Tues., Dec. 27, 2016

More homeowners weigh whether to move or improve

Instead of listing, owners are customizing their abodes with upscale renovations.

By TESS KALINOWSKI  -  Real Estate Reporter

Change is hard, but not as hard — or as expensive — as moving house in the Toronto region's overheated real estate market.

As realtors wring their hands over a dearth of home listings, professional renovators are struggling to keep up with the demand for their services.

Instead of selling their homes, many owners are opting to renovate and they're using the appreciated value of their property to pay for the improvements, says Fairside Homes' Jon-Carlos Tsilfidis, outgoing chair of the of the Renovator and Custom Builders Council of the Building Industry and Land Development Association (BILD).

He says there are two kinds of renovations: "One is to get (the home) ready for market and the other is, 'No, I'm going to live in it.'"

"If they want to be in their home for one or two years it's generally the cosmetic stuff that gets done to increase the property value and the salability of the home. They will do things like kitchens and bathrooms, and make the house look nice," said Tsilfidis.

"If they're staying longer, they're going to do the things that are energy efficient: they're going to do roofs and windows, the insulation behind the walls if they don't have enough. It increases the comfort,” he said. “At the same time they also do the bathrooms and kitchens.”

The amount of money spent on home renovations and repairs in Canada now exceeds new home construction. Ontario accounted for almost four of every 10 Canadian renovation dollars, according to a May report by Altus Group, a company that specializes in housing industry research.

The renovation sector is expected to keep gaining ground over the year to come.   

That report suggests that the renovation sector, worth more than $70 billion in 2015, was expected to be even stronger this year and next.

Meanwhile, realtors and builders are predicting new home inventories and re-sale listings will continue to decline in 2017.

Sales manager Reid Dennison of Bryant Renovations, says the trend to improving rather than moving rings true to him.

"Very frequently I speak with people who had thought about moving, but now want to add instead (on to their existing home),” he said. “When they realize what's involved in stepping back in the (housing) market, they prefer to look at a renovation. Not all of them do it, but it becomes a serious option."

Despite those seemingly instant updates shown on TV, modernizing a more traditional home is seldom straightforward, said Dennison.

Kitchens and bathrooms are always in demand. Recently, there has also been interest in master suites.

"But often they don't come with a walk-in closet or an ensuite and there's no way to add one without losing (another) bedroom," he said.

He recommends that owners looking at renovations consult a designer. Bryant has its own designers but will work with others.

"Designers know about movement, light, the way people use space," said Dennison.

While it's good to talk to two or three contractors, price comparisons can be mug's game, he said.

"A lot of people feel they need three quotes before the design. That's a mistake. What they really need to do is talk to three contractors and develop a sense of trust with them,” said Dennison. “Then the actual budgeting and pricing should be a co-operative process with your designer and builder."

Company founder Dennis Bryant says fashion and technology have sped up the pace at which owners are willing to invest in changing the look and function of their homes.

"An obvious example is that people put new flooring in all the time. Once upon a time it went in and it was the same wood floor that was there for 100 years," he said.

A lot of flooring these days isn't made for re-finishing but even if it is, homeowners will very often tear it out in favour of something newer.

There's also a trend to customization.

"It happens particularly in condos. It's a brand new condo and people have been there a year or two and it's probably fine but it's not what they want. It is surprising how much gets torn out," said Bryant, who has ripped out his share of perfectly good cabinets and fixtures just because they weren't to another owner's taste.

He advises against renovating to sell a home. Painting and cleaning is your best bet, said Bryant.

Home owners looking at a renovation can take 99 per cent of the risk out of the project by a RenoMark designated contractor, he said.

He suggests calling past clients and visiting a job site.

"Just meeting the people who are working there will tell you a lot. If you like the people, it's likely a company you can rely upon. If you go there and find people are disrespectful and they're careless and it's messy, you can get a feeling for what's going on," said Bryant.

Make sure the contractor is fully insured for demolition and underpinning. People don't ask for these very often but they're easily checked, said Bryant. He advises against relying heavily on web-based recommendations.

RenoMark are the renovators who are municipally licensed, insured and trained, said Tsilfidis. They pay a "not insignificant" amount of about $1,400 a year for the designation. They follow a code of ethics, including the commitment to returning phone calls within two days.

Enrollment in the program has gone up in recent years, but not at the pace Tsilfidis said he'd like to see.

There are about 190 general renovators among about 1,500 members of BILD, including suppliers, trades, builders and financial professionals.

The trend in renovations is to bigger jobs such as building an addition on the back of a home or putting another storey on a bungalow. Those can be a much longer process because many municipal planning departments are inundated with permit applications, he said.

"Usually when you get a building permit that will entail at least two other permits — plumbing and HVAC (for example)," said Tsilfidis.

How long a home owner waits for work to begin depends on where they live and the scope of work.

"You would think there would be a predictability in timelines and there isn't and that's our frustration. We can wait two weeks or 12 weeks to get a zoning certificate," he said.

That identifies the variances required to go on to the committee of adjustments and then you might wait four months to get a committee hearing. Then there's an appeals period, he said.

"It could take upwards of a year to get a building permit."

Renovation by the numbers

$52 billion

Renovation spending that is considered discretionary with repairs and improvements that keep homes in working condition accounting for only 1 in 4 reno dollars.

58%

The amount of residential construction spending on renovations ($70 billion) compared to 42% ($50 billion) spent on new dwellings.

$5,000

Average spending per Canadian household on both owner-occupied and rental properties.

$1,400

Average annual spending per rental unit on repairs by landlords. This figure includes common areas such as parking lots and elevators.

Altus Research