Canadians opting to renovate rather than build new
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(Special) -- To renovate or build new has always been a big question for homeowners - whether it's better to take your old home and try to modernize it or simply tear it down and start anew.
I recently renovated my 1948 bungalow in the Leaside area of Toronto. It was a stressful eight month process of demolition of the interior, new insulation, roof, windows, electrical wiring, plumbing and drains, heating and air conditioning system, flooring, and painting plus all the other numerous decisions and costs such as the kitchen and bathrooms and some outside landscaping improvements as well.
But in the end it was worthwhile both from a living and financial perspective. Although I figure I doubled my equity in the house, in today's market I could sell for two to three times what I have put into it.
I plan to stay where I am for the foreseeable future, but when the time does come and I do sell all the financial gains will be tax-free because it is my principal residence.
It appears I am not alone.
A new report from Altus Group shows that home renovations are exceeding new home building. Canadians spent just over $70 billion on renovations in 2015, $20 billion more than was spent on new dwellings. Renovations accounted for 58 per cent of total residential construction spending compared to 42 per cent on new dwellings.
Looking ahead, renovation spending is expected to increase by 1.7 per cent in 2016 and 2.3 per cent in 2017, although it is expected to be tempered by high debt loads and a still sluggish economy, the report says. Residential renovation is defined as the sum of residential alterations, improvements, conversions and repairs.
A recent poll by CIBC has found that the home renovation budgets of Canadians is going up but is shifting more to the outside of the property than the inside.
Canadian homeowners planning to renovate expect to spend an average of $13,000 on home improvements this year but their main focus in shifting to outdoor projects such as building or repairing decks and patios and landscaping yards and gardens.
Forty-two per cent of those polled were focused on landscaping, including decks and patios, up from 25 per cent in 2015 while 54 per cent said they plan to do basic maintenance compared to 55 per cent in 2015.
Indoor renovations are less of a priority, with 33 per cent looking to renovate bathrooms compared to 40 per cent in 2015 and 26 per cent plan to update kitchens, down from 31 per cent last year.
"The poll findings show that Canadians are focused on outdoor projects," says Scott McGillivray, host of HGTV's "Income Property." "Spending more on the outdoors may not necessarily be the first option when it comes to return on investment, however, you should never underestimate the value of curb appeal. If you've already taken care of the big hitters inside the home and have the renovation funds, why not turn your attention to outdoor projects."
More than half of the respondents in the CIBC poll said their biggest concern is going over budget and only 34 per cent said they actually have a budget for their upcoming project.
"Whether you hire a contractor or do it yourself, you should have a good understanding of how much your project will cost and build in a contingency for potential overruns or surprises," says Barry Gollom, vice president of mortgages and lending with CIBC. "It's critical to stay on budget as it is easy to lose control of your spending if you don't have a detailed and comprehensive plan."
In my case I finished off my interior renovation with a new asphalt driveway, an interlocking stone parking pad with a small retaining wall, a refinished porch and new railing. From the curb it looks beautiful and that beauty is carried on when you step through the front door.
In any market, but particularly in today's hot housing market, an attractive exterior with a beautiful, functional interior is almost surely, over the long-term, a formula for comfortable living and financial reward.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2016 Talbot Boggs
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