A new RBC study conducted during the market turmoil in October finds overall intentions to purchase a home in the next two years remain steady at 22 per cent and have not changed since January 2008. As well, renovation intentions are slightly higher than last year - up four percentage points as 70 per cent of respondents are planning to renovate or make home improvements in the next two years.
"Despite recent economic events, we've noted that Canadians still believe a home is a good investment and many are continuing with their home improvement plans," remarked Catherine Adams, RBC Royal Bank's vice-president, Home Equity Financing.
According to RBC's 5th Annual Renovation Survey, given the choice, most Canadian homeowners would opt for hammers and paint brushes, rather than packing tape and cardboard boxes. Seventy five per cent of Canadian homeowners say that, if their home needed major renovations, they would rather renovate, than sell and move.
While the majority of Canadians (55 per cent) would definitely continue to renovate even if housing prices were to drop, they appear to be a little more hesitant than they were in 2007 (66 per cent). Many Canadians seem to be choosing to renovate rather than relocate, noted Adams.
Renovation Budgets. Most Canadians planning renovations will spend less than $50,000 and indicate they plan to spend $10,801 on average - up about 10 per cent from $9,850 in 2007.
The RBC survey also showed that 63 per cent of homeowners have renovated in the past two years and more are establishing a realistic reno budget. Seven-in-ten had a budget and half (53 per cent) stuck to it. Even those renovators that did go over budget have pulled back significantly. The average budget excess was 24 per cent in 2008 compared to 74 per cent overage in 2007 and 88 per cent in 2006.
To finance their reno expenditures, Canadians will be less likely to tap into cash or savings than they have in the past (47 per cent in 2008, 51 per cent in 2007 and 69 per cent in 2004). Only 28 per cent would consider using the equity in their home, down from 41 per cent who said they would consider it in 2007. More men (32 per cent) than women (24 per cent) would consider borrowing against home equity for their renovation - the lowest cost of all the borrowing options.
"When people are looking for a mortgage they're usually very cost sensitive, and they seek advice about the best possible rate and product combination. We don't always see those same savvy cost comparisons for home renovations, even though many involve sizable expenses," added Adams.
When it comes to top mistakes or renovation disasters, Canadians who have completed a renovation in the past two years, blame going over budget (26 per cent); using the wrong contractor or tradespeople (14 per cent); choosing the wrong products (12 per cent) and doing it myself (11 per cent).
Balance of Report and Tables
Royal Bank Report provided by Lindsay Doke Trusted Mortgage Advisor RBC
David Pylyp With the recent financial market turmoil there seems to be room for the Toronto Real estate market to stabilize. Although many are calling for a freefall in prices I have yet to see any tangible adjustments in sales and asking prices in executive townhouses or prestigious neighbourhoods like Markland Wood or Watercolours in Lorne Park.