Maclean's magazine article claims the renovation boom "puts the economy at risk"!
The article in the July 28, 2014 Maclean's, by Chris Sorenson, is called "The Dark Side of the Renovation Boom." It says that Canadians are over-indebting themselves with renovation spending that is nothing more than "conspicuous consumption" and that a rise in interest rates or a housing price correction could bring our industry crashing down - affecting the entire economy.
August 27, 2014 by Steve Payne
Wow, what a depressing – and, for me – irritating read.
Journalist Chris Sorenson takes a wrecking bar to the entire feel good feeling of our current renovation boom (an average 7 per cent per year increase in Canadian renovation spending) in the July 28, 2014 Maclean’s magazine.
His article paints a picture of an over-indebted, over-leveraged homeowner base in Canada who are spending money like water on home renovations based on low interest rates and the expectation of rapid, ever-increasing real estate prices.
What happens when those interest rates go up, he asks. What happens if the housing market drops 20 per cent?
His basic theme is summed up in this statement, which I believe is totally unsupported by serious research: “(The renovation boom is) driven by the premise that thousands spent on new floors and fixtures is an ‘investment’ as opposed to mere conspicuous consumption.”
And then he says that many renovating homeowners do so because they believe that “shelling out $2,000 for a new granite countertop could add another $10,000 or more to the value of a home.”
And then there are lots more questionable claims like that in the article.
It’s not because I’m the editor of Canadian Contractor that I disbelieve most of the doom-and-gloom statements in this article. It’s because I live in Toronto, where so many of the Maclean’s-types, and the CBC-types, and the Globe and Mail-types write their own versions of the “Canadian” (read: the Toronto) economy.
It’s true that in the trendy, Starbucks-lattes-nested-in-gigantic-baby-stroller neighbourhoods of midtown Toronto, where Land Rovers and Mercedes SUVs sit outside of million-dollar 1,800-square-feet mock tudor homes covered in ivy, “conspicuous consumption” and debt drive many renovations.
But I think that is a gross misrepresentation of the renovation work being done by most of our Canadian Contractor reader-contractors across the country. I believe renovations are more rationally thought-out than THAT, in most marketplaces outside of the Centre of the Universe.
Read the full Maclean’s article here.
Tell us what you think. Do you think this article is anywhere close to the truth? Or do you share some of these concerns?