Home renovations are hugely popular in Canada, and they’re also extremely good for the economy. Last year, Canadians spent $66 billion on making renovations to their home; and in the GTA alone, renovations on residential homes provided 101,700 jobs that equaled $5.3 billion in wages. And while homeowners might be most interested in simply replacing outdated cabinetry or installing nicer floors, these projects may just be the answer for homeowners unhappy with their home, but facing a cooler housing market where selling is not always so easy.
Kenzie Campbell of Royal Home Improvements in Etobicoke, says that home renos make sense for homeowners that need more space, or different amenities than their home currently offers; and they’re going to be cheaper in the long run, too.
“If you’re in an escalating marketplace, where all properties are rising equally, you sell one and buy another. You pay all of the municipal fees, the land transfer tax and moving fees and you probably will still want to renovate,” says Campbell.
And the fact that a home is almost never “move-in ready,” even if it is just a paint of coat on the walls the new owners want to put on, those are still renovations – and they’re still costly. At a time when home prices are still climbing (albeit at a much slower pace,) and it’s becoming more and more difficult to buy a home due to tighter mortgage rules, completing home renos – and being even happier in your home – can make a lot of sense.
And it’s not a trend that’s occurring in the GTA alone. Alberta, just like in nearly every other category of their housing market, is seeing a huge boom in home renovations this year. While home renos have slowed during the second quarter of 2012, residents still spent $1.17 billion in that quarter alone.
Todd Hirsch, senior economist with ATB Financial says that those numbers are “down a bit from the record high set in the first three months of 2012, but there’s a seasonal component to the data. Renovations always tend to pick up in the January to March period.”
And Mr. Hirsch also says that while renos are a great alternative for homeowners during a cooling market, he says that the amount of renos actually occurring in any one given area is another sign of economic growth. That certainly seems to be the true with the amount of jobs, future opportunities, and incomes this industry is currently bringing in.
And, he even goes one step farther, saying that completing home renos can be good for home buyers too, rather than building new, or paying top dollar for a turnkey home, filled with modern amenities.
“Building a new home may be the preferred option, but poor economic conditions may tilt the balance in favour of buying a fixer-upper – a less expensive existing home that requires renovations.”
And that, in an even broader sense, can do good for the entire area around that home, should it happen with enough homes in disrepair. By scooping these properties up and fixing them up, homebuyers are also increasing their value – and little by little, increasing the value of all the properties around them.