Most people regard renovations as a nice-to-have option, inspired by what they see on the growing number of home-improvement TV shows.
In a market that’s undergoing intensification, however, home renovations are becoming a serious business.
Last year more than $72 billion was spent on renovations nationwide, approximately 40 per cent greater than the value of all new-home construction, according to Altus Group.
There are a number of factors driving this renovation surge.
In the GTA, the bulk of the detached housing stock is owned by boomers, and most of them don’t wish to leave their homes. They’re choosing instead to renovate and age in place.
It’s understandable when you do the math. If an empty-nester living in a detached home in the city of Toronto were to downsize into a smaller, less expensive condominium, the costs associated with the move could total well over $100,000, after factoring in commissions, legal costs, land transfer taxes, and moving and other expenses.
So staying put and renovating their existing abodes begins to make sense to many boomers especially when the math is mixed with family considerations. This is one of the main reasons for the shortage of detached homes on the resale market. In February, active listings of detached homes were down by approximately 40 per cent, according to the Toronto Real Estate Board.
As children of boomers struggle with ever-increasing real estate prices, many of them are moving back in with their parents, making it all that much harder for that unit of housing to be recycled into the resale market.
A similar demand arises from the other end of the family’s generational spectrum, with aging parents moving into the same home as their adult children. In the US, a record 60 million Americans are living in multi-generational households.
The need to accommodate more family members under the same roof is spurring the uptick in renovation activity across the GTA, and things won’t be slowing down anytime soon on this front.
But undertaking a reno can be complicated and stressful, and most people find they’re ill equipped to handle the process. Poorly planned renovations often uncover deferred maintenance problems, which can end up expanding the scope and cost of projects. So it’s best to consult experts, and be sure you do your homework and choose the right design professional and contractor to carry out the job.
While renovations aren’t for the faint of heart, in a market deep in the throes of intensification, going forward, more housing units may be recycled through the renovation market instead of the resale market.
Source: The Star
