The number of Albertans spending money on renovations for their existing homes and recreational properties is on the rise.
According to Statistics Canada, investment in home renovations in the first quarter of 2017 hit a record high of $1.78 billion. A release from ATB Financial’s Economics and Research Team says this is close to double the spending a decade ago.
Todd Hirsch, chief economist with ATB Financial, says he was surprised by the data for the first three months of this year.
“The increase that we saw in late 2016 and the first quarter of this year can be attributed to the rebuild in Fort McMurray (from last year’s wildfires) because not every house was destroyed, which we tend to focus on.” he said. “There were also many, many homes that needed to be renovated.”
Hirsch adds there are also other reasons for the increase in renovations.
“I do think there is this residual effect on renovating homes with people who received severance packages . . . Maybe people had some time on their hands. Maybe they thought it was a good time now to do it because you might be able to get a contractor who can bid on a project,” he said.
According to ATB Financial, the trend in renovation spending over the last 10 years shows a clear spike in spending at the end of 2013 and the start of 2014 as a result of the June 2013 floods in southern Alberta.
Lai Sing Louie, regional economist for the Prairies and Territories with Canada Mortgage and Housing Corp., says the spike in renovation spending may also be attributed to the recession of the last couple of years, when thousands of Albertans lost their jobs due to a collapse in oil prices.
Instead of “moving up” into bigger and more expensive homes, it is possible many people have decided to stay in their homes and make improvements rather than buying something else, he says.
I do think there is this residual effect on renovating homes with people who received severance packages . . . Maybe people had some time on their hands. Maybe they thought it was a good time now to do it because you might be able to get a contractor who can bid on a project.
“There are a lot of people spending money on improving their home that they live in right now,” he said.
However, he says there are also more MLS® System sales this year compared with a year ago and that will tend to drive renovation spending. In addition, employment growth has improved, suggesting that renovation spending will be higher this year than last year.
A poll by Ipsos, conducted for BDO Canada Limited, found that many Canadians are making financial sacrifices to complete home renovations this summer.
As a result of their planned renovations, nearly one-quarter of poll respondents say they are not paying down debt as fast as they should be, 25 per cent aren’t saving enough for emergencies, and 21 per cent are not saving enough for retirement as they focus on renovating their home.
On average, Canadian homeowners plan to spend $16,439 on their home renovations, with Albertans anticipating the highest spending at $22,586.
Another poll by CIBC indicates a growing number of Canadian homeowners are choosing to renovate this year, but are spending less to do so – perhaps as a result of high household debt levels and elevated prices.
The poll found that 48 per cent of Canadian homeowners will renovate this year and they will spend $11,800 on average, which is the lowest level in three years.
Also, the poll found that 56 per cent of homeowners who plan to renovate are choosing to stay in their home rather than selling.
In 2016, 37 per cent of homeowners intended to renovate and spent an average of $13,000 each.