|A resounding 74 per cent say are preparing to sell or want to add value to their homes. (Comstock)
At the recent Housing Outlook Conference hosted by Canada Mortgage and Housing Corp., one presentation included a profile of the renovation industry. From a new home builder's perspective, I found it interesting to gain an understanding of this fast-growing segment of residential construction.
The size of the industry was no surprise. Having grown to $15 billion in 2004, it is projected to reach $20 billion in 2008. Clearly, the abundance of TV design shows in recent ears is making an impact. With gorgeous stylized rooms for small spaces, first homes, condos or other homes, there's something for everyone.
The latest-generation shows, which promote the business of flipping homes for huge profits, add another element to the industry. Whether or not the amount of effort is accurately depicted or the examples are relevant to the Canadian market, the ideas and potential are enticing.
So enticing, that 43 per cent of Ontario homeowners are electing to join the renovation wave. Other factors building consumer confidence and fuelling the wave include ready access to home financing, favourable interest rates and steady job income.
Strong home sales also help to sustain healthy renovation spending as homeowners getting ready to sell, repair or modernize and recent purchasers personalize their homes with paint, flooring and new kitchen cabinets.
• How old are these homeowners?
It appears renovation fever isn't age-related. Forty per cent of 18- to 34-year-old homeowners are looking to personalize their own castle, as are 42 to 45 per cent of older homeowners. From first-time home buyers to growing families and boomers with paid-off mortgages, custom-izing your living environment is a lifetime pursuit.
• Why are they planning to renovate?
A resounding 74 per cent stated they were preparing to sell or wanted to add value to their homes. Forty-nine per cent were for repairs or maintenance, six per cent added much needed living space. A new emerging reason, to add energy efficiency, was the choice of seven per cent.
• How much are they spending?
The average renovation expenditure by household is also rising. In Toronto, for example, the 2006 figure of nearly $12,500 increased to $13,500 this year, and is forecast to reach $14,000 next year. Ottawa followed close behind with $10,500 in 2006, $11,500 in 2007 and $12,000 predicted for 2008.
• Who's doing the work?
With the busy lifestyles of today's families, it's also no surprise that 40 per cent of the work was contracted out; 28 per cent did it themselves and 26 per cent was was done by contract labour using materials bought by the homeowner.
• What are the most popular types of renovations?
Topping the list were: exterior work (35 per cent); painting and wallpapering (35 per cent); flooring and carpeting (33 per cent); and room remodelling (31 per cent). Other planned renovations included windows and doors, plumbing, interior walls and ceilings, electrical fixtures, heating and air conditioning, structural additions, exterior walls and built-in appliances.
• What's the return on investment (ROI) in renovations?
This question is one renovators are often asked. If homeowners are planning to sell and move, or even if they plan to stay, most want to know how a renovation will affect the value of their home. Here are the CMHC numbers: bathroom and kitchen remodelling, 75 to 100 per cent ROI; Interior and exterior painting, 50 to 100 per cent ROI; Roof shingle replacement, 50 to 80 per cent ROI; Furnace-heating system, 50 to 80 per cent ROI; Basement remodelling, 50 to 75 per cent ROI.
• What are the steps to a successful renovation?
Developing a plan of wants and needs, selecting the right professional and capturing the appropriate details in a written contract are the key steps.
-- Jim Vanderhoeven is president of the London Home Builders' Association.