The Reno Market Has Taken Off
Since 2012 there has been a home renovation fever in Toronto and much of Canada. The price of resale homes has encouraged people to renovate their old homes instead of buying new ones. According to Scotiabank, Canadians spent approximately $53 billion dollars on home renovations in 2015. The fact that even small renovations raise property values has motivated homeowners to undertake these projects
Renovation expenditure has risen in the Toronto area constantly for the past four or five years. According to published real estate reports the figures linger around a three percent yearly increase for kitchen and bathroom renovations (full home renovations as well as other rooms and additions have kept to an average increase of two percent). One possible explanation for this phenomenon is that buying a new house often turns out to be more expensive in the long run than renovating an existing one.
People generally renovate their homes for four main reasons
- To bring operating systems up to date (water, heating, electricity etc.)
- To increase comfort or add space
- To add value
- To increase the sale price when looking to move
According to the Appraisal Institute of Canada, not every renovation increases the value of your home and those that do vary in return on investment percentage. Kitchen and bathroom renovations can have the highest impact on the value of your home.
A kitchen renovation can run from $3000 for small updates (painting, changing out faucets, updating wiring) to $30,000 or more for a full renovation including appliance replacement. While $30K is a lot of money, according to the Appraisal Institute of Canada and the National Kitchen and Bath Association, your return on investment could be between 80-100%.
Remodeling your bathroom can cost from $2000 to $7000 for an update, while the sky’s the limit for a complete remodel! The return on investment for bathroom renovations is anywhere between 75-100%.
A good rule of thumb for home renovation investments is that up to 75% of the money you put into the project is returned to you through tangible means (ie. increased property value, energy savings, decreases in repair bills). The remaining percentage will most likely not be tangible but can be returned in different ways like comfort, additional space, or the deep satisfaction of having the home you’ve always wanted.
Renovating your kitchen or bathroom is almost always a good idea, but be careful not to take on more than you can afford – there’s nothing worse than living in a half finished house.
Source: Homeservice Club of Canada