As the wood shortage continues, lumber prices show no signs they will be chopped down anytime soon. Thanks to the COVID-19 global pandemic, the price of lumber has soared up to 300% of what it was just two years ago. This is a historic jump that looks like it will linger even after the pandemic finishes. At its peak, the price of lumber was being traded at nearly $1,500, a huge jump from the low $400 in late 2019 and early 2020. To put things in perspective, what once was a $5 2×4, now costs around $12-15.
What Causes the Rise?
As with all things in our economy, price is largely driven by the supply and demand of the market. Increased demand and decreased supply are to be blamed for the hike in wood prices throughout 2020 and into 2021.
Since most Canadians have been spending a lot more time in their homes, many have elected to take on home improvement projects. These projects range from minor structural changes and redoing decks all the way to additions and complete rebuilds. One thing that all renovations have in common is their shared need for lumber. Just like at the beginning of the pandemic when there was no toilet paper left, all the wood that was coming in, was going out just as quickly. Wood began to take longer to arrive, and cost more to purchase. Interestingly enough, these two events are correlated, seeing as toilet paper is, in fact, a paper product. If demand does not decrease, the prices will remain high or grow even higher.
If any part of the supply chain is disrupted, supply will take a hit. When it comes to lumber in Canada, that’s exactly what has happened. Canada has thousands of acres of forest, but there are fewer facilities to work with that wood. The pandemic has forced the closure of multiple different sawmills across Canada. While some are set to reopen in the coming months, others are due to shut down their machines for good. Sawmills find it hard to entice new employees, as students are feeling the pressure to attend university and college, as opposed to finding manual labor or construction jobs. Sawmills are also typically located near abundant forests in rural areas across Canada, which also tend to be less populated than their bustling city counterparts. Additionally, even if sawmills were able to keep up with the demand, the number of drivers who carry the lumber from the forest to mill, and mill to store has also decreased.
What the Future Holds
These towering costs make it appealing for consumers to reschedule their renovation plans. But it’s important to acknowledge that when and the likelihood of prices ever returning to what they were is quite dubious. One way to cut down on your lumber costs is to use recycled wood where you can. H&H Wood manufactures pallets out of recycled older pallets, keeping costs low without sacrificing quality.