Garry Marr | August 9, 2014 7:45 AM ET
More from Garry Marr | @DustyWallet
David Reich has spent tens of thousands of dollars renovating his four-storey house in Montreal.
‘HGTV effect’ pushes home renovation spending to record $63-billion
It could be just the impact of all those home-renovation television programs, but Canadians are fixing up their properties like never before, according to a new report.
The 86-year-old wheelchair-confined architect says it’s been worth every cent because he’s still in his home and can move effortlessly from floor to floor.
“I’m disabled. It didn’t happen overnight but I had to make a choice between selling my house or adapting the house,” said the polio survivor, whose mobility has decreased over the years from the disease. “It was just easier to adapt. This is a huge market and there are billions of dollars being spent [to make homes adaptable].”
The question many seniors are asking themselves today is whether they want to renovate and retrofit their house to meet their current physical conditions, move to a condo or even consider a retirement community where they’ll pay a lump sum for all their needs.
“If I hadn’t spent all this money, I’d be in a [retirement] home and to me a home is a death sentence,” says Mr. Reich, adding he says a high-end retirement residence could have cost him thousands of dollars per month.
Long-term maybe he won’t get his money back for all the renovation dollars he has put in but he figures it’s worth it. “I could break someone’s legs and create a bigger market for the house,” he says, with a laugh.
Certified financial planner Ted Rechtshaffen, chief executive of TriDelta Investment, said seniors really have to ask themselves what they hope to accomplish by renovating.
“Are you renovating to live in the property for 15 years or because you are planning to sell,” says Mr. Rechtshaffen. “Sometimes if the renovation is because of a physical need, you have to ask yourself how much easier will it be in a bungalow or a condominium?”
Spending a ton of money to make a two-storey home into a one-storey residence might not make financial sense. But, from an emotional point of view, there is no way to make an argument.
‘The emotional side is tough,” says the CFP, who cautions people should not go into a renovation addressing handicaps thinking they will get that money back upon the sale of the home.
He says it’s a tough question but seniors need to ask themselves how many years they’re going to get out of a renovated home before moving again for health reasons. Mr. Rechtshaffen notes if you renovate and downsize you are out both the cost of your upgrades and the transaction costs of moving.
If I hadn’t spent all this money, I’d be in a [retirement] home and to me a home is a death sentence
He adds the cost of a retirement home may seem steep with some easily charging $5,000 per month but you have to consider the fact you’re not going to have many more costs beyond that.
“Don’t forget you’re also selling your home. If you’re selling a $1-million home what if you can earn 5% investing that money,” the planner asks.
Last year, there was $63.4-billion spent on renovations in Canada, a record for the market. The seniors’ share of the market, those 65 and older, was worth $8-billion, according to a study from Altus Group based on 2o13 figures.
Patricia Arsenault, an executive vice-president with Altus, said seniors generally do less renovation work than other age categories.
But she says the size of the seniors segment in Canada is so large it counters their smaller participation rate.
“I’m not so sure more people will want to stay in their homes than previously did because there are so many more options today for seniors to accommodate them,” said Ms. Arsenault. “But just the fact we have an aging population, means there are going to be more seniors and the total [renovation] pot for seniors will grow.”
Both Ontario and British Columbia offer tax credits for seniors doing renovations to improve accessibility but the money alone is not enough to entice people, she says.
“You still have to spend the money to get the credit,” said Ms. Arsenault, about the tax break which is $1,500 in Ontario and $1,000 in B.C., for example. “You’re not going to do it, just to get the credit.”
So in the end, does she think it is worth it to do that renovation?
“The accessibility might even detract from the value of your house,” she says. “A family with 35-year-olds doesn’t want a bathtub you can walk into.”
But the tide may be turning as the population ages, says Elton Ash, executive vice-president of Re/Max of Western Canada.
“Accessibility is becoming more and more important. We are starting to see a trend. You can even see a greater return on some of those improvements.”
He says the bungalow with say wide doorways that a wheelchair can fit through is something that consumers are seeking out and that wasn’t happening five years ago.
Mr. Ash says it does depend on the market. In the suburbs, an accessible home could reduce your price but in the urban core it might make it more valuable.
“The Baby Boomers want to move to the urban core and having [a home] accessible is something they may just want,” says Mr. Ash.