Is the perfect storm brewing for difficulties in home and cottage renovations in Ontario?

Here is what is happening in Ontario with the renovation industry that is brewing the perfect storm of upcoming issues for home and cottage owners!

Labour Shortages

As we head into the beginning of the construction and renovation season in Ontario, we are noticing more and more that many more seasoned and professional contractors, workers and the like, are or have already retired. This is putting an immense shortage pressure on available and more importantly, qualified people to do work on peoples property. The younger generation, some of whom have limited skills are unwilling to join the workforce - Why the workforce is shrinking.

We ourselves have received numerous calls lately that people have been reaching out to various companies only to find that the contact information is no longer valid or that their calls are not being returned. This is becoming a growing and worrisome trend in the construction and renovation industry.

Material Costs and Shipping

Though the industry has seen a slight dip back to “normal” prices of some materials in the last quarter of 2021, the prices of many products have risen to all-time high’s already in the beginning of 2022 and are still on an upward trend. Products such as lumber are again seeing a spike in costs. We are also seeing increased prices and shortages in products such as extruded aluminum, needed for products such as railings, dock ramps, and such, as well as ABS piping which is the standard product used for all residential plumbing drain systems. If you walk into a ‘Big Box’ or local hardware store today, you will notice that the shelves where many of the ABS plumbing items are stored, are bare and nobody can predict when these items will be re-stocked. The primary American manufacturers of the resin were hit with a major freeze in February of 2021 resulting in major shut-downs and necessary re-tooling of the plants. The reason for this is that these plants were predominantly in the Gulf Coast of the United States.

Many products that are either produced in Europe or Asia are faced with an almost weekly increase in prices lately as a result of shipping costs, not as a result of local, but rather international freight charges. For example, the pre-pandemic cost to ship a 40’ sea container from China to Miami was approximately $6,400 CAD. Today, that same container will cost the importer in excess of $28,800 CAD before any duties and taxes are applied. This results in costs well over $30,000-38,000. What may now add to an additional increase to the cost this year is the soaring cost of Diesel fuel, and the war in Ukraine, which will force some transporters to seek diversion routes and increase the distances needed to travel for ships.

Supply Chain Issues

As you are reading this, there are over 200 shipping vessels in a holding pattern on the California coast alone. One may not think that this is a lot, but when you consider that each ship can hold 10,000 forty-foot containers or 21,000 twenty foot containers, THAT’S A LOT OF PRODUCT! To make the numbers more palatable, pardon the shipping pun, a twenty foot shipping container can hold about 8,600 board feet of lumber, 358 sheets of 3/4” plywood , 6,480 square feet of floor tiles (18“ x 18”), and approximately 1,300 boxes of laminate flooring! -That’s just ONE out of 21,000 containers! That is one heck of a lot of merchandise floating at sea, let alone the containers awaiting pick-up from the ports in North America that need to be distributed to ten’s of thousands of companies and warehouses!

On average, a typical 2,000-square-foot home uses upwards of 16,000 board feet of framing, and about 300-350 sheets of plywood.

Environmental Impact

I know that we have touched on this in past blogs, but the environmental impact on products not just now, but in the future is tremendous. As this article is being written, there are over 26,500 acres of forest fires burning just in the United states alone! This translates to an average of over 21,000,000 Trees being devastated right now. To break this down further, this means that we are loosing the equivalent of framing almost 20,000 homes just now! The spring and summer results in far greater devastation, and a greater loss to the forest industry and trickles down to us as massive losses in lumber available for construction of any sort and increased costs.

Municipal and Permit Fees

Many districts and municipalities are raising the cost of getting building permits, construction levies and service fees in Ontario. Just as an example, if you want to build a new home in the Township of North Kawartha, as of February 1, 2022 permit fees are doubling for every $1000 of building cost! Municipal levies in the same area were over $8000!

Throughout the time of this pandemic many municipalities in Ontario have been slowly increasing their levies, permit fees and such. This too is adding to the cost of construction and renovations. Some municipalities have even taken matters a step further. In efforts to crack down on “un-permitted” structures such as garages, sheds (greater than 108 square feet), decks, and shoreline decks, and so on. If a homeowner or their agent (contractor) applies for a permit, one of the local inspectors and/or by-law officials may visit your property to see what structures are on site, then dig deep to investigate if they are permitted or not. If not, you may be forced to remove or relocate them. They will also impose a fine and charge the permit fees for the structures.

The Perfect Storm

With all the external impacts mentioned, the cost to construct or renovate your home or cottage will have many factors raising the price tag that is out of the contractors control. The best advise to property owners is to find reputable contractors that have tenure in the industry and lock in your projects sooner than later. Don’t be surprised that many companies are only able to hold their quoted prices from 7-15 days and have contingencies in place to account for unexpected material cost increases. This is because material prices are so volatile that what is quoted today, may cost more once it comes time to building your project.

Finally, contact your local municipality’s Building Office to enquire how much your permit fees will cost. Each project type will have a different fee base. Some projects will be based upon the area of the job in square feet, while others are based upon the cost of the project. You want to verify this prior to applying.