Thank you, Madam Chair.
The Canadian Home Builders' Association is the voice of Canada's residential construction industry. We represent some 9,000 member firms from coast to coast, including home builders, renovators, trade contractors, product and material manufacturers and building suppliers and services.
There's no question that the pandemic has shown the extreme exposure that Canada’s residential construction industry, and in turn consumers, have to lumber price volatility. The record price increases and product scarcity, both north and south of the border, have caused major issues for industry, homebuyers and homeowners over the past two years. The effects of those issues persist today.
CHBA’s 2021 Q4 housing market index survey showed that the national average construction cost for a 2,500-square-foot home has increased by over $34,000 due to lumber prices. This has resulted in higher prices for consumers and in some cases severe losses for builders with fixed-price contracts.
Canada already has a housing affordability crisis. Adding tens of thousands of dollars to the price of a new home due to lumber increases has contributed quite a bit to the crisis. A major contributor to rapidly escalating house prices in Canada is also a lack of housing supply, and access to more stable lumber prices is critical to building more homes—both market-rate housing and affordable housing. The crisis also impacts the ability of municipalities and not-for-profit organizations to deliver affordable housing units. Social housing budgets are fixed, so increased input costs mean fewer units coming online for those in most dire need of housing.
In addition to rapidly rising lumber costs, the lumber crisis has also meant delays in construction, as price increases have been accompanied by physical supply shortfalls as well. Home closings are now delayed about 10 weeks on average across the country due to ongoing supply chain challenges.
It's also noteworthy that there is another Canada-U.S. trade issue on the horizon for construction, and that is the gypsum board anti-dumping order from the Canadian government on U.S. drywall shipped into western Canada. This duty, which was dramatically reduced from its original intended levels five years ago due to the impact it would have on housing affordability, is set to expire or be extended. CHBA strongly recommends that the government take action to ensure that this duty is ended.
Overall, given the many challenges facing all aspects of the supply chain for construction and other industries, it is clear that all efforts should be made to address every aspect of Canada’s supply chains. Where lumber is concerned, actions are required to provide a more consistent supply and to stabilize prices. This is doubly true given that lumber for construction should be part of a sustainable construction future for Canada. Lumber is a Canadian product that is renewable and a carbon sink, but if availability and pricing volatility continue as such large issues, it may become necessary to look at replacement materials.
CHBA recommends a number of actions for the federal government.
Make it a priority to investigate all issues of lumber supply, as well as potential solutions to ensure a reliable lumber supply in Canada with less price volatility.
Redouble efforts to resolve the present softwood lumber dispute with the United States.
Wherever possible, include end-users in trade tribunals so that final arbiters can appreciate the real and human impact that prolonged trade disputes have, especially in home construction and affordability. This was the case with the drywall dispute five years ago. It may need to be the case again this year.
Work with the domestic lumber producers to increase capacity to ramp up production, including by working with other levels of government to ensure more responsive and certain access to raw materials.
Consider all action possible to support the construction products and materials supply chain, including supporting the domestic manufacturing capacity of construction products and materials.
Finally, deal swiftly with transportation disruptions within Canada, whether they be import issues with respect to shipping and receiving, work stoppages by rail or other interruptions caused by infrastructure issues.
As the country recovers from the COVID-19 pandemic, we have a chance to build a housing continuum that supports all Canadians, from social housing to aspiring first-time buyers to seniors wishing to age in place. From new Canadians looking to establish roots in their chosen communities, to those looking to expand their homes as their families’ needs evolve, to new Canadians joining our communities—all have housing needs. Canadian lumber should be a big part of that solution.
On behalf of CHBA, I thank you for undertaking this study. I look forward to answering any questions the members of the committee may have.