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Niagara Falls
Friday, July 12, 2024
Arch-i-text: Construction costs have escalated

Thinking of a home renovation, an addition, or a build? Be prepared, because the cost of your project under current market conditions is going to be significantly more than you think. And allow me to say that it is NOT the fault of your local contractor or builder.

Although it may be stating the obvious, we are living in challenging times.

Let’s consider softwood lumber for a moment. Twenty-four months ago, the humble spruce 2×4 in the local big-box store was priced at about $3. By mid-summer of 2020 it had risen to almost $9, then in November it was back down to below $5, and as of this month it’s selling for over $8.

Now, let’s assume that the cost of the lumber for framing a new house at the beginning of 2020 was $40,000. Today’s cost for that same lumber would be over $106,000!

How can this have occurred?

Well, it begins with the drastic loss of western softwood timber resulting from predation by the mountain pine beetle and the spruce beetle whose out-of-control proliferation is due to global warming. The resultant shortage of harvestable timber has led to the loss of about half of the western processing facilities.

Then along comes COVID. First, the mills anticipated a slowdown in housing starts and planned accordingly. That slowdown was shorter than projected and the mandated stay-at-home DIY'er demand for lumber rocketed to unprecedented heights, putting the mills in a desperate backorder position. Then came lockdowns. Any time a mill employee tested positive, the entire operation was shutdown, with associated delays to output and subsequent increased production costs.

After nearly catching up in the fall of 2020, once again, the December lockdowns precipitated another round of shortages.

All this was complicated by the American demand on Canadian producers (despite Donald Trump’s tariff) continuing to rise.

To sum it up, there has been a domino effect: climate issues led to insect predation, creating a shortage of healthy standing timber, which led to closed mills and diminished capacity further hamstrung by COVID workplace lockdowns, exacerbated by unprecedented demand. The result, perfect storm conditions for the wildly inflated costs.

And lumber isn’t the only supply chain showing this type of cost inflation and fluctuation.

I was recently speaking with the owner of Canada’s largest distributor of porcelain slabs, who stated that while stock levels at the factory were good, there was a drastic shortage of shipping containers (apparently being stockpiled in China) that is resulting in supply shortfalls.

Even the jobsite Port-a-Potty has become more expensive as new COVID government regulations insist they all be flushable!

Unfortunately all costs that literally come home to roost.   

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