Reno sector booming

It's no surprise the Canadian Home Builders Association deemed October renovation month. It should add November and December, too.

In an already superheated real estate market where low interest rates, high employment, and rising real estate prices have created a perfect storm of demand for skilled construction labour, I suspect the renovation frenzy is focused on having the new wall oven hooked up in time to feed guests during the holiday season. " Can I have it done by Christmas?" is probably the second most-asked question after " How much over budget are we?"

The renovation sector in Canada is expected to reach $ 53.3-billion in 2008, a 6.8% increase over this year, according to Canada Mortgage and Housing Corp. ( CMHC). In Ontario, renovation spending is a $ 20-billion industry, outpacing new construction and economic growth. One of the drivers of renovation growth is home sales. Studies have shown that there is a strong correlation between the two: Renovations are planned within three years of a home purchase, says CMHC. Since real estate transactions reached an all-time high for October in Toronto ( 7,915 listings sold), Ontario contractors will hear their cellphones ring indefinitely.

What is the smartest kind of renovation? Kitchen and bathroom renovations provide the best return on investment of any renovation project, adding 50% to 100% payback in enhanced house value, says the Appraisal Institute of Canada.

Where's a homeowner to turn? According to CMHC, 28% of homeowners tried the do-it-yourself approach this year, while 40% contracted the job. Another 31% did a combination of the two: They got involved, buying materials or pointing out the paint blotches, but they still hired most of the trades.

Who do we look to for advice? A recent RBC/ Ipsos Reid study indicated that 41% said the big box lumber stores were a major source of information, but only 1% looked to their spouses for guidance. While the majority of Canadian homeowners ( 67%) plan to renovate in the next two years, this figure was down from 76% in 2005. While fewer people are planning to renovate, they are spending more on average. CMHC reports that the average expected cost of a renovation in 10 major cities was $ 11,270.

Of course, that's the expected cost. The RBC/ Ipsos Reid survey reported that 43% of people who had finished their renovations said they were over budget. But that wasn't the money that was foremost when asked what the biggest headache was during the renovation; 46% said it was the time involved. That kitchen you are aiming to finish by the holiday deadline? You may want to make reservations.

(Source: National Post)