- 74% of homeowners plan to improve their homes in 2021, with outdoor projects leading the way.
- Adding a pool or hot tub or extravagant landscaping generally does not add value to your home at resale.
- Some renovations, like adding a pool, could increase the cost of your home insurance.
Canadians have always loved to renovate their homes. It’s estimated in 2019 Canadians spent north of $80 billion to spruce up, repair, upgrade or expand their homes. In the early days of the pandemic spending on renovations stalled; it picked up in the latter half of 2020 once the realities of working from home (and online schooling) made themselves known.
It looks like any momentum lost in early 2020 by the renovation industry may be found again. According to a recent HomeStars survey, almost three quarters (74%) of Canadian homeowners plan to improve their homes in 2021.
"With all this extra time at home, Canadians are investing in their spaces by making repairs, adding functionality or simply to 'spark joy' in the new normal we're living in,” says Shir Magen, CEO of HomeStars.
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What homeowners plan to renovate in 2021
The national survey found that the most popular projects this year will be outdoor work, including landscaping and decks:
- 54% of homeowners plan to improve their outdoor space
- 32% plan to take on a bathroom renovation
- 23% are taking a critical eye to the kitchen
- 17% are looking to make the basement a better space
But not all renovations are created equal; if you’re looking to sell your home, some upgrades will add value to your home while others may not.
Renovations that typically add value to your home’s resale
The Ontario Securities Commission’s GetSmarterAboutMoney resource suggests if you’re planning to remodel or renovate, the following projects may help increase your home’s value:
- New or improved kitchens and bathrooms
- Lower cost improvements like painting, new wallpaper, or flooring
- New windows or doors
- Basement renovations
- Renovations that involve making the home more energy-efficient (especially if you’re able to take advantage of government rebate programs)
The costs of these renovations can be recouped, in part, when you sell your home. The average rate of return on the cost for a kitchen or bath renovation is estimated to be 75-100%, lower-cost improvements roughly 50-100%, new windows or doors around 50-100%, a basement renovation approximately 50-75%, and energy-efficient upgrades about 60%.
Renovations that may not provide a return when selling
Some renovations may not add value to your home’s resale value. If these projects are on your to-do list, make sure you’re doing them for your enjoyment because it’s possible you won’t get any of your money back when you decide to sell:
- Adding a swimming pool
- Extravagant landscaping
- Spa-style shower systems
The running theme for renovations that don’t add value, it seems, is all about personal preferences. Two out of the three renovations (swimming pool and landscaping), if not favoured by the buyer, involve work and maintenance to upkeep. Many people would consider filling in a pool or may be unable to keep up with the landscaping required to keep a lush garden.
Additionally, projects that are along the lines of maintenance will not add value either. Replacing an aged roof or HVAC system or upgrading your plumbing or electrical systems fall under home maintenance, and a buyer would expect them to be up-to-date and working.
A final thought on renovations to possibly avoid
Be careful of over-improvement. How will your home fit into your neighbourhood once the renovations are completed? A home worth $100,000 more than comparable houses in the vicinity will appear overpriced, no matter how nice it is. How does that fancy new kitchen fit into the rest of the home? Renovations should be consistent with the rest of the house. Otherwise, a buyer may look at it and see all the work that’s still left to be done.
Your home insurance premium may change
Some renovations may increase your home insurance premium. Your premium may increase, for example, to address a new risk that was not there previously, like if you add a pool. Your premium could also increase if your renovation increases the replacement value of your home, like if you add a second storey to your bungalow.
On the other hand, depending on the scope of your renovation, your premium could also decrease. Upgrading an electrical system or installing a new security system, for example, could contribute to lowering your home insurance rate.
To find out more about how your renovations could affect your premium, call your home insurance provider before you begin. This will help you understand what is and isn’t covered while also making you aware of exactly what you can expect from your home insurance rate once your renovations are complete.