Canadians investing in their homes
Homeowners funding renovations through personal savings
If you’re like most Canadians, you’re more likely to tackle a home renovation than sell your current house and buy another or purchase an investment property. Topping the list of spaces homeowners most want to update are backyards, kitchens and bathrooms.
According to the 2021 Scotiabank Housing Poll, 58 per cent of Canadian homeowners are planning to renovate their current home in the next two years and one in four are looking to start in the next six months. Backyards are the most popular area at 33 per cent, followed by bathrooms at 30 per cent and kitchens at 28 per cent.
Even more Canadians are dreaming of a home renovation. A recent survey by HomeStars, an online marketplace that connects homeowners with home service professionals, suggests the percentage of Canadians wanting to update their homes is 74 per cent.
“Despite the pandemic, last year was incredibly busy for renovations, as we’ve seen firsthand with our pros and homeowner service requests, and there’s no sign of it slowing down anytime soon,” says Shir Magen, CEO of HomeStars. “With all this extra time at home, Canadians are investing in their spaces by making repairs, adding functionality or simply to ‘spark joy’ in the new normal we’re living in.”
The survey found the most popular projects this year will be outdoor work, including landscaping and decks, with 54 per cent of homeowners planning to improve their outdoor space. In second place came bathroom renovations at 32 per cent, followed by kitchens at 23 per cent and basement renovations at 17 per cent.
How much are homeowners planning to fork out on making their home renovation dreams come true? According to the HomeStars survey, 46 per cent of respondents will spend between $1,000 and $10,000, while 24 per cent will invest between $10,000 and $25,000 and 11 per cent will spend between $25,000 and $50,000.
Why are Canadian homeowners choosing to renovate now? Twenty-nine per cent want to enjoy their outdoor space because they’re spending more time at home, the HomeStars survey found. Fourteen per cent of homeowners said since they weren’t spending on vacations, they’d invest the money in home renovations and repairs.
Just six per cent plan to break open the piggy bank to improve their work from home and homeschooling space. When asked why they were planning on renovating, 50 per cent said they want to ensure they can age more comfortably at home.
For those looking to break into the housing market, the pandemic continues to play a strong role in their decision making. According to the Scotiabank poll, 57 per cent of Canadians believe now is a good time to buy because of low interest rates – up nearly 20 per cent since August 2020. Thirty-nine per cent of younger Canadians aged 18 to 34 years say the pandemic has accelerated their plans to purchase a home – a number that has more than doubled in just over six months.
Whether Canadians are buying a new home or renovating, personal savings is the No. 1 way they plan to finance a down payment or home upgrades, according to Scotiabank – a signal that Canadians have been able to put more into their savings amid the pandemic. For existing homeowners or first-time buyers, a home equity line of credit can be a valuable resource when looking to make other investments, the bank notes.
Whether you’re a first-time buyer, investing in a second property or embarking on renovations to your home, understanding what you can afford financially is the first step. A financial or mortgage advisor can help you better understand what’s achievable for a down payment or to fund renovations, Scotiabank advises.
Before the first swing of the hammer, making sure you understand the full extent of the costs of the renovation can save you money in the long run. Get a quote from multiple contractors, understand the full cost of materials and look into local by-laws to see if you require any building permits.
Make sure you don’t max out your budget on your purchase or renovations and leave yourself vulnerable to surprise costs that may arise. Consider how you can create a safety net for yourself to protect you from unexpected expenses that may come up. Owning a home is a long-term investment, Scotiabank reminds. Understanding the state of the housing market can help you realize the potential long-term gains of your new property or investing in your current one.
Livability trumps ROI
Canadians are investing in home renovations to improve quality of life, not to add value in the current Canadian real estate market, according to the Re/Max 2021 Renovation Investment Report.
More than half of Canadians renovated their home in 2020 with the intention of living in it, with 29 per cent renovating to enhance their lifestyle for non-essential reasons (aesthetic and/or recreational purposes) and 29 per cent doing so for essential reasons (safety and maintenance). Only 16 per cent renovated to increase the market value of their home to sell within the next one to three years.
Still, 59 per cent of Canadians admit they always consider the return on investment (ROI) that a renovation will have on their home’s overall market value. Re/Max brokers, meanwhile, identified fresh paint and landscaping as two upgrades that yield a high ROI, despite being low-budget and minor in nature. Eight-seven per cent of brokers say a kitchen renovation is the home improvement that resonates most with buyers
Source: Toronto Sun
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