During unstable house market, why not renovate rather than move?
Pedro Arrais, Canwest New Service
Published on Canada.com: Thursday, November 06, 2008
While new housing construction has cooled due to economic uncertainty, some builders find the demand for home renovations, especially high-end projects, continues unabated.
Builders expect the renovation market will occupy them more as new house construction declines. (In recent years, the renovation market was held back due to a lack of available labour.)
As owners reassess their options in these changing times, many are deciding to renovate because it can be less expensive than demolishing a building and rebuilding.
Sometimes an existing house was built at a time when there were more lax bylaws. A new building on the same site would be subject to today's bylaws and building codes and might have to be smaller or farther away from a desirable feature.
For Derek Hill and Betsy Johnson, the 1970s waterfront home they found on Saltspring Island had the perfect location. They new they'd found their retirement home when they saw its large windows overlooking Stuart Channel, with Maple Bay beyond.
But it took the couple $560,000 in renovations to modernize the house.
"Around here, you can't buy an entry-level home for $300,000," says Hill. "The location was just what we were looking for, but it needed some renovations to make it practical and comfortable."
The couple transformed small, dark rooms into bright living spaces with lots of natural light. They instructed Wilco Construction to make the 2,600-square-foot house as green as possible. The house has a solar hot water heater, energy-efficient windows, a heat pump and a heat-recovery system.
Whenever possible, they tried to reduce and reuse materials, going so far as to recover about 45 kilograms of bent nails pulled from two-by-four lumber from demolished walls.
The renovated house now has the master bedroom on the main floor and four bedrooms down. The great room, with its 21-foot-high ceiling, features exposed beams from Vancouver Island and sandstone quarried from the property.
Although expensive renovations are spectacular, they may not make financial sense for people with modest incomes.
"Costly additions and changes are sometimes only a benefit for the current owner; they don't always suit the next buyer," says Gilles LeBlanc, a house appraiser with the Victoria firm Coast Appraisals. "The danger is that when people over-improve, they never get back the reno cost."
Despite this warning, though, LeBlanc says most typical renovations, such as kitchens and bathrooms, are worth the effort and make a lot of sense for homeowners.
Renovations are usually undertaken to address space deficiency or rectify issues such as traffic flow, says Greg Miller, principal of G.E. Miller, a builder and contractor specializing in custom renovations.
For high-end clients, the focus is usually more on creating a retreat-like environment. A recent $650,000 renovation project saw Miller's company overhauling a 3,000-square-foot, two-bedroom penthouse suite. He completely changed the decor, giving it a modern, urban feel.
Physical changes were made to improve flow, with changes to door locations, the introduction of smart wiring, the addition of a master bedroom on the main level and the creation of two home theatres.
Miller says that, regardless of cost, a renovation has to make economic, as well as emotional, sense.
While some clients may scale back their projects in reaction to the uncertain economic times, he thinks renovations are more cost-effective than moving.
But not everybody agrees. Real estate agents argue that when most people are confronted by changing needs, it's usually more cost-effective to move.
"Most people don't realize the magnitude of their decision until they see that excavator sitting in their backyard," says Rob Angus, a real estate agent with Address Realty Limited.
He supports renovations made within the confines of the building, especially kitchen and bathroom improvements, but draws the line at expensive additions.
"There are exceptions, like if the house is on waterfront. But quite often it makes more sense to relocate."
Canwest News Service