Renovation Nation Struggles to Stay on Budget: RBC Poll
TORONTO, October 27, 2010 — House-proud Canadians
are investing in their homes, but some are struggling to keep
the related costs in check, according to the seventh annual
RBC Renovation Poll. Two-thirds of Canadian homeowners (66
per cent) completed a renovation in the past two years and
while 68 per cent of Canadian renovators established a budget,
only half (49 per cent) managed to stay within it.
Many also indicated that hindsight is 20/20 and expressed
some regret in the way their home improvements were completed.
Twenty-eight per cent cited exceeding budget as their biggest
renovation mistake, followed by using the wrong contractor
or trades people (15 per cent) and 'doing it myself' (13 per
cent).
"Canadians continue to consider any home improvement
as a very good investment, but the challenge with renovating
is that it's easy to keep adding on projects," said Patricia
Everingham, director, RBC Personal Lending. "Costs can
mount up easily and the next thing you know you're over budget
and behind schedule. The best course of action is to plan
a realistic budget and arrange for flexible financing options
at the outset."
Using credit to finance a renovation
More than half (55 per cent) of Canadian renovators used
cash or savings to pay for their renovation and a third (35
per cent) paid off the debt they incurred in under a
month. Of those who are still paying for their renovation,
41 per cent expect it will take more than a year to pay off.
Canadians who used payment methods in addition to cash or
savings most commonly used credit cards (38 per cent) or a
regular line of credit (24 per cent). The top reasons cited
for using a credit card were to earn reward points (42 per
cent), make it easier to track renovation expenses (30 per
cent) and because they needed the available credit (28 per
cent).
Younger Canadians aged 18 to 34 planning to renovate in the
next two years are most likely to say they will use a credit
card to finance their project (40 per cent) along with cash
or savings.
"Smaller makeover projects usually mean fewer expenses
and a credit card offers a convenient way to pay as you go.
If you are planning a major reno, borrowing a larger amount
upfront often makes sense and helps you establish a budget
you can stick with," added Everingham.
Renovation trends
For those intending to renovate in the next two years, the
two most popular planned renovations are bathrooms (38 per
cent) and exterior renovations (32 per cent) including yard
and deck improvements. Plans to renovate a basement increased
the most at 21 per cent, up from 13 per cent in 2009. Keeping
up with the Joneses continues to motivate some Canadians,
as the top two influences on renovation details are friends,
family and neighbours' homes (36 per cent), followed by TV
home improvement shows (34 per cent). Females are most likely
to say that they were first to identify the need or desire
to renovate (63 per cent). More than half (55 per cent) of
women taking on a renovation project expect their spouse or
partner to do most of the work, only 34 per cent intend to
hire a contractor and 31 per cent say they will do most of
the work themselves.
Renovation outlook - Canada vs. U.S.
Over the past two years, Canada was a "renovation nation"
in comparison to the U.S., with 66 per cent of Canadian homeowners
having completed a renovation in the past two years, compared
to 51 per cent of their U.S. counterparts. However, the poll
also found that Canadian plans to renovate over the next two
years have slipped. Renovation intentions across the country
have declined four percentage points to 62 per cent - likely
due in part to the end of the home renovation tax credit.
South of the border, slightly more (67 per cent) of American
homeowners intend to renovate, however they plan to spend
less ($9,800) than their Canadian counterparts ($10,796).
Renovating trumps relocating
Three-quarters of Canadian households (74 per cent) say they
would prefer to renovate than move and half of those (52 per
cent) who are planning to renovate would still continue with
their renovation if house prices were to level off or decline.
The vast majority of Canadians (92 per cent) view renovations
as a means to increase the value of their home.
Whether Canadians want to get renovation advice or borrow
with confidence, the RBC Advice Centre www.rbcadvicecentre.com
is updated regularly to reflect current trends and answer
the questions that are top of mind. Interactive tools and
calculators provide customized information covering many facets
of personal finance.
These are some of the findings of an RBC poll conducted by
Ipsos Reid between September 17-22, 2010. The online survey
is based on a randomly selected representative sample of 3,565
Canadian and 3,205 U.S. homeowners of whom 2,156 Canadian
and 2,090 U.S. homeowners plan to renovate within the next
two years. The results are based on a sample where quota sampling
and weighting are employed to balance demographics and ensure
that the sample's composition reflects that of the actual
population according to Census data. Quota samples with weighting
from the Ipsos online panel provide results that are intended
to approximate a probability sample. An unweighted probability
sample of 3,565 Canadian respondents, with 100 per cent response
rate, would have an estimated margin of error of ±1
per cent, 19 times out of 20. An unweighted probability sample
of 3,205 U.S. respondents, with 100 per cent response rate,
would have an estimated margin of error of ±2 per cent,
19 times out of 20.
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Media contact:
Jacqui van der Jagt, RBC Corporate Communications,
416 974-1756, jacqui.vanderjagt@rbc.com
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