Here’s why real estate is staying strong despite the pandemic
Canadian homeowners shelled out $80.1 billion on home renovations in 2019, according to a new report from Altus Group. The real estate data firm said overall spending was up 2.6 per cent in the year, outpacing overall economic growth.
According to the report, about 75 per cent of that spending was on home upgrades, with the remainder earmarked for necessary repairs. That $61.2 billion spent on upgrades roughly matched overall spending on new home construction, according to Altus.
However, Altus said Canadian home renovation spending growth is expected to grind to a halt amid the economic uncertainty caused by the COVID-19 pandemic. The firm is forecasting home renovation spending will fall 5.2 per cent this year after hitting $80.1 billion in 2019.
Altus Group forecast renovation spending will drop in all regions, with spending set to fall the most in Quebec, Alberta and Ontario. However, Altus sees a strong snap-back in 2021, forecasting a 5.3-per-cent jump in renovation spending due to falling five-year mortgage rates and the drop in rates on home equity lines of credit.
That drop in the cost of borrowing could prove significant, as Canadians increasingly borrow against the value of their homes. Altus estimated Canadians borrowed at least $14 billion dollars to finance their renovation plans last year, with home equity lines of credit (HELOCs) and other secured financing products accounting for about 60 per cent of the borrowing.