TORONTO – When Corinne McDermott’s mortgage came up for renewal, she and her husband considered moving.
“We always thought this house would be our middle house,” McDermott said of the east-end Toronto abode she shares with her husband and two kids.
But sky-high home prices, hefty realtor fees and land-transfer taxes deterred her. Instead she’s opted for a large-scale renovation — including building on a three-storey addition with an ensuite master bathroom and a walk-in closet — to the tune of roughly $150,000.
“We’re creating our dream home, that we plan on never leaving,” McDermott said.
Renovation contractors say soaring home prices in Toronto and Vancouver are encouraging many homeowners to pursue renovations instead of shopping for new homes.
“They can’t afford to buy new, so what they’re doing is they’re improving the living spaces that they’re in now,” said Jon-Carlos Tsilfidis, the renovators council chair at the Building Industry and Land Development Association.
According to a poll released by CIBC (TSX:CM) on Thursday, Canadian homeowners plan to spend an average of $17,142 on renovations this year, with basic maintenance such as painting, flooring and replacing appliances coming in as the top category for planned repairs.
However, that’s down 13 per cent from last year, when homeowners planned to spend $19,754 fixing up their houses.
The telephone poll of 1,020 Canadians conducted by Nielsen Consumer Insights is considered reliable within 3.1 percentage points, 19 times out of 20.
In Toronto, however, contractors say demand for renovations shows no signs of waning.
“I can attest to the fact that we’ve never been busier,” said Brendan Charters, development manager at Eurodale Developments.
Charters attributes the renovation boom to rock-bottom interest rates and soaring home prices, which mean that many people who bought properties years ago, when they were cheaper, now have excess equity in their homes.
In addition, many professionals who work downtown are migrating towards the city core, where many of the homes were built between the 1930s and 1950s.
“We have a very aging housing stock in Toronto that is ripe for renovation,” Charters said.
Some contractors say weakening demand in western provinces like Alberta and Saskatchewan, where housing markets have been hurt by the declining oil price, are likely dragging down the national average.
“Canada is so diverse from coast to coast,” Charters said, noting that piping-hot real estate markets in the Greater Toronto Area and Vancouver are quite different from the remainder of the country.
Brent Ballash, owner and managing director of Calgary-based Amorea Designs, says consumers are certainly spending more conservatively as a result of massive layoffs in the oilpatch.
However, that could also end up boosting renovation spending since many homeowners would rather fix up their homes than purchase new ones during such uncertain times, he said.
“Our experience is that people feel safer staying put and reinvesting in their current home when things are uncertain,” he said.
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