Rebate revisited: Some homeowners forge ahead with renos despite skyrocketing costs

·6 min read
Joe McGrath and his wife have been making do with a renovation that remains unfinished. Construction costs soared after they locked down plans to take advantage of a provincial rebate program.  (Kyle Mooney/CBC - image credit)
Joe McGrath and his wife have been making do with a renovation that remains unfinished. Construction costs soared after they locked down plans to take advantage of a provincial rebate program. (Kyle Mooney/CBC - image credit)
Joe McGrath and his wife have been making do with a renovation that remains unfinished. Construction costs soared after they locked down plans to take advantage of a provincial rebate program.
Joe McGrath and his wife have been making do with a renovation that remains unfinished. Construction costs soared after they locked down plans to take advantage of a provincial rebate program. (Kyle Mooney/CBC)

Soaring lumber costs have proven to be a trap for homeowners in Newfoundland and Labrador who took advantage of a popular provincial rebate program last year, and now find themselves locked into renovation contracts.

Joe McGrath is one of those homeowners caught between the plans of last year and a project that remains unfinished, many months later.

Looking down at his kitchen's dusty plywood floors while a painter coats columns of white on some nearby drywall, he laughs defeatedly.

"We've got to live here," he said.

Since McGrath and his wife, Jennifer McGrath, started renovations last year, the cost of in-demand building materials like plywood and oriented strand board (OSB) has skyrocketed.

Today, those products are fetching four times their pre-pandemic price.

The irony for McGrath is that he and his wife had only decided last spring to delay their renovations.

Then came the residential construction rebate, the Newfoundland and Labrador government's partner program with the Canadian Home Builders Association.

Designed to spur activity in the province's construction industry, the program, announced last June by then minister of finance Tom Osborne, offered homeowners a rebate of up to 25 per cent, to a maximum of $10,000, for renovations and new builds.

It proved wildly popular, with 12,000 homeowners eventually signing up, according to officials with the Department of Finance. To date, 6,400 rebates have been administered as part of the $30-million program.

"We'd been talking about this for a number of years," McGrath said. "And when [the rebate program] came along, we said, 'Let's go for it.' We figured this incentive won't be there forever."

Plans locked down as prices soar

As required by the program, the McGraths had locked down their renovation plans by Aug. 7. But within a month, the cost of North American softwood lumber, an indispensable home building material, had reached an all-time high.

Kildare Renovations owner Dermot Kearney finds the staggering prices for lumber "hard to swallow."

"It's cheaper to build a home with concrete now than with lumber," he said in an interview.

"A lot of us are talking amongst ourselves saying, 'How could it have gone up this much?'," he said. "Thirty dollars a sheet [of plywood] to a hundred? How do you justify that? How can you explain that?"

Kearney fears soaring prices will "kill the industry." His biggest fear? That the current market will become "the new norm." He says government action is needed to stop price fixing.

Lumber costs began soaring in 2020, and remain high well into the 2021 building season.
Lumber costs began soaring in 2020, and remain high well into the 2021 building season. (Shane Fowler/CBC)

But Kearney is also cognizant of the compounding factors that he reckons brought about the hike in lumber prices: a drop in production due to COVID restrictions, and higher demand.

And it's not just lumber that's increasing, Kearney says. He claims the Texas cold snap catapulted the price of polyethylene—an essential ingredient for piping projects. The US state is North America's largest producer of the polymer.

Joe McGrath's experience echoes Kearney's observations. He says he's paying top dollar for junction boxes, wiring and drywall. "Basically every material you can think of," he said.

"The price of resin has gone through the roof," Brad Hickey, store manager at Hickey's Timber Mart, said by phone. "So now the price of ABS pipes has gone up."

Hickey feels for those forced to ride the ever rising wave that is the current building materials market.

Until now, his company has managed to get by without having to put a mark-up on materials—something he hopes to avoid at all costs.

WATCH | Art Hicks at Home Hardware in Witless Bay is tired of giving people bad news about how much their building projects will cost this year:

"Our margin's basically the same as it's always been," Hickey said. "We're not charging more, we're paying more."

"It's no good for me to have to sell $70 plywood," he said. "There's going to be more people doing projects if it's at $25."

Hickey predicts rates will continue to tick upward as long as the US market remains hot.

"And it's red hot right now," he says, citing U.S. President Joe Biden's trillion-dollar stimulus package as an indicator of what's to come.

Double the bill to replace a deck

Trevor Oates has been waiting to renovate ever since his back deck was wrecked by Snowmageddon, the stunning blizzard that shut down much of eastern Newfoundland in January 2020. "It looked like a deck you'd put on an old cabin," he recalls.

He wanted something ground-level. "More privacy. Less wind," he says, in between sips from a Diet Coke one sunny spring afternoon in St. John's.

Trevor Oates was astonished when the estimate came in to replace a deck damaged by Snowmageddon in early 2020.
Trevor Oates was astonished when the estimate came in to replace a deck damaged by Snowmageddon in early 2020. (Kyle Mooney/CBC)

He's looking at a deck joist made of brown pressure-treated lumber that his contractors have laid on the ground in his backyard.

Oates didn't enrol in the rebate program—his plans only came together this past January.

Once final costs for degrade plywood and brown pressure-treated pre-cuts were factored in, the final price was "way more" than what Oates anticipated: just about double, in fact.

"I was expecting $4,500, maybe $,5000?" Oates said. The bill came in at just under $9,000.

"How does the average Joe afford that?" he said.

Joe McGrath is wondering the same thing. His estimates now are close to $7,500 higher than his original quote.

"You know, we're feeling it," McGrath said, attempting to shrug off the renovation woes. "It's more out of pocket and more that we've had to borrow."

Would he have enrolled in the program had he known nearly three quarters of his refund would be gobbled up before his walls got a second coat of paint?

"I don't think so," McGrath said.

Like many, he has decided to put his head down and plow through. "Once you get into the project, you've got to finish it," he said.

The scene in McGrath's kitchen serves to emphasize his point: a sliding door that opens to an unfinished deck; a layer of plastic draped over a box of cereal on the table.

"We've got three young kids now in school," he said. "We need a place to live that's comfortable. So what can you do?"

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