Luxury market leads renovation rebound
July 14, 2021
Higher-end renos seen as lead spending curve. | IRMI.com
While home renovation spending is forecast to rebound in 2021 to the $80 million range seen in post-pandemic 2019, according to the Altus Group Housing Report, a survey by Sotheby’s International Real Estate zeroes in on where money will be spent and by whom.
Sotheby’s says it is the luxury end of the market that will dominate renovations in both 2021 and 2022.
“The pandemic has driven high-end homeowners to enhance their living spaces with discretionary renovations to enrich their lifestyle and enable work, entertainment and socializing,” according to Sotheby’s 2021 Luxury Outlook, released July 12.
Common luxury home renovations include the enhancement of outdoor spaces with gardens and landscaping, patio and deck upgrades, outdoor kitchens and dining areas, outdoor theatres, waterfront docks, and personal sports facilities such as pools and basketball courts.
Interior renovations include kitchen upgrades, reconfigurations to accommodate home office space, and the addition of theatres, personal fitness equipment and wellness facilities, the survey found.
Lack of luxury real estate inventory in Toronto, Montreal and Vancouver is amplifying this renovation trend, according to Sotheby’s.
“Homebuyers are now more likely to purchase homes that require repairs and updates due to a lack of other options in their desired neighbourhoods,” the report states. It adds “while this renovation trend is largely driven by end-users, market confidence is also motivating investment-minded buyers to purchase homes for renovation in anticipation of future resale at a higher price.”
A Mustel Group survey earlier in 2021 backs the outlook for an uptick in renovation spending. Mustel’s Generational Real Estate Trends Report: Aging in Place report found 86 per cent of homeowners in Canada’s key metropolitan areas wanted to live in their current home for as long as possible.
“Those who already own single family housing in their desired neighbourhoods are choosing to renovate with the intent of living there for as long as possible given the current shortage of housing options available for sale,” according to the Mustel study.