By Sukanya Ray Ghosh
Gazing into the Crystal BallCanadian Contractor Estimating Project Management Renovation Contractor 2021 canada contractor industry forecast
Experts discuss what to expect in 2021 and beyond.
As the world grappled with COVID-19 in 2020, most industries everywhere felt the brunt of the many lockdowns and supply chain disruptions. With most construction-related activities deemed essential across Canada, the home renovation sector experienced a surprisingly positive year, all things considered.
“Early on in 2020, we saw a drop of about 22 percent of activity, and then we saw a very strong rebound. We expect 2020 will finish off with little to no dip as compared to the year before, when the final numbers roll in,” noted Kevin Lee, CEO of Canadian Home Builders’ Association.
He added that in 2019, reports showed that direct and indirect jobs in the renovation sector were over 111,000, contributing $85 billion in economic activity. The 2020 figures are expected to be about the same.
Predictions for the year ahead
Industry experts note that the home renovation industry has been on the upward curve of growth for quite a few years now.
According to Lee, it has been growing in recent years at a rate faster than the overall economy. He, therefore, expects this trend to continue in 2021, along with the surge in renovations seen last year.
“I don’t think anybody saw the renewed interest in home renovations that came as a result of the pandemic. But it makes sense with people working from home, attending school from home, exercising at home and entertaining outdoors, among other things. It was an unexpected side effect of the pandemic and we do expect that to continue into 2021,” he explains.
Lee also adds that as per recent surveys, one third of Canadians are planning to complete significant home renovations or repairs in the coming year.
Financeit CEO and founder Michael Garrity has similar predictions for 2021. Garrity’s first prediction is that this year will continue to be defined by the pandemic. The industry will continue to deal with the positive, as well as negative consequences of COVID-19.
“We’re going to be wrestling with the pandemic all the way through quarter one and two in Canada, maybe even into quarter three before we begin to see light at the end of the tunnel,” he says.
Garrity notes that unlike 2020, however, the industry will not be surprised by it. Everyone is better prepared and more organized to deal with issues such as supply chain constraints and labour interruptions, for example.
As people are forced to stay in due to the ongoing health crisis, there has been an overwhelming focus on the home space. Garrity predicts that there will be continued high demand, especially for small jobs.
“People stayed home, looked around and got frustrated. They focussed on the things that they wanted to get fixed. It is a good story for the industry, especially for small jobs,” he explains.
Garrity’s adds that 2021 is going to be the year of the staycation.
“People understand that their outdoor space around their home is going to be where they want to focus. They’re not planning trips to Barbados or Florida. They’re wondering whether they want a pool or should they put a hot tub in. Do they redo their backyard and build that outdoor cooking area that they’ve always wanted? I think there’s going to be a real push for the beautification of the outdoor space so that people can come together safely and enjoy a home-based vacation. Yeah, I believe that’s going to be a huge trend in 2021.”
Garrity, himself occupied with a complete backyard renovation, notes that people realized in 2020 how ill prepared their yards were to entertain people.
He adds that a fourth trend he has seen is a rise in demand for financing home renovation and improvement projects. He predicts that this will continue in 2021 as it would be easier for some people to pay on a monthly basis for 10 years instead of the full amount upfront.
What should contractors expect?
Vaccines have been rolled out. The country has already started walking on the path to eventual recovery. This means that the economy will also eventually improve from the current situation.
Lee notes that since people will continue working from home for at least the short and medium term, contractors can expect continued interest in improving their home spaces – both indoor and outdoor.
In its Fall Economic Statement in Nov. 2020, the federal government promised $2.6 billion in support for energy efficient home retrofits. Lee notes that the CHBA is particularly excited about this move as it has been advocating incentive programming to help people make smart decisions about how they invest in their renovations. Additionally, the association will be
targeting a million EnerGuide home evaluations. Therefore, Lee recommends that in 2021 home renovators think about having good partnerships with the EnerGuide evaluators.
Lee notes that an ongoing issue that renovators are familiar with and can expect to see even in 2021 is the challenges on the lumber supply side. There is an ongoing shortage and the prices are going up in the lumber markets because of the strong demand from renovation and new
construction, both in Canada and in the U.S.
“With very strong demand on both sides, we unfortunately expect those lumber prices to continue to be high. So, from a renovator perspective, that’s going to be an important part of pricing. Makes sense, potentially, to go to cost plus contracting. Order well in advance. You have to manage expectations for the clients as well, because we saw these shortages derailed project times,” Lee says.
Change is the only constant
The year 2020 turned out to be a gamechanger all around. The home renovation industry is certainly feeling the impact and influence of COVID-19 on how people think about their home spaces today.
Every year, the CHBA does a homebuyer preference study. The study focuses on what people are looking for and what they want to do with the renovations.
Lee notes that there are certain trends that are ongoing and are going to be amplified because of COVID.
“There was already a slight trend towards less open concept design, but we think that will really continue because sound transmission is becoming an issue as people are trying to perform multiple functions at home. It’s maybe two adults trying to do their jobs from home or kids attending online school. We expect more special purpose rooms like home offices, home theaters and certainly more of an emphasis on outdoor living,” he explains.
Lee notes that 2020 also saw an uptick in single detached houses, a trend that had been going down and moving more towards multis. This changed as people looked at their futures and realized that they maybe didn’t need to be in the office every day or they could live further away from their offices. Since renovations often happen right after the purchase of new homes, the trend suggests more incoming opportunities for home renovators.
As people reacted to the pandemic, another change that came up was a preference for digital interactions. According to Garrity, companies in 2021 will think about how they can accelerate digital connections with their customers, facilitating meetings, discussions and even payments digitally.
“It’s a labour-intensive business that involves seeing the project space, cooperating with the homeowner, designing and customizing, and then ultimately doing all the hard, heavy-lifting to get it done. But I think 2020 is the year that digitization has accelerated in every business. Our businesses have to change as well. There’s never been a better time and I think that the companies who take on technological advancements are going to be much better positioned. Digitization makes your job easier and makes your customers feel safer,” says Garrity.
The CHBA, through its annual homebuyer preference survey, is seeing a trend towards more and more emphasis on the digital marketplace for evaluating home builders and renovators.
“So, websites and social media are really important for businesses to stay ahead and to have the best chance of getting the best business,” says Lee.
The CHBA also sees an aging-in-place trend that had been ongoing before the pandemic but strengthened further after. “With all of the challenges of retirement homes, more people are interested in aging and living in home for as long as they can,” explains Lee.
CHBA is planning on launching more training and resources for its renovator members to inform them about all the aging-in-place technology and awareness they will need to do these renovations.
Garrity notes that 2021 is expected to be a busy year for home renovations but things might slow down in 2022. “That means, for 2022, your business better be set up to be highly competitive when demand starts to recede,” he says.