The renovation boom continues even as project costs rise and interest rates rise

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Susan Lambertis is in the process of having her entire home renovated and hopes to have it ready early next year.

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

After going through the plans with an architect over the past year, obtaining the necessary permits and suffering some delays due to the pandemic, the project officially began last spring.

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

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

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

Dave Kenney, who co-runs BroLaws Construction with his brother-in-law, said a kitchen makeover could cost anywhere from $15,000 to $20,000 more than it did a few years ago.

“A job two years ago and a job now don’t compare, which is a little difficult as a business owner when you’re getting callbacks for other jobs you’ve been put on before,” he said.

Jordy Fagan, co-founder of Toronto-based interior design firm Collective Studio, said projects are currently more expensive overall, which she attributes largely to labor costs. She said prices for materials like wood have stabilized somewhat compared to the wide swings over the past two years, but are still higher than before the pandemic.

“It’s easier now to make an offer and not say, ‘Okay, this offer is only valid for five days because anything can happen in five days.’ At least it’s a little more stable now and feels a little more comfortable to jump into a makeover,” she said.

After the first lockdown, Collective Studio experienced a surge in demand in the summer of 2020.

“This summer felt a little more normal, even though we were pre-vaccinated. I feel like this has sparked interest in preparing for the next fall wave, 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 insanely big, which was amazing.”

Fast-forward to 2022 and falling consumer confidence has impacted some of that volume, but demand is still very strong, Fagan said.

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

Meanwhile, Kenney of BroLaws said one of the challenges in recent years has been the quality of the workforce, especially as demand remains high and workers are overwhelmed.

He said his company is working to encourage interest in the professions and give young people the right education and experience.

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

Kenney added that as the cost of living rose, he raised his employees’ wages and consequently raised prices to keep it up.

Average hourly wages for construction workers rose 7.5 percent year over year in September, up from $2.36 to $33.79, according to Statistics Canada.

While Kenney has been able to keep up with demand, he said that due to ongoing delays, getting projects to 100 percent is sometimes still a problem.

“For example, we finished a kitchen, but they didn’t have their stove for the next two months because the stove was backordered and shipping to them was delayed,” he said. “Or we’ve completed other projects and we’ve been waiting for a countertop that has now been back-ordered just because demand is coming in from overseas.”

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

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 have people been asking for this year? Special spaces for kids to work, home offices and spaces to entertain, Fagan said.

Kenney said there are also many requests for kitchen overhauls, outdoor projects and indoor air quality improvements.

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

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

“A lot of people fund particularly large renovations through things like their lines of credit. With the cost of borrowing rising as fast as it has been, many people are now postponing some of their renovations,” he said.

However, RenoAssistance, a general contractor company owned by Desjardins, expects the renovation market to remain strong over the next year.

That’s because 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 cooling housing market, it said.

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

“I obviously expected this to be the most stressful thing we’ve ever done. Everyone says that. I feel like we handled it pretty well.”

Adena Ali, The Canadian Press

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