Lumber Prices and How They Affect Home Additions and New Home Construction
Everything you need to know about the elusive “lumber” line item!
In the last year alone, many material costs in the residential construction world have increased anywhere from 20 to 30 percent (including drywall, insulation, and concrete), but none of these increases even compare to what has been seen year-over-year with the lumber costs. The combination of COVID-19, mill closures, and the increase in demand in the DIY/new housing starts markets has swung the once-stable supply and demand curve way out of wack. This is not the first time that lumber has seen high prices, but it is certainly a shock to the consumer market that lumber is seeing record highs for the first time in a long time.
This article aims to educate home owners about the state of the lumber market and how it affects the residential construction market and affordability.
A COMPARISON OF YEAR OVER YEAR LUMBER PRICING
HOW LUMBER PRICING AFFECTS RESIDENTIAL INFILL CONSTRUCTION
HOW LUMBER PRICING AFFECTS HOME ADDITION AND RENOVATION PROJECTS
WHAT YOU CAN DO TO PROPERLY PREPARE FOR RECORD-HIGH MATERIAL COSTS
Jumping right into the numbers, you can see in the graph where the 2021 lumber pricing is at currently, based on 2x4 #2&BTR SPF lumber. How they are calculating the monetary value in the y-axis is arbitrary due to the number of years shown on the graph.
As you can see, the different between March 2021 and March 2020 is 2.3 times the price. This means that the cost of your lumber package between now and this time last year is over twice the cost, which represents over a 100 % increase in lumber material costs.
To put this into perspective of square footage, for doing a 2500 square foot new home you would have been able to get the lumber package between $40 000 to $50 000. Now that same package will cost you around $100 000 or more. That is a difference of over $50 000!!!
Year over year comparison of lumber pricing to Toronto
The short answer to this question is that the increase in lumber prices affect new construction the most of any other type of residential construction project. When you think of the anatomy of lumber a home building project you can break it down into:
Main floor package
Main floor walls
Second floor package
Second floor walls
Roof package (trusses or joists for flat roof)
Exterior sheathing/plywood
With a new home build the entire home is completely new, all the way down to the foundation. This means that everything from the main floor lumber package and up is new as well, which adds a lot to the lumber material cost.
As stated in the previous section, it is the difference between $40-50 K and $100 K + for a 2500 square foot new home right now, in just the material alone!
A home addition (or renovation as defined by the City of Toronto) is classified as leaving 51% of the existing above-grade walls. This means that you are utilizing more of the existing floors/joists/walls and leads to a lower price tag for the overall lumber package. For a 2500 above-grade home addition (assuming the existing main floor package is being used) you can expect to pay around $60 000 to $70 000 for the lumber package (depending on how much lumber is needed for the main floor)
There is a simple answer to this, do your due diligence! You have already completed the first step in reading this blog but now it is time to put some real numbers in place.
BVM Contracting offers no-obligation consultations of construction costs using our database of previously-quoted projects. We are able to account for the material changes by referencing when the project was quoted to current pricing of all commodities. This will give you the most transparency when you are determining if you will be able to afford your renovation or new home construction project.
Reach out to use here or you can email contact@bvmcontracting.com to start the conversation!
About BVM COntracting
BVM Contracting is a full-service General Contractor or Home Builder located in Toronto. We provide home renovation and building services for major home renovations (kitchen renovations, bathroom renovations, basement renovations, full interior renovations, home additions, lot severances, and new home construction). Our goal is to help guide our clients through the process of renovating their home, from concept to completion.
Further than providing General Contracting and Project Management for major home renovations, we also offer value-added services such as renovation financing, renovation rebate consultations and services, building permit and design services, smart home installation services, and real estate investor services.
To learn more about our offering by visiting our services page.