Renovation boom continues even as project costs increase and interest rates rise

Susan Lambertis is in the process of renovating her entire home and hopes to have it completed by early next year.

“We’re knee deep in Reynolds,” she said.

The project officially kicked off this spring after completing plans with an architect last year, obtaining the necessary approvals and some pandemic-related delays.

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

“We need new windows, we need new roofs. Our kitchen is falling apart — cupboards are broken, our fridge is broken, our stove is broken. So we kind of need to do a lot,” she said.

The renovation industry saw a considerable boom in the first two years of the pandemic as people spent more time at home, and that momentum continued despite rising costs and interest rates.

Dave Kenney, who runs BroLaws Construction with his brother-in-law, says kitchen renovations can cost $15,000 to $20,000 more than they did a few years ago.

“There’s no comparison between a job two years ago and a job now, and as a business owner, it’s a little difficult when you get callbacks from people who have used your other jobs before,” he said.

Jordy Fagan, co-founder of Toronto-based interior design firm Collective Studio, said overall projects are currently more expensive, which she attributes largely to labor costs. Prices for materials such as lumber have stabilized compared with the wild swings over the past two years, but remain above pre-pandemic levels, she said.

“It’s easier to make an offer now, rather than like, ‘Okay, this offer is only valid for five days, because anything can happen in five days.’ At least it’s a bit more stable now and feels more comfortable doing renovations ,”she says.

Coming out of the first lockdown, demand for Collective Studios soared in summer 2020.

“That summer felt a little bit normal, even though we were pre-vaccine. I think it sparked interest in getting ready for the next wave of fall, which is setting up a work-from-home environment and understanding that kids don’t necessarily have to go back to work in September.” Back to school,” Fagan said.

“The volume started to get incredibly loud, which was great.”

Fast forward to 2022, Fagan said, and declining consumer confidence has impacted some sales, but demand remains strong.

“I think people are saving some money now,” she said.

Meanwhile, BroLaws’ Kenney said one of the challenges over the past few years has been quality labor, especially as demand remains high and workers are stretched thin.

He said his company was trying to foster interest in the industry and provide young people with appropriate training and experience.

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

Kenny added that as the cost of living has risen, he has raised wages for his employees and, as a result, prices to keep things going.

Average hourly wages for construction workers rose 7.5 per cent in September from a year earlier, or $2.36 to $33.79, according to Statistics Canada.

While Kenney has been able to keep up with demand, he says getting projects to 100% can sometimes still be a problem due to ongoing delays.

“So we finished a kitchen, for example, but they didn’t have a stove for another two months because the stove was backordered and shipped to them late,” he said. “Or we’ve done other projects where we’ve been waiting for a countertop and are now backordered because of the need to import from overseas.”

Between March 2021 and February 2022, homeowners spent an average of about $13,000 on interior renovations, and an average of $6,600 on outdoor projects, according to home improvement company HomeStars.

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

So what are people asking for this year? There are dedicated work spaces, a home office and play space for the kids, Fagan said.

Kenny said there were also many requests for kitchen overhauls, outdoor projects and improvements to indoor air quality.

Looking ahead to 2023, some industry experts say there could be some cooling.

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

“A lot of people, when they do a particularly major renovation, are financing it through things like a line of credit. So with borrowing costs rising rapidly, a lot of people are putting off some renovations now,” he said.

However, general contractor RenoAssistance, which is part of Desjardins, expects the fit-out market to remain strong next year.

That’s because more homeowners are choosing to stay with their existing properties and improve them, rather than trying to find new properties in a cooling housing market, the report said.

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

“Of course, I was expecting it to be the most stressful thing we’ve ever done. That’s what everyone said. I think we handled it pretty well.”

Adena Ali, Canadian Media

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