Reno spending will bounce back to $80B by 2021
August 26, 2020
Canadian home renovation spending will dip 5.2 per cent this year but will roar back to the $80 billion level by 2021, according to a report from Altus Group, which notes renovation spending is now worth more than new home construction.
The drop in spending this year is due to COVID-19, the report said, but noted very low lending rates – also linked to this virus – could fuel the recovery in 2021.
During March and April, the renovation industry was put almost on hold with only essential repairs being done and larger projects postponed, according to Altus chief economist Peter Norman. This resulted in a 23 per cent decline in overall spending, compared to the strong pace of 2019.
Activity surged back in June as provinces began to open up and homeowners began retrofitting to work from home, Norman explained.
In 2019, 60 per cent of home renovations were linked to home equity loans, which is not an option now for some debt-challenged owners.
However, lending rates this in 2020 fell to record lows this summer, with the Bank of Canada forecasting mortgage and other lending rates will remain low for at least two years. These low rates could spur renovations in 2021.
The 2020 decline in renovation spending is expected to be most significant in Quebec, Alberta, Ontario and Saskatchewan. Renovation spending in the Atlantic provinces is not expected to decline as dramatically.
B.C. is projected to experience the most muted decline in renovation spending. B.C. is also forecast to lead the increase in 2021, with spending to rise 5.5 per cent from 2020 levels compared to a national average increase of 5.3 per cent. In 2020 total renovation spending is expected to reach about $76 billion, down from $80.1 billion in 2019, according to Altus Group.