Why have home build & renovation costs skyrocketed in 2021?

Home renovations have been quite popular over the past 5 years but the COVID19 pandemic & following lockdown has accelerated this with 60% of homeowners now wanting to complete a renovation within the next 2 years.

Rylie Cook

07 May 2021 • 4 min read

Did you know that 25% of Canadian homeowners are planning a renovation within the next 6 months?

The most desirable renovation projects in Canada are backyards (33%), bathrooms (30%) & kitchens (28%) which makes sense as people want to utilize their outdoor space better & are cooking more from home.

Backyard renovations largely focus around creating a new deck which necessitates a lot of lumber to complete.

Previously these types of backyard projects would run around $8000 but have now increased drastically to $14,000 - 20,000 as a result of rising lumber prices.

Lumber prices affect pretty much every aspect of home renovations so the question that most people have is "why are lumber prices so high right now?"

When the pandemic hit last year, saw mills that produce timber throughout Canada & the US shut down production as they prepared for a less active housing market.

Unfortunately for them, the housing market did not become less active but actually did the complete opposite and went into overdrive as people either wanted more space in a new home or to complete renovations on their existing property.

This resulted in a massive shortage of supply as the saw mills could not ramp up production fast enough to deal with the backlog of demand which in turn caused lumber future prices to rise by 500%.

For the average new construction single-family home in the US, this translated to a $36,000 increase in overall cost.

Here is a quick breakdown on how much different home renovation costs have increased over the past year:

Bathroom remodel = 13% price increase vs. previous year
New siding = 16% price increase vs. previous year
Landscaping = 17% price increase vs. previous year
Home addition = 30% price increase vs. previous year
Pantry or closet = 33% price increase vs. previous year
New cabinets = 56% price increase vs. previous year

A Canadian construction company that was selling lumber for $10 per Sq. Ft last year is now charging $23 per Sq. Ft, however this amount is only stable for roughly 2 weeks before changing (likely as an increase).

In turn, some builders are now including escalation clauses into their renovation contracts to cover any potential changes in material costs.

As a result of these increasing lumber prices, consumers have started to switch their materials of choice as the cost difference decreases.

Previously the price gap between these different materials was too large for most consumers but now that it has shrunk, many people are looking into these slightly more expensive alternative products.

An example of this is using composite materials vs. pressure-treated wood for backyard deck construction.

The new average price for a pressure-treated wood deck is roughly $5000 compared to $5500-6000 for a composite material that will require less maintenance over the course of its life.

At this close of a price difference, consumers are starting to choose these alternative materials but this will likely revert when timber prices come back down to previous levels in 2022 (hopefully).

Have you been affected by these changes in home renovation costs?

Let me know in the comments section below!

Rylie C.

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