Homeowners who resisted the urge to renovate in the first 18 months of the pandemic may now see their chance as timber prices, which soared to dizzying heights in the spring, have fallen back to earth.
At the family-run Peacock Lumber in Oshawa, Ontario, owner Glen Peacock said retail prices have “slumped” in recent weeks. A two-and-a-half-foot, two-by-four-inch piece of wood that was $ 12.65 on June 1 is now selling for $ 3.95, Peacock said – basically what it would have been sold for before the boom.
“It was amazing that it took so long for people to say this is too much money,” said Peacock. “People who have waited with their projects when they could will be in a much better position.”
A pandemic-related increase in home renovations and do-it-yourself projects triggered shock waves through the home improvement and construction industries at the beginning of the year. North American timber prices hit record highs of more than $ 1,600 per thousand board feet in May – three times higher than pre-pandemic levels.
The price roller coaster resulted in customers pre-ordering wood months in advance to ensure supplies and even sparked a spate of opportunistic thefts from construction sites across North America.
But the ride has come down even faster than it has increased, and that means many retailers have been trying to get rid of products they bought at higher prices.
“With timber prices falling as fast as they were, everyone had to sell their overpriced inventory at a loss,” said Joel Seibert, owner of Mountain View Building Materials outside of Calgary. “The ideal situation would have been if the price would have taken twice as long to fall again than it would to rise.”
Liz Kovach – president of the Western Retail Lumber Association, which represents timber, building materials and hardware stores in western Canada – said the pandemic price bubble had burst with the arrival of summer. Warmer weather and the easing of COVID-19 restrictions across the country resulted in Canadians traveling more and spending less time on projects around the house, she said.
“It was a challenge on the retail side,” said Kovach. “We saw a lot of sales prices just so they could move the materials.”
The falling prices have already led to cuts and work restrictions in sawmills. Canfor Corp. based in Vancouver announced in late August that it would operate all of its BC sawmills at 80 percent capacity until market conditions improve. Conifex Timber Inc., also based in Vancouver, announced on August 20 that it would cut timber production at its Mackenzie, BC sawmill for a period of two weeks.
The rapid rise in the cost of wood earlier this year added “tens of thousands of dollars per home to the cost of building new homes,” said Kevin Lee, executive director of the Canadian Home Builders’ Association. And while consumers may already benefit from lower prices at home improvement stores, home buyers entering into new construction purchase contracts are still seeing higher prices.
“Builders still have to clear their stocks because they have bought higher-priced sawn timber. It takes a while to empty the system, ”said Lee. “Yes, wood prices from the mills dropped dramatically in the summer, but unfortunately it took a while to reach the rest of the industry and consumers.”
Lee said that when it comes to building new homes, pricing is made more difficult by the ongoing supply chain challenges associated with a pandemic. While lumber-related difficulties have subsided, home builders are still grappling with delivery delays and price inflation on everything from plumbing and electrical products to kitchen furniture.
“It’s not like the three to five times price increases we’ve seen in lumber, but I’d say we see an average of 10 percent increases in prices for everything, including the kitchen sink,” Lee said. “And we’re still seeing delays in closings just because we can’t get any products or materials.”
In a statement to customers earlier this week, Paul Quinn, an analyst with RBC Dominion Securities, said that as autumn arrives, timber markets are starting to tick a little higher. Home centers are seeing increased traffic as customers try to complete projects before winter, Quinn said, and retail demand is usually a leading indicator of wood prices.
—Amanda Stephenson, The Canadian Press
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