Canadians slowed their renovation spending, but that’s expected to change. Altus Group is forecasting an upcoming rise in renovation spending, after a decline in 2018. The firm expects 2019 numbers to come in higher when reported later this year. They also expect 2020 numbers to top last year’s final numbers, fueled by HELOCs and mortgage refinancing.
Renovation Fell For The First Time Since 2011
The numbers for 2019 aren’t finalized, but Altus forecasts they’ll come in above 2018. There was $77 billion spent on renovations in 2018, down 5.15% in real terms from 2017. In 2019, they expect the year to finish with $78.5% billion in renovations, a real increase of 2.1% from a year before. They also expect this year to rise to $80.8 billion, up 3% from last year. The decline in 2018 was highly unusual, and the first in Canada since 2011.
Canadian Renovation Spending Expected To Rise In 2020
Most Households Plan On Using HELOCs and Refinancing To Pay
Canadians are tapping every form of credit to pay for these renovations. A survey from Altus found 35% of people plan on using a secured line of credit like a HELOC to fund the renovation. About 23% of people are looking to refinance their home to fund at least part of the renovation. Personal loans and unsecured credit are planned to be tapped by renovators using 20% each.
HELOCs and Mortgage Refinancing Are Going To Be Popular Payment Methods
Higher interest rate loans are also being tapped to pay for renovations. Seventeen percent of people said they would use credit cards to pay. Another 6% of people said they would use private store credit cards, and the same amount said they would tap private loans. Hopefully they get a nice signup bonus on those credit cards for the extra interest they’ll pay.
The firm expects renovation spending to rise both last year, and this year. One weight that may support this is rising home values, which have been on a tear recently. This trend tends to provide fuel for consumption through HELOCs and refinancing – both are sources of funds the majority of people plan to tap. Although this is the forecast, one negative working against this is consumer credit growth – which has been flat. As general economic anxiety surfaces, it becomes more difficult to get people to part with their cash.
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