How house sales affect renovations
CMHC's Canadian Housing Observer, 2011, says there is a direct relationship between home sales and renovations.
December 30, 2011 by Robert Koci
Last week I asked for your impression of how house buying trends affect renovation activity. The CMHC released its annual Canadian Housing Observer Report for 2011 yesterday and answered the question from its perspective in its description of renovation trends in 2009 and ’10.
In the first quarter of 2010, renovation activity increased by 10.6 per cent from the last quarter of 2009. It then flattened out for the rest of the year. Among a list of factors to account for this flattening, the report says, “As the year progressed, the lagged impact of the moderation in (home) sales over the previous few years weighed on renovation spending.” In other words, at a macro level there is a direct correlation between home sales and renovations. With a lag of six months to a year, renovation spending follows home sales up and down.
So, there you have it. Mystery solved, though we still don’t know what changes take place within the renovation activity itself. We don’t have a really good handle, for instance, on how repairs and maintenance react to home sales relative to large-scale renovation. We don’t know what percentage of projects move from DIY to professional and back when home sales rise or fall. Those figures are much harder to break out, and answers to questions about those figures are likely to derive from anecdotal evidence, not hard numbers.
You can download the entire report here for free.