US tariffs on lumber and timber products from Canada could have an unexpected effect on the Canadian housing market, increasing the amount of materials available domestically and potentially reducing construction costs for certain types of housing, according to an analysis by the Canada Mortgage and Housing Corporation (CMHC).

The research, presented by CMHC's chief economist, Mathieu Laberge, estimates that a more consistent use of Canadian wood products in residential construction could increase the annual number of new low-density housing units by approximately 3.5%, equivalent to almost 4,000 additional homes per year.

The analysis also indicates that construction costs for this type of housing could decrease by up to 17% in some urban centers, although the impact varies depending on the market and the type of project.

Single-family homes and terraced houses would be the main beneficiaries, since they use proportionally more wood than high-rise residential buildings.

The scenario analyzed results from the trade restrictions imposed by the United States on Canadian products.

Although tariffs represent pressure on the economy and on producers who depend on exports, CMHC believes that a greater availability of wood on the domestic market could create conditions for a wider use of the material in housing construction.

“The current tariff situation could represent an opportunity to address the challenges of housing supply in Canada, while strengthening the link between the forestry and housing sectors,” said Laberge.

According to the economist, a stronger domestic market for Canadian timber products could simultaneously support the construction of new housing and increase the resilience of the forestry industry.

CMHC's estimates represent a potential scenario, dependent on more consistent use of available timber in residential construction, and not a prediction that tariffs, by themselves, will automatically result in more homes or a reduction in prices.

CMHC is a federal public company responsible for various areas of the Canadian housing system, including financing, mortgage insurance, research, and real estate market analysis.

Source: sensomagazine.ca