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© Copyright 2009 Work-4 Projects Ltd.
State of the Renovation Union

By Charlie Blore

With the new home construction market taking its share of lumps over the last year, renovators have been quietly going about their business — and there have even been whispers about growth. We decided to have a look for ourselves at the issues of the day and the state of the market from coast-to-coast.

British Columbia
Despite a precipitous drop off in new home sales and prices over the last year, British Columbia’s renovation market has held a steady pace. BC Renovation Council chair, Ralph Belisle, singled out Kamloops and Nanaimo as markets that have done particularly well.
The fall in new home activity has had a mixed bag of effects. On the one hand, more homeowners seem to be turning toward renovation rather than buying new. On the other hand, reduced activity in new home construction has led to an influx of cash renovators. This not only increases competition, but the fact that cash contractors can operate with less overhead also puts downward pressure on renovation prices. 
“The word’s out: everyone knows there’s lots of renovation work,” says Belisle of the growth in cash renovations. “When a company enters from a less service-oriented part of construction, they’ll get themselves in trouble, but before they do they’ll probably get work by thinking they can do it for much less money, when they can’t.”
The federal tax credit announced in January for renovation projects was welcome news in British Columbia. The favourable attention it will bring to the market and the fact that claimants must go through a licenced renovator to qualify for the up-to-$1,350 credit, are both being seen as positives.

The Prairies
The situation in the Prairies mirrors that of British Columbia. New home construction in the Prairies has been rocked by this recession, and the renovation market is doing better than its new start counterpart. While some renovators have seen a drop in activity, others have flourished.
“The renovation market in Saskatchewan is stable,” says Ron Olsen, general manager of Boychuk Construction Corporation. “We’re seeing signs of growth but it would be moderate, I would think. Definitely the federal [tax credit] is having an effect. We’re certainly seeing more activity in terms of pricing and so on. And that should translate into more activity in the coming months.”
According to outgoing Alberta Renovation Council chair, Robert Schulz, aside from the economy, the region’s major concern is competition from cash contractors moving over from the decimated new home market. The RenoMark program has flourished as a result, and the federal tax credit hasn’t hurt either.

While the renovation market itself is rolling along quite well in the Ontario, two bombshells have just been dropped by the provincial government, which threaten to derail the legitimate renovator.
The first was Bill 119: An amendment to the Workplace Safety and Insurance Act of 1997 that would make workers’ compensation coverage mandatory for independent operators, sole proprietors, partners in a partnership and executive officers of corporations working in construction. The cost of increased premiums to the average small or medium-sized renovation company affected by this bill will, by most estimates, be in the neighbourhood of $10,000 per year.
The second bombshell came in the latest provincial budget, with the announcement that the province will be using a harmonized sales tax as of July 1, 2010. While exemptions were won for new home projects under $500,000, the renovation industry hasn’t yet been exempt in any way.
Ontario’s Renovation Council chair, Michael Martin, reports that while renovations have maintained a strong pace through the economic downturn in all but the hardest hit areas — Oshawa, for instance — these twin obstacles could throw the market for a loop.
“I think, come next year, the underground is going to flourish, and the legitimate contractors are going to hit a little bit of a stall,” says Martin.

Much like Ontario, Quebec’s renovation industry has managed to weather the storm and is showing signs of recovery. Nonetheless, the fate of the manufacturing sector — which employs one in six Quebecers — will have a significant impact on the renovation market down the road.
“In the last few weeks renovations have started picking up, but it’s more small jobs than it was before.” says Ari Artzy, general manager of Ady Renovation.
Government intervention, both federal and provincial, has been key in stimulating activity. In January, the Charest government announced a new tax credit that will pay for 20 per cent of renovation expenses up to a maximum of $2,500 — nearly twice what the federal government is offering with its credit. Interested homeowners must provide receipts and have a total project budget of over $7,500. The credit is available for one year, retroactive to January 1, 2009. The province is projecting an average reimbursement of $1,400 through this credit. This is on top of the aforementioned federal tax credit.

The Maritimes
By and large, Atlantic Canada has fared better than most of the country through this recession. The renovation market, it seems, is no exception to that trend. Manufacturing jobs represent a relatively small share of the Maritimes’ workforce, and as a result, the region hasn’t been hit as hardly by layoffs and slowdowns. Activity has remained brisk throughout most of the region.
In particular, energy efficient retrofits have been a popular choice. In New Brunswick for instance, incentives from the provincial government have succeeded in drawing projects out.
“The market is probably as good as it’s ever been,” said Brian Thompson, New Brunswick chair to the Canadian Renovators Council. “[Job losses] may filter down here at some point in time, but right now we don’t seem to feel it very bad.”

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