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A growing number of homeowners who were planning renovations are postponing or even nixing their plans, a new survey finds, and many of those choosing to renovate are prioritizing must-haves.

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“Right now, our customers want to hold onto their cash for a rainy day,” says Medi Zadegan, president and CEO of White Orchid Build & Design Inc. in Toronto. “At the same time, for many, these home improvement projects are a necessity. We’ve seen that increasing mortgage payments have resulted in households renovating their basements either to create a multi-generational home or to generate rental income.”

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According to a Leger study commissioned by Fineanceit Canada Inc., a point-of-sale financing provider in the home improvement industry, 39 per cent of Canadians blame affordability challenges as the reason for postponing their renovation plans for anywhere from one year to indefinitely. That number rises to 48 per cent among respondents aged 18 to 34.

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Kitchen renovations were especially popular amid the pandemic.
Kitchen renovations were especially popular amid the pandemic. Photo by Solerno Construction photograph

FINANCIAL UNCERTAINTY

“It’s no secret that Canadians are continuing to be mindful of spending as rising interest rates and financial uncertainty are felt across the country,” says Financeit CEO Michael Garrity. “While some may have the option of shifting their renovation dates around, for those who are needing to make necessary upgrades, this can make for a challenging situation. It’s not surprising that younger Canadians, who likely have less disposable income than their older counterparts, are being impacted at a greater rate.”

The housing market is also expected to influence the home improvement sector in the year ahead. For Canadians unable or uninterested in buying a home because of higher interest rates, renovating the home may be a more attractive option, Financeit suggests.

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That could be especially true in markets like Toronto, say Brendan Charters, a renovation expert and development manager at Eurodale Design + Bild in Toronto. (He’ll be speaking at the National Home Show, presented by Re/Max, happening March 10 to 19 at Toronto’s Enercare Centre at Exhibition Place.)

Demand for home improvements was “voracious” during the pandemic and given the “significant” amount of time it takes to acquire necessary building permits and approvals, most designers and builders in the customer space are “still swamped” with work requests, he reports.

Financeit CEO Michael Garrity.
Financeit CEO Michael Garrity. Photo by Supplied

‘CORE NEEDS’

“Calls may have slowed but there’s still a backlog for talented and reputable firms that deliver real value to their clients,” Charters says. “While there’s lots of chatter about interest rates, the housing market and ‘the sky is falling,’ the reality is we have an immense amount of older housing stock in the city so updating those homes is something that’s always top of mind.”

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A volatile stock market and/or higher interest rates may impact renovation budgets, but you can only put off things like a leaky roof for so long, Charters reminds. “There may be a shift in focus from renovating that kitchen again to core needs of the house. Those types of projects are always in demand in older homes.”

Peter di Scola, chair of the RenoMark Renovator Executive Committee at the Building Industry and Land Development Association, says many renovators have reported the cancellation of “significant and multiple projects.” Most cancellations are among homeowners who feel “uncertain” about how the economy will impact their personal finances and job security, he notes.

Renovation expert Brendan Charters.
Renovation expert Brendan Charters. Photo by Supplied

Not long ago, it was common for people to renovate a newly purchased home to meet their needs but di Scola, owner of Solerno Construction Group Inc., finds that has slowed. And people who’ve been in their homes for years have already completed renovations. “We did a lot of renovations during the pandemic to add space or make it more efficient for their needs, such as adding an office, gym, washroom or finishing the basement.”

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Cancellations may not equate to shorter wait times because your contractor still needs time for design, permits, determine prices and order materials, and negotiate contracts, he warns. Exceptions could include cosmetic projects, such as installing hardwood floors and painting.

BIG-TICKET ITEMS

HomeStars, a home renovation review website that surveys its users annually about their renovation plans, reports demand for home renovations has dropped 10 to 20 per cent compared to last year, based on internet searches. “It’s not surprising given the economy but it is really meaningful,” CEO Shir Magen says. “The other trend is that discretionary projects, the nice-to-have projects, are down.”

Shir Magen of HomeStars.
Shir Magen of HomeStars. Photo by Supplied

Last year’s HomeStars survey found homeowners spent $13,000 on average in the previous 12 months on indoor renovations. Today, many are forking out upwards of $20,000 on projects. “That makes sense because they’re not doing discretionary cosmetic projects. They’re doing those must-haves that will give them a few more years in their home,” she says.

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Renovating a basement or turning it into a rental suite to create additional income to ride out this economic turmoil is significantly more expensive than a paint job, Magen reminds. “We’re telling our HomePros that yes, they’re seeing more holes in their calendars but each project that goes through to them is worth more.”

She predicts demand for multigenerational suites will grow because, since the pandemic, families don’t want their elderly parents living in an institution. “Our homes need to do more for us and that means renovations,” she says. “Renovations don’t stop because of a recession.”

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