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May 2011...Home renovating now a national pastime
The entertainment industry has found a new spin on reality shows that has been surprisingly successful: home renovations. The toolbelted contractors on television are unlikely stars, but their home improvement message has helped fire up the imagination of a whole generation of Canadian homeowners!
According to the Canada Mortgage & Housing Corporation (CMHC), growth in home renovation spending in 2009 was $53.8 billion, up 2.7% from 2008. In fact, renovation spending registered its 11th consecutive year of growth in 2009 despite the onset of weaker economic conditions. CMHC expects that renovation spending will continue to register positive gains, with spending at $56.7 billion in 2010 and $58.4 billion in 2011.
So where are we spending our renovation dollars? A gourmet kitchen tops the list of “dream renovations” for most Canadians, and that’s also where they tend to spend the most renovation dollars (with bathroom renos coming close behind in popularity). According to the Appraisal Institute of Canada (AIC), homeowners are probably making the right decisions on where to spend their money; kitchens and bathrooms are at the top of the list for renovations most likely to provide a return on the money invested (returning 75% to 100%).
Think that a renovation will increase the value of your home? It’s a nice thought, but just not a sure thing. In fact, there are very few renovation projects that will return more than 100% and pay you back more than your costs.
Painting may be the exception. While it doesn’t have the power-tool appeal of knocking down walls, it can be almost as impactful. In fact, the experts consistently agree that painting pays: money spent on a great paint job is almost always money well spent, whether it’s inside or outside. In the grand scheme of renovations, painting is a low-cost activity, but it can have a big impact on the look of your home.
Still, it’s good to know that not all renovations are created equal: some will provide you with some payback, and others are rather notorious as “money pits” for homeowners. The AIC says that the best renovation projects are kitchens, bathrooms and both interior and exterior painting. In the mid-range category (returning 50% to 75%) are projects like a basement renovation, flooring upgrade, window/door replacement, furnace/heating system upgrade and installing a fireplace. Further down the list for payback are swimming pools and skylights.
It’s clear that renovating to add value to your home is a tricky business. It can work if you’re a talented do-it-yourselfer, if you keep your costs down, and if you don’t over-improve your home. The next buyer is less likely to see value in your honed granite countertops if all the other homes in the neighbourhood are sporting laminate. From the standpoint of investment, you actually may not want to have the nicest house on the block.
But playing your own version of Trading Spaces can be a great way to increase your enjoyment of your home. Though they might not be making their owners big bucks, certain home renovations are popular projects because they improve the quality of life of the families that live in the homes now – not because they might be attractive to the next buyer.
No wonder we’ve become a nation of renovators – turning the houses we have into the homes we want. And why not? There’s never been a better time. With a wide range of financing products available to homeowners right now, Canadians have the tools available to make their renovation dreams come true.
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