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.
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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Jacqui van der Jagt, RBC Corporate Communications,
416 974-1756, firstname.lastname@example.org