Home Builders warn of chunky cost increases, long delays

The cost of building a 2,500-square-foot house has increased by $68,000 since the start of the pandemic, according to the Canadian Home Builders’ Association, and all types of properties are taking as long as 10 weeks longer to construct.

The organization said lumber increases account for half of that increase, with “other material costs” contributing to the rest. Supply chain disruptions and strong demand from buyers has led to the crunch.

“[There are] continuing challenges with the supply chain and labour availability, which is increasing construction costs and causing delays in home completions,” the organization wrote. “These challenges, combined with a lack of land availability, are reducing the industry’s ability to bring still more much-needed housing supply online.”

The organization said closings are being affected, with delays extending from quarter-to-quarter to as long as 10 weeks mostly due to a lack of appliances and windows. Sixty four per cent of builders said they expected a delay in pre-sales or development.

“Respondents are now indicating that plumbing components are being hit the hardest, though appliances and windows remain close behind, along with a long list of other products and materials,” they wrote. 

The group launched its Housing Market Index in the first quarter of 2021. It said today builder sentiment is increasingly positive, but they do worry about the challenges.

“Until the fourth quarter, quarter-to-quarter sentiment in 2021 had been declining due to a number of uncertainties in the housing market such as supply chain disruptions, material costs, changes to the stress test, and another wave of COVID-19,” the wrote. 

“The reduction of some of those uncertainties and continued homebuyer activity have resulted in a positive shift in sentiment, which is consistent with the incredibly strong housing starts and building permits data over the past few months.”

Meanwhile, 63 per cent of builders said the supply of lots in their area were “low to very low” and called on governments to look at addressing permit delays, zoning issues and “NIMBYism.”