Interest rates

Renovation Boom Continues Even as Project Costs Rise and Interest Rates Rise

Susan Lambertis is having her whole house renovated and hopes it will be finished early next year.

“We’re in a knee-deep renovation,” she said.

After reviewing plans with an architect last year, securing necessary approvals and some pandemic-related delays, the project officially kicked off last spring.

Lambert said she and her husband were motivated to upgrade their home after realizing many small repairs were needed.

“We needed new windows, we needed a new roof. Our kitchen was falling apart – cabinets were all broken, our fridge was broken, our stove. So we kind of needed to do a bunch of things,” she said.

The renovation industry really boomed in the first two years of the pandemic as people spent more time at home, and that momentum has continued despite higher costs and rising interest rates .

Dave Kenney, who runs BroLaws Construction with his brother-in-law, said a kitchen remodel could cost between $15,000 and $20,000 more than just a few years ago.

“A job two years ago and a job now are not comparable, which is a bit difficult as a business owner when you get callbacks for other jobs that people have used you for before,” did he declare.

Jordy Fagan, co-founder of Toronto-based interior design firm Collective Studio, said projects are more expensive overall right now, which she attributes in large part to labor costs. She said prices for materials, such as wood, have stabilized somewhat from the sharp swings of the past two years, but still remain above pre-pandemic levels.

“It’s easier to give a quote now, and not be like, ‘OK, this quote is only good for five days, because anything can happen in five days.’ At least now it’s a bit more stable, and it’s a bit more comfortable to dive into a renovation,” she said.

Coming out of the first lockdown, Collective Studio saw demand skyrocket in the summer of 2020.

“That summer felt a bit more normal even though we were pre-vaccinated. I feel like that sparked interest in getting ready for the next wave of fall in terms of setting up work-from-home situations and understanding that kids wouldn’t necessarily be going back to school in September,” Fagan said.

“The volume started to get incredibly big, which was amazing.”

Fast forward to 2022 and declining consumer confidence has impacted some of that volume, but the demand is still there, Fagan said.

“I think people have saved money now,” she said.

Meanwhile, BroLaws’ Kenney said one of the challenges of the past two years has been with the quality of the workforce, especially as demand remains high and workers are stretched.

He said his company works to create interest in the trades and give young people the right training and experience.

“I think we need more advocates or people who can show that trades can be a good place to work and that you can be as successful as any other job,” he said. .

Kenney added that he had increased the wages of his employees as the cost of living rose and he had therefore raised prices in order to maintain this.

In September, the average hourly wage of construction workers rose 7.5% year over year, an increase of $2.36 to $33.79, according to Statistics Canada.

While Kenney was able to keep up with demand, he said getting projects 100% was always a problem, sometimes due to persistent delays.

“So we finished a kitchen, for example, but they didn’t have their stove for another two months because the stove was out of stock and their shipment was delayed,” he said. “Or we have completed other projects and were waiting for a counter that is now out of stock just because of overseas demand.

Homeowners spent an average of about $13,000 between March 2021 and February 2022 to renovate the interior of their homes, while an average of $6,600 was spent on exterior projects, according to company data from HomeStars home improvement.

HomeStars also found that homeowners expect to spend an average of more than $25,000 on home renovations from March 2022 to February 2023.

So what did people ask for this year? Dedicated child labor spaces, home offices and entertainment spaces, Fagan said.

Kenney said there were also a lot of requests for kitchen overhauls, outdoor projects and indoor air quality improvements.

Looking ahead to 2023, some industry experts say there could be a bit of a cooldown on the way.

Kevin Lee, CEO of the Canadian Home Builders’ Association, has already seen a slight slowdown in demand in the second half of 2022.

“A lot of people, when they’re doing particularly large renovations, finance them through things like their lines of credit. So while the cost of borrowing is rising as quickly as it has, many people are now postponing some of their renovations,” he said.

However, RénoAssistance, a general contracting company that is part of Desjardins, sees the renovation market remaining strong next year.

Indeed, more and more homeowners are choosing to stay in their current property and improve it rather than trying to find a new property in a declining housing market, he said.

Lambert said the renovation process has been stressful, as she and her husband balance mortgage payments, rent and financing the renovation itself, but noted that having a good contractor and architect made a big difference.

“I went in expecting it to be, of course, the most stressful thing we’ve done. That’s what everyone says. I feel like we’re doing pretty well. »

Adena Ali, The Canadian Press

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