Older households prefer to renovate: CMHC
Historical census data show almost 80 per cent of households headed by someone 55 or older prefer not to move
To renovate or not to renovate, that is the question, and Canada Mortgage and Housing Corp. says it has the answer.
For households headed by someone 55 to 64, the response is going to be to renovate rather than move. Indeed, the Crown corporation predicts almost 400,000 households in Ontario could be in the market to renovate. The agency says the age group will make up about 1.1 million households in Canada’s largest province next year.
“Although the average growth rate of home renovations is not likely to match that of the last couple of decades, the province is still set to see an increase. Ontarians are aging, the housing stock is aging, home prices are on the rise and more homebuyers are turning to the resale market — all these factors support renovation spending,” said Ted Tsiakopoulos, a regional economist in Ontario with CMHC.
CMHC noted that historical census data from Statistics Canada show almost 80 per cent of households headed by someone 55 and older prefer not to move.
“This is due to declining mobility when households age. In fact, households only move if health and finances necessitate this or to be closer to family and friends, the report notes.
“In addition, undersupplied resale markets combined with rising transaction costs stemming from realtor fees and land transfer taxes would further discourage mobility among older households. Housing needs change as a household ages which will require adapting the current home to meet ever changing needs.
The report points to another reason for renovation: Adult children still living at home.
“In addition, with a large share of young adults staying home longer due to economic and academic considerations, the need for space will remain important.”
CMHC says renovation spending may not be growing at the same rate it was prior to 2008, but it nonetheless contributes to almost 3.5 per cent of Ontario’s gross domestic product. The renovation market is now worth more to the provincial economy than new construction.
The red hot resale market is also having an impact on the renovation market, namely because when people buy homes they tend to want to fix them up. Ontario saw 173,896 home sales in the first eight months of the year, up 9.3 per cent compared to the same period a year earlier.
“With resale activity running at record levels in 2015 and in early 2016, this suggest renovation spending is poised for additional growth.
In 2015 alone, Ontario’s renovation market was estimated at about $25 billion,” CMHC said.
“In recent years, popular projects included: remodelling of rooms which includes basement upgrades, painting and wallpapering, heating and air-condition and landscaping.”