New study predicts $80.8 billion in renovation spending this year
Mortgage brokers involved in the home equity loan market might be looking forward to a profitable 2020. According to a new forecast from Altus Group, the level of renovation spending by Canadian homeowners is expected to be on the rise.
Home renovation spending slumped in 2018 to $77 billion, down 5.15% from 2017’s level. This marked the first time since 2011 that spending for home renovations failed to secure a year-over-year increase.
Although the data for 2019 has not been finalized, Altus Group is expecting a year-end total of $78.5 billion in renovations, a 2.1% uptick from 2018. Altus Group is also predicting the 2020 level to be at $80.8 billion, a 3% increase from last year.
When it comes to paying for these renovations, Altus determined that 35% of Canadians will be seeking out products such as a home equity line of credit (HELOC) to finance their projects, compared to 20% of renovators aiming at personal loans and unsecured credit to finance their projects. A remaining 17% of renovators stated they were going to use a bank credit card and 6% were polishing off their retail store credit cards.
Read more: Home equity loan: Everything you need to know
The new data echoes the enthusiasm measured in March 2019 with a RateSupermarket.ca survey that found 50% of Canadians would prefer to stay in their homes and renovate the property if they were presented with a $50,000 windfall, compared to 30% who would take the money and move.
"Given the current real estate market and tightening mortgage rules, renovating your existing home makes a lot of financial sense for many Canadians," said Janine White, vice-president of marketplace and strategy at RateSupermarket.ca. "Our survey shows that Canadians understand and appreciate the value of their real estate investment."
