How homeowners are choosing Renovations over moving up in the market

I had met Mike and Maria through a referral when the two were just getting serious and had decided to take the plunge and buy a house together. It was 2014, and they bought their first home for $269,000. Seven years later they were married, had two children, and decided to move up to buy a higher priced home. Mike was frozen with fear had prices moved up that much? Unfortunately yes, his mortgage would have gone up by $250,000 for the home they were seeking. Their final decision was to renovate and put $125,000 in their home to meet their needs.

Why is renovating trending to be the most popular choice?

Very simply, it makes greater financial sense. Selling your home involves a large cost. In today’s market this would include the following: realtor fees, government land transfer tax, lawyer costs, moving costs and possible mortgage penalties for breaking the mortgage. We have seen families pay between $40,000-$60,000 before buying a new house.

If renovating is your decision, always approach the bones of the home first. What do we mean?

Your roof, your foundation, your exterior, the electrical, furnace and the floors. Canadians normally do not think like this, they want a return on their investment. But without the basics of the home complete, it may cost you more in the future.

Where do renovations give me the most return?

Let’s look at where you will get your best return for every dollar spent:

• Kitchen 75% to 100%
• Bath 75% to 100%
• Painting 50% to 100%
• Energy efficiency 60%
• Basement 50% to 75%
• Furnace heating 50% to 75%
• Windows and doors 50% to 75%
• Air conditioning 25% to 75%
• Landscaping 25% to 50%
• Fencing 25% to 50%
• Skylights 0% of 25%
• Swimming pool 0% to 25%

I suspect that the percentage for the swimming pool has gone up since Covid.

I decided to renovate now what’s next?

Taking inventory of what will be required and what your wishes are.

Get quotes for price, quality and in what timeframe. Grants and rebates for energy efficiency improvements.

Visit your bank or mortgage broker to ensure the added funds are reasonable to your budget and cost structure.

In other words is it affordable?

Before proceeding ask yourself if the renovation will add personal happiness in your life and it will add value.

If the answers to these questions are yes, then be selfish. Add happiness, increase the value of your home and affordability.