With the Ontario election taking place on June 2, at time of this writing it is uncertain who will be elected Premier or if Doug Ford will be re-elected. With inflation, the high costs for lumber and home prices, the concerns on people’s minds is affordable housing, along with the cost of living that is ever rising. Gas prices have hit over the $2 mark per liter in many areas across many provinces. The ongoing invasion of Russia into the Ukraine is also affecting supply chains and export markets. Over the May long-weekend, Southern and Eastern Ontario as well as parts of Quebec were hit with a massive storm causing extensive damages in many areas due to wind speeds of over 130 km/hr and heavy rains. Power lines and electrical towers were knocked down, trees falling on cars and homes, with many trees also damaged as the storm passed. Over 176,000 people were left without power in the National Capital Area for days and crews worked around the clock to reestablish power in the areas affected across the province.
In Ontario some construction trades are on strike causing delays to home and commercial building. Some contacts noted the cost of labor and lack of trained tradespeople continues to be of concern. However, demand for housing continues to be strong even though April figures showed a slowdown for that month, which still boosted demand of Hardwood finished goods. Remodeling and renovation projects both in Canada and the U.S. continue to bolster Hardwood demand for flooring, cabinets, mouldings and millwork, and furniture.
Ash production had increased slightly in early to mid-May, but green Ash production was not very high. It was noted that some mills were no longer processing this species in the U.S. border states, with developing supplies insufficient to meet buyers’ needs. The market is not getting enough of this species, and so prices are steadier for green No. 3A and Better. Supplies of kiln-dried Ash are also insufficient to meet demand, thus inventories are thin for most grades and thicknesses.
Aspen demand is strong for developing supplies, as end users were looking for lower cost Hardwood species. As sawmill operators cleared out winter cut logs, green lumber availability edged higher in May. Kiln dried inventories were reported as low, with prices increasing as a result.
Basswood supplies were tight heading into late spring. Sales continued to non-traditional Basswood users looking for lower priced alternatives to Soft and Hard Maple. As well, contacts noted regular customers have been busy and were looking for stocks. Competition is strong for the limited supplies and prices are rising for 4/4 through 8/4 No. 1 Common and Better. Green stocks are also strong with prices firm.
Birch sales continue to be strong due to the trend for painted finished cabinets, interior fittings, furnishings and moulding and millwork. Suppliers are struggling to keep pace with their customers’ demands. Some contacts noted that the slight rise in sawmill production over spring eased price pressures for certain grades, but numbers continue to rise for kiln-dried stocks.
Hard Maple logs were not as easy to come by over the spring for some contacts, nor did they get the species mix they usually preferred and benefit from most. Contacts noted that log decks were level or even down, while others reported an increase. Supplies were adequate for this time of year for some wholesalers. Soft Maple is still a favored species for many Hardwood finished goods. Secondary manufacturers and wholesalers continued to buy large quantities. On hand supplies of kiln-dried Soft Maple are thin. Green Soft Maple output increased, which eased price pressures somewhat.
According to comments, Red Oak sales in the U.S. are steady to distributors and secondary manufacturers, while exports from the U.S. to Canada contracted 21 percent in Q1 2022 from Q1 2021. There is more interest in the common grades at this time. On the other hand, White Oak competition is stiff for mills for quality logs, especially from veneer manufacturers and other sawmills processing rift and quartered lumber. Green lumber production is also insufficient to meet buyers’ needs. Domestic and international markets are performing well.
Statistics Canada reported wholesale sales rose 0.3 percent in March to $79.8 billion (the most recent data available), as a result of building material and supplies sector rose 3.8 percent to $14.1 billion.
Home sales in the Toronto market dropped drastically in April, 41 percent from the same month last year, and down 27 percent from March, reported the Toronto Regional Real Estate Board (TRREB). They commented it appeared that the Bank of Canada was achieving its goal of slowing consumer spending as it fought high inflation. The year-over-year decline in sales was greatest in the area surrounding Toronto and was particularly apparent in the detached housing category, TRREB stated. Average home prices also dropped in April, a sharp contrast from month-over-month increases seen since spring 2020.
April’s average home price was down $100,000 from a month earlier from its average price of $1.2 million. TRREB anticipated there being enough competition between buyers to support continued price growth relative to 2021, but the annual pace of growth would moderate in the coming months. Some say home prices will fall across the country at least during the short term.
Canadian Imperial Bank of Commerce (CIBC) economists see interest rates as being on the rise, and the ultra rate-sensitive Canadian housing market is responding. Sales are falling fast and prices will follow across Canada. Going to balanced conditions or a buyers’ market won’t cure what ails the Canadian housing market, only ease the symptoms for a short time. If history is a guide, the slowing ahead might worsen the supply-demand mismatch in the market, they added.
Canada Mortgage and Housing Corporation (CMHC) says a shortage of housing supply has been the predominant issue impacting housing affordability. This was the key finding in its inaugural Housing Supply Report released March 1. The report tallied 2021 residential starts, however March 2022 housing starts showed further declines.
CMHC said this is the first report in a series that will be released throughout 2022 and 2023 to “inform better policies and decision making” related to housing supply.
“Housing starts have struggled to keep up with population growth in some CMAs, especially Toronto,” the report added.
Housing starts in Canada fell 2 percent over a month earlier to 246,243 units in March 2022 and below market expectations of 250,000 units, according to CMHC data. Urban starts decreased by 2 percent to 220,708 units in March, as multi-unit urban starts slipped by 5 percent to 154,876 units while single-detached urban starts increased by 8 percent to 65,832 units. Across Canada, rural starts were estimated at a seasonally adjusted annual rate of 25,535 units in March.
