Canadians to scale back home renovation spend: BMO
By Bank of Montreal
By Bank of Montreal
May 30, 2012 – According to the Annual
BMO Home Renovation Report, fewer Canadians are planning home
renovations this year but are choosing projects with the greatest
returns – a sign that consumers are scaling back and becoming more
strategic on spending amid rising concern about household debt.
Half of Canadian homeowners (51 per cent) plan to renovate their homes
in the next year, compared with 62 per cent in 2011. Single family
homeowners far out-pace their condo-dwelling counterparts (62 per cent
versus 41 per cent respectively).
Regionally, the report revealed:
|Plans for home renovations||Total||BC||AB||MB/SK||ON||QC||ATL|
"The scaled-back plans for home renovations likely reflect increased caution on the part of households as they continue to reduce discretionary spending to rein in debt," said Sal Guatieri, senior economist for BMO Capital Markets. "After averaging nine per cent in the past decade, consumer loan growth has slowed to almost two per cent recently, suggesting Canadians are taking recent debt warnings to heart."
The study, conducted by Leger Marketing, also revealed the top five renovation plans for Canadians:
1. Kitchen - 39 per cent 2. Bathroom - 35 per cent 3. Basement - 16 per cent 4. Bedroom - 11 per cent 5. Family room - 10 per cent. "Making home upgrades can add significant value to a home; however, it's crucial that homeowners consider the financial implications involved," said Laura Parsons, a mortgage expert with BMO. "Renovation projects come in different shapes and sizes and vary in return on investment. Homeowners planning to move forward with renovations should consult a professional to help balance wants versus needs and the overall value of the investment."
HGTV.ca and BMO offer the following advice on which renovation projects
provide the best return on investment to help Canadians make sense of
their reno plans:
1. Painting: When done well and with taste, applying a fresh coat of
paint to the interior or exterior of a home is a simple way to realize
gains on your renovation investment. Return: As much as 300 per cent.
2. Kitchen remodeling: A kitchen renovation can be one of the most
costly home improvement projects, however, careful planning, budgeting
and shopping will help minimize expenses. Consider aspects such as
whether or not the project is in line with the style and quality of the
rest of the house and neighbourhood. Return: 68-120 per cent.
3. Bathroom addition/remodeling: A bathroom addition should be a top
priority for those looking to add value to a home with only one
bathroom. This is particularly true if neighbouring homes feature
multiple bathrooms. Additionally, upgrading an outdated bathroom will
also bring significant value to a home. Return: 80-130 per cent; 65-120
per cent respectively.
4. Window/door replacement: Replacing inefficient windows or doors can
be an excellent use of your home improvement dollars, as they refresh
the esthetic and also help to keep energy costs down. Stick to standard
styles; odd shapes and highly customized arrangements do little for
resale value. Return: 50-90 per cent.
5. Deck addition/improvement/expansion: Decks are one of the few
exterior improvements with any significant return, apart from painting.
Return: 65-90 per cent.
The Leger Marketing survey was completed on-line from March
19, to March 22, 2011, using Leger Marketing's online panel,
LegerWeb, with a sample of 1000 Canadian homeowners. A probability
sample of the same size would yield a margin of error of +/-3.1 per
cent, 19 times out of 20.