Radio personality Michael Helinka, financial analyst for the CBC Metro Morning in Toronto, believes the tide has turned in the real estate market and we are looking at an imminent correction with as much as a ten to 15 per cent downturn in pricing.
The key indicator he sees is house and condo prices remaining high while sales slow significantly. That’s the way all real estate slides start, he says, and we are overdue for one right now.
Are we looking at a housing correction? I think so. Prices for housing across Canada have remained high for much longer than the health of the economy warranted. In Toronto and Vancouver particularly, prices and sales were stubbornly accelerating upward while employment remained stagnant. The time for the correction is now.
What does that mean for renovations? It means more of them, not less. It means more repairs, not less. It highlights the reality that new home building is a competitor to the renovation industry. When people don’t move, they improve.
The biggest improvement in the “improvement” industry will be felt in Toronto because of the additional taxes that make selling and buying within the city so expensive. Total costs incurred in a buy and sell for an average home run approximately $30,000 and homeowners know $30,000 will buy a lot of home improvement.
As usually happens, the guys building new homes will be laid off as the slowdown bites and they’ll enter the renovation market. As usual, they will put downward pressure on pricing for subs and renos in general. The renovators that survive it will be the ones that focus on marketing their reputation and skill and have invested in the tools needed to be more efficient in communication, administration and estimating. They will avoid the temptation to hire the new, cheaper guys coming from tract homes and keep their trusted, tried and true subs. They will trim their margins a bit, but just a bit. And they will guard their reputations with their lives.