The momentum of the renovation market has not been dampened by inflation and rising interest rates.
Demand has been growing during the pandemic, especially from the summer of 2020 as people spend more time at home.
“That summer we had a more than normal summer, even though it was before the vaccination. I felt like people were getting ready for the fall surge, realizing they would be telecommuting and the kids wouldn’t be going back to school in September,” says Jordy Fagan of Toronto-based interior design firm Collective. Studio.
In 2022, demand remained very strong despite the loss of consumer confidence.
“I think people had saved up,” adds Ms. Fagan.
Despite this momentum, the market faces many challenges. One is skilled labor, says Dave Kenney of BroLaws Construction.
Mr. Kenney points out that his company wants to generate interest in this sector of employment. She also wants to train young workers.
“We need more people who can argue that construction is a good field to work in, that you can do well in it, than in any other industry,” he says.
Mr. Kenney adds that he had to raise the salaries of his employees because of the rising cost of living. And, as a result, he had to raise his prices.
In September, the average hourly wage of construction workers climbed 7.5% on an annual basis, according to Statistics Canada.
While renovators’ backlog remains strong, they face another problem: getting the job done on time due to supply chain delays.
“For example, we have just finished a kitchen, but the oven was not available for two months. The item was on hold. It had therefore not been delivered, summarizes Mr. Kenney. Another example: we had to wait for a counter because the supplier was out of stock due to high demand. »
Homeowners spent an average of about $13,000 from March 2021 to February 2022 to complete renovations inside their homes. The average exterior renovation project was $6,000, according to data from HomeStars, a home improvement company.
Homeowners expect to spend an average of over $25,000 from March 2022 to February 2023.
A slowdown
But experts already see clouds looming on the horizon.
Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA), says he’s already seen a slight slowdown in demand in the second half of 2022.
“Many people finance their major renovations through different means such as their line of credit. Since borrowing is becoming more and more expensive, many prefer to put their renovation project on hold. »
RénoAssistance, a company in which Desjardins Group is the majority shareholder, believes that the renovation market will remain vigorous next year.
The reason: more owners prefer to renovate rather than sell in a slow real estate market.