical high #lumber prices, the #deconstruction industry is proving itself to be a creative and environmentally friendly alternative to new wood. We explore why the prices are soaring, what deconstruction is, and the role it fills. https://t.co/VqT9czbRZO pic.twitter.com/9Oy02GmQ7E
— Capital Daily (@CapitalDailyVic) May 5, 2021
The current level of consumer demand for renovations amid surging prices is “completely unprecedented,” says Ralph Oswald, 61, who recently sold his Winnipeg business, Oswald Construction Ltd., after more than 40 years in the renovation industry, but still works there as a senior manager.
He said his 13 employees are very busy. In fact, this could be the most active year ever for the business.
There are lots of ways to save money on the large-scale home renovations or additions his company takes on, some contracted for $150,000, $200,000 or more, said Oswald.
“The costs of your finishes, your fixtures, your flooring, those sorts of things. You could choose to downgrade your expectations a little bit. I mean, there are $400 toilets and $800 toilets,” he said.
Some clients are ordering items from online sites such as Amazon or Wayfair to save money, he said.
But most are swallowing the extra cost and sticking with the plans they’ve made, said Oswald. Some projects were conceived before COVID-19 existed and have been awaiting final designs and permits for over a year.
He added it’s almost impossible to completely mitigate the higher cost of wood, short of cancelling or dramatically scaling back the project.
“I can buy a cheaper toilet but I’ve got to use the right two-by-fours and two-by-sixes and sheeting and joists. You can’t cheat on that.”
Commodity prices over last year…
WTI Crude: +148%
Heating Oil: +123%
Brent Crude +121%
Natural Gas: +38%
— Charlie Bilello (@charliebilello) May 6, 2021
The asteroid that killed the dinosaurs was also transitory.
— Sven Henrich (@NorthmanTrader) May 4, 2021
The crypto exchange @FTX_Official launched a new lumber futures contract in just two hours of work.
According to founder @SBF_Alameda, yesterday users requested it, so then they just went ahead and built it right there and then.https://t.co/TMkrHLvtrS pic.twitter.com/YiAMXUpDRH
— Joe Weisenthal (@TheStalwart) May 6, 2021
If you had bought $200,000 of lumber in March of 2020 you'd now have $1,600,000 of lumber in a house that is being eaten by termites. pic.twitter.com/JXOiXQNAJ6
— Cullen Roche (@cullenroche) May 5, 2021
With the Bullish Consensus at 94%, perhaps it's time to hammer down some profits and take some wood chips off the table…#lumber pic.twitter.com/nWXlOrnJts
— Kevin Duffy (@kevinduffy1929) May 7, 2021
People are stealing trees on Vancouver Island — could the soaring cost of lumber be to blame? I Reporting by Briar Stewart pic.twitter.com/wAT3R4DNOn
— CBC News: The National (@CBCTheNational) May 5, 2021
*LUMBER FUTURES EXTEND RECORD RALLY TO TOP $1,500 FOR FIRST TIME pic.twitter.com/VL15J3l3uZ
— Jim Bianco (@biancoresearch) May 5, 2021
What's driving up lumber prices? https://t.co/2D7vMOcnUQ pic.twitter.com/PBlmzzEkyW
— Financial Post (@financialpost) May 6, 2021
Expensive lumber costs have added $36,000 to the average price of a new home, report finds https://t.co/fg9Zxy0vUW
— Business Insider (@BusinessInsider) May 3, 2021
As the pandemic crushed the US economy last spring, sawmills shut down lumber production to brace for a housing slump. The slump never arrived, and now there isn't enough lumber to feed the red-hot housing market. https://t.co/PD5tfLVknc
— CNN Business (@CNNBusiness) May 6, 2021
Absolute psychos went did it. The crypto exchange FTX set up a lumber futures market. https://t.co/DdoyANlfSj
— Joe Weisenthal (@TheStalwart) May 6, 2021
Wood prices are on fire. @jackhough discusses what's behind the mania in the lumber market and how long it could last on this week's Streetwise podcast. Listen now: https://t.co/4BQQzVKbkO pic.twitter.com/5BbVwSG3xS
— Barron's (@barronsonline) April 30, 2021
The biggest lesson in all of this is that while money may grow on trees, lumber does not.
— Justin Paterno (@zerobeta) May 6, 2021
This report by The Canadian Press was first published May 6, 2021.