There is an old saying that when the construction industry is doing well, everything is going well. But, this significant portion of the economy is not doing all that well. Even that many are starting to be worried.
The prices of building materials have really exploded. For some items, it is possible to see that the prices have jumped 500%. The entrepreneur Philippe Daoust, owner of PAGA Buildings explains that a simple 2 x 4 that sold for $ 1.60 in January 2020 is now priced between $ 8.69 and $ 9.69. “It just doesn’t make sense anymore, says Mr. Daoust. The consequences are significant. Building a 6-unit building costs between $ 35,000 and $ 50,000 more than last year. Inevitably, this has repercussions on rental prices. Take for example a sheet of 5/8 plywood. Last year it cost $ 23. This year, the same sheet sells for $ 70.”
Philippe Daoust refuses to throw stones. According to him, the owners of these companies are not making more profits even if the prices have jumped. “They face the same problems as us. They are imposed prices. What is happening is the saw mills are responsible for it. Usually sawmills made 8% profit. Right now they’re taking up to 80%. So inevitably the prices went up.”
When someone wants to renovate or have a house built, they will use contractors to get quotes. Now this process has been changed.
“Now I am bidding for labor only. I can guide my clients to obtain prices from my suppliers, but I no longer include materials in quotes.” Faced with the reality of the prices rising, Mr. Daoust said that some customers prefer to postpone their project. Since December, 4 of his contracts have been postponed. “Something’s going to happen for sure. Currently, I advise people to be conservative. There is also something that should not be overlooked in the field of construction. Interest rates have started to rise. In 18 months, interest rates could be back to normal.”
Shortage of materials
In addition to seeing the costs explode, the scarcity of merchandise is felt. “Last fall we had to quit because we ran out of drywall. Now, it is insulation and we have been advised that it could be beams soon. Without beams, the sites will have to stop, because we will no longer be able to make floors.”