OTTAWA – With Greater Toronto’s resale real estate market recording higher-than-ever average prices, Ontario’s home renovation market has continued to expand at an impressive pace – overtaking even the province’s new construction market, in terms of investment dollars spent.
According to the Canada Mortgage and Housing Corporation (CMHC)’s most recent Housing Market Insight briefing issued September 27, Ontario’s renovation market was estimated at roughly $25 billion in 2015 alone.
The CMHC’s report notes that the Ontario’s renovation market, which grew sharply between 2000 and 2008, is now poised to comprise nearly four per cent of the province’s GDP within the coming years.
Renovations fueled by real estate goals
CMHC’s most recent analysis of Ontario home renovation projects found that 75 per cent of them were undertaken “to add value to the home” – and that home renovation work generally takes place within 12 months of an existing home purchase.
“With resale activity running at record levels in 2015 and early 2016,” noted the report, “This suggests renovation spending is poised for additional growth.”
In recent years, the most popular projects have been bathroom remodels, basement upgrades, painting/wallpapering, heating, air conditioning, and landscaping projects – some of which our regular readers will recognize from our previously-published feature on staging tips.
Seniors lead in renovation spending
According to the CMHC’s report, Ontario’s 65+ demographic – who currently lead all age groups in home equity – will continue to play a major role in Ontario’s resale market, as households aged 55 to 74 are forecasted to contribute the most to Ontario’s household formation over the next several years.
More specifically, households aged 55-64 are projected to comprise nearly 1.1 million of the province’s households by 2017.
That shift will likely have a huge boosting effect on renovation spending because within recent years, Canadians over the age of 40 have been the most likely to invest in home upgrades. Moreover, according to the report, “historical census data indicates that as much as 80 per cent of households over the age of 55 age in place and prefer not to move.”
Rather than seeking a new home, the report explains that baby boomers are much more likely to adapt their current homes, in order to meet changing lifestyle needs as they grow older.
“Although the average growth rate of home renovations is not likely to match that of the last couple of decades, the province is still set to see an increase,” explained Ted Tsaikopoulos, a regional economist with the Ontario CMHC.
“Ontarians are aging, the housing stock is aging, home prices are on the rise, and more homebuyers are turning to the resale market — all these factors support renovation spending.”