The cost of raising a roof is going through the roof.
Driving the news: The average cost of building a home or apartment complex in 11 major Canadian cities was up 54% in the first three months of 2023 compared with the same timespan in 2019, per The Globe and Mail.
- The materials needed to build a standard 2,400 square-foot home are ~$67,000 more than they were pre-pandemic, with much of that due to high lumber prices.
Costlier two-by-fours and bags of concrete have created a myriad of negative side effects, like jacking up still-high home prices, making renovations harder, and driving up the cost of insurance premiums—as bigger bills for materials mean potentially exorbitant claims costs.
Why it matters: High costs are preventing some developers from starting new projects, adding another factor contributing to Canada’s ongoing housing shortage. The annual rate of housing starts fell off a cliff last month, down 23% from April and 20.5% year-over-year.
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Starts have dropped steadily since November, and the CMHC projects the annual rate of starts this year will come in at 212,000 units, down from 240,590 in 2022.
Bottom line: This is happening as we need more (like way more) housing. An immigration surge has kept demand high, and the odds Canada will have 5.8 million more homes than it did in 2022 (which the CMHC says needs to happen) are between slim and none.—QH