Boom time for home renovations: how to make the right choice

Armand Tremblay is beginning to appreciate that rising house sales translate into boom times for renovators.

But by year’s end, he’ll have lots of company as low mortgage rates and the hint of improving job prospects draw thousands of others into the real estate market.

And many will be Canadians 50-plus, preparing for a new life in a smaller home, or one the size they’re accustomed to in a different community — even different part of the country.

No matter the circumstances, says Toronto housing economist Frank Clayton of Clayton Research Associates, almost every homebuyer makes substantial changes to their new dwelling soon after moving in, if only to adapt it to their specific needs. If the home is new, there are still basements to finish, walls to be painted and up-graded wiring to be installed. And even if you don’t move at all, there’s always a small mountain of repairs that have been begging to be done for years. It all adds up to big dollars — both for the spender and Canada’s home renovation industry.

Twelve months ago, after five slow years, Clayton forecast a two per cent real increase in renovation spending that year (1996) to $18.2 billion, and anoer four per cent increase to just below $19 billion in 1997. It’s still too early to confirm that growth. But Canada Mortgage and Housing Corp. (CMHC), the federal government’s principal housing agency, is now calling for a 5.6 per cent jump this year that would translate into over-all spending of more than $19.9 billion.

Most of that new work in percentage terms will be in Alberta (renovations there will be up eight per cent this year, compared with national growth of 5.6 per cent) and Ontario (up 7.9 per cent), largely because of better economies and sharp rebounds in existing home sales. Those two above-average performances should be followed by Prince Edward Island (plus 7.2 per cent) and Manitoba (up seven per cent). Lagging the expected national growth rate will be Quebec (up 4.9 per cent), Nova Scotia (up 4.3 per cent), Saskatchewan (up 2.8 per cent) and British Columbia (up 1.2 per cent). On the downside, renovation is expected to decline in New Brunswick and Newfoundland this year by 0.7 per cent and 0.9 per cent, respectively. Whether you’re planning a move to a new or existing home or just staying in place, renovations require some thought and planning. Take the current trend of home offices, for example:

“People are typically using an existing room to create a home office,” says Gino Lombardi, chairman of the renovation council for the Greater Toronto Home Builders’ Association. His experience is that costs can range from the expenditure of just a desk and chair to a full-scale home office. But given a typical case such as building an office in the basement, Lombardi says most people spend from $3,000 or $4,000 upwards. For more common expenses — bringing a new or existing home up a few notches, for example — CMHC figures the average cost would work out to roughly half that much.

Based on inflation-adjusted figures from a 1984 survey by the federal agency, Canadian homeowners this year will spend an average of $1,231 for labour and $706 for materials or ($1,991 in all) to renovate their dwellings. Not only do renovations require thought, research and careful planning, Ashley Ford, a Vancouver Province writer, is distressed that many consumers — particularly seniors — who may have just shelled out $200,000 for state-of-the-art high-tech accommodation move in without any instruction manual from its builder or former owner.

“You’d be hopping mad if your new car or computer, which cost a lot less, came without full instruction manuals,” he argues. “So why,” he quotes local home industry guru Shell Busey as saying: “Are Canadians complacent when it comes to the largest single expenditure most of the them will ever make in their lives?”

Busey says a manual can be vitally important when it comes to renovating a house. “Knowing where sewer lines, wiring and plumbing run in an older structure are crucial in planning a renovation. It can assist in saving thousands of dollars.”

Clayton, the Toronto housing economist, says the ideal target for a renovation contractor today is the higher-income homeowner, who has just bought an older home.

“Fewer than five per cent of households have, in recent years, spent more than $10,000 on renovating their home,” he notes. “But the high average spending for those who did, means that this group accounted for more than four out of every 10 renovation dollars spent by homeowners.”

One big plus for anyone considering renovations this year is that there is still plenty of existing space looking for new owners — thereby keeping a lid on new home construction and freeing up a sizable pool of skilled tradespeople available at affordable prices. CMHC goes even farther by noting today’s low mortgage rates “should lead owners to borrow and get on with planned renovation projects.”