My Hammer
| August 2010It would be easy to gloat over the fact that the story link here called, “HST blamed for 13.7 per cent decrease in home sales” confirms what I had predicted in this space a few months ago. I won’t because it did not take any special knowledge or genius to expect that home sales would jump before July 1st as homeowners took advantage of the incoming new tax, and then slump afterwards.
The drop becomes a good news story outside Ontario and B.C. When you read further, you learn that the decrease was only about six per cent across Canada (the 13.7 per cent refers to the drop in home sales in the Ottawa region only). About 85 per cent of that drop is accounted for in Ontario and B.C., which means the drop across the rest of the provinces was tiny and overall projections for home sales this year remain on track.
For renovators, however, it’s the worst news. If new home sales are dropping even as the province has made significant rebates available to new homebuyers, renovations, which have no such rebate, must be falling right off the table.
I talked to Steve Barkhouse, a renovator in the Ottawa area and he says the future does not look bright for his industry in Ottawa. Recently, a client he is doing a $250,000 renovation for had to cut the ensuite from her plans in order to keep her project on budget. Barkhouse roughed in the space, but then left it. “That's value that was taken away from her because she was doing a renovation rather than buying a new home,” Barkhouse says. And it has taken away from Barkhouse as well. What do you think the chances are that, once he is gone, she will hire a cash contractor to finish the bathroom? I think they are pretty good. The job is hidden from the street, she can buy the fixtures herself and there are plenty of good contractors around willing to do work under the table.
Contractors down east that have been living with the HST for a while say consumers get used to it, but do they get used to it and go back to paying the tax, or do they get used to it by finding ways around it?
It’s harder to get numbers on renovation activity than new home sales activity. Perhaps we will never really know how badly the HST is damaging the legitimate renovation business, except through the anecdotal evidence of your stories. If your business is suffering as a result of the HST, or if you have decided to do more underground work, please send us your story. It’s just about the only way to make clear how powerfully bad the effect of the tax is.
Robert.koci@rci.rogers.com