I think this article touches on something that's been a factor in keeping the demand for single family homes red hot. This is one of the reasons why I always stress picking the location you want first, then worry about the house. You can always update, refresh, renovate, rebuild...but you can't as easily move your house to another neighborhood.
The caveat with these renovations is that the houses will end up increasing in value and, when combined with the low inventory of single family homes in the city, the market value of these houses will keep increasing at higher rates than if the house was left in its original condition. Financially, I think renovating is a wise decision, as I get the impression that many people underestimate the associated costs of moving.
http://www.thestar.com/business/rea...owners-plan-17000-in-renovations-in-2015.html
Canadian homeowners plan $17,000 in renovations in 2015
High house prices and rocketing moving costs are persuading many Canadians to stay put, and renovate their homes instead
Many Canadians are trying to put some luxury into their homes through renovations rather than moving.
By: Alexandra Posadzki
The Canadian Press
Published on Fri May 08 2015
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 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.
