Good news for builders and renovators: your projects could cost you a lot less in the next three to six months! Patience could save you big money as the frenzy draws to a close.
• Read also: US plans to double tariff on Canadian lumber
Price records have been linked since last summer. Last week, the price of the Spruce 2×4 increased another 5%. It cost $ 2.89 before the pandemic; Réno-Dépôt is now selling it for $ 9.29. This is an increase of 221%.
Several analysts now expect a sharp drop in prices. Like coffee, grains or metals, lumber is traded on the futures market. Between May 7 and May 18, the price of wood fell by 25%.
But beware ! You won’t see this drop in stores this weekend.
“It usually takes three to six months for the price of futures to be reflected in the price paid by consumers,” explained Simon Brière, market strategist at RJ O’Brien.
Simon Brière anticipates a 30% drop in prices by 2022.
“With the market price curve, I suggest postponing renovation and construction projects, if possible.”
Several forecasters share Mr. Brière’s opinion. BMO Capital Markets has updated its benchmark forecast for western spruce, pine and fir lumber. The bank sees prices falling in the second half of the year.
“Affordability concerns could intensify if mortgage rates rise,” read a note released this week. “Household wallets are not unlimited, and at some point demand could decline due to reluctance to shell out more for the same stud and siding. “
The ability to pay customers does indeed have limits! Soaring lumber prices are now adding to the cost of building a new home about $ 30,000 in Canada, according to the Canadian Home Builders Association, and up to $ 43,000 in our American neighbors.
Within seven months, BMO expects a “violent” price correction, with a drop of more than 61.8% from this week. When the lumber market corrects itself, it can do it quickly.
To give you a recent example: in the spring of 2018, the price of lumber had hit a record high in April, and five months later, the price had halved. Patience will have paid off.
Several shareholders have made stratospheric gains over the past year. The title of the largest wood processor in Quebec, Resolute Forest Product, climbed nearly 600%. If you bought $ 1,000 worth of shares in May 2020, they are now worth around $ 7,000.
One of Resolute’s vice-presidents, Jacques P. Vachon, has also liquidated more than US $ 1 million in shares since the start of the year, according to data from the Securities and Exchange Commission, the US stock market policeman. .
Forget cryptocurrency and technology, wood has provided much more attractive returns! Often, when insiders get rid of part of their shares, whether or not they were vested through the exercise of options, it is because they believe that the share price has reached a certain level of cap. . The party may be drawing to a close …
♦ Pierre-Olivier Zappa hosts the show every day of the week At your business, on LCN from 6.30 p.m.
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