How Are Lumber Prices Affecting Your Insurance Premiums?
With renewal season just around the corner this a question we are getting frequently. Will rising prices in lumber spike insurance premiums? And why the heck are lumber prices skyrocketing in the first place?
What's With The Increase?
SUPPLY
As the pandemic absolutely crushed the economy when it hit, sawmills in Canada shut down production in anticipation of a downturn in the housing market. Sawmills expected the slump to last up to 5 months response they cut shifts, slowed production, and limited staff to abide by public health orders. Unfortunately, the downturn was virtually non-existent and now the lumber market is red hot, seeing increases of over %100. Making it impossible for the mills to keep up and get ahead of demand while having to limit the number of workers to comply with social distancing. Pre Covid-19 a 2×4 was priced between $3.00-$4.00 and now they are sitting between $8.00-$10.00.
DEMAND
I spoke with Geoff Gregoire from Contractors Corner in Brandon, Manitoba for a local take on the spike in lumber prices. According to him, there was roughly a 2-week period of decreased demand, since then demand has skyrocketed. This being attributed to the stay-at-home orders forcing restaurant closures, inability to travel, cancelation of sports and families spending more time at home has kept that money in the bank and families staying at home, has driven the urge to renovate. An interesting trend noted by Geoff; Snowbirds, who historically do not spend money on home renovations, are now spending those dollars to update those glorious pink bathrooms instead of spending on their trips south. Modernizing for the purpose sale. As we all know, the housing market is quite hot.
Say you have 2 children in hockey. $2000.00 per child for equipment and fees. An extra $2500.00 for travel, food etc. That is rough combined total of $9000.00. And most families spend substantially more than that on sports and extracurriculars. That is an extra $9000.00 in your account. –
No one expected a DIY and homebuilding boom. With people forced to be at home, not only did they have more time on their hands and more income in their accounts, but this also triggered almost a “panic buy” to configure office spaces, learning spaces, outdoor spaces, and play/outdoor spaces in their homes. And those renovations that had been put off for years have now become a priority.
How Does it Affect My Insurance Premiums?
