Anshu Arora LLM, MSc, PMP

A new survey shows renovation spending reached $68 billion in 2014, $20 billion more than was spent on new homes last year.

Some of it is the so-called “HGTV effect,” according to Altus Group, but Peter Norman, chief economist with the real estate research company, said it’s also because the housing stock in Canada just keeps getting older.

“There are a number of homes out there that are more 50 years old and they require a lot of work all the time,” he said, adding that low interest rates have probably helped the renovation sector more than the new home sector. “Every person who renews their mortgage from five years ago renews it at a lower rate. To a lot of people that frees up cash they’ll put back into their house.”

Altus expects the spending on renovations to continue to grow by three per cent annually in 2015 and 2016, which would leave renovation outperforming the general economy.

Renovation spending is now such an important part of the overall Canadian economy that it accounted for 3.4 per cent of gross domestic product in 2014. Most of the spending, three out of every four dollars, is going toward alterations or improvements. The rest of the spending is primarily going towards repairs. Gregory Klump, chief economist for the Canadian Real Estate Association, said strong real estate sales ultimately lead to renovation spending. The average amount of money spent on renovations following a real estate sale was $9,535 in 2013.

“Often it can make a lot of economic sense to renovate instead of moving,” Klump said.

From the 2000s up to the recession, renovation spending grew by 8.7 per cent annually. Post-recession it grew by 2.6 per cent annually. Phil Soper, chief economist with Royal LePage Real Estate, said the biggest reason for the uptick in renovation spending might be the cost of homes.

“In our biggest cities in every province the homes have become more expensive and the gap between entry level and luxury homes has grown,” Soper said. “Many people look at that and say rather than stretching to buy an entire new home, maybe I can upgrade my existing property.”

Contrary to conventional wisdom, not all the spending is being done with debt. Only about 20 per cent of all dollars borrowed under home equity lines of credit are earmarked for renovations.

One concern for the government might be the percentage of home renovation conducted in cash, and therefore part of the underground economy. About 40 per cent of respondents in the Altus survey believe small renovation jobs under $5,000 are done with cash.

Another worrisome issue for consumers might be that many of these renovations are being conducted without proper insurance coverage. TD Insurance warned Tuesday that not telling your insurance company about what you plan to do in your home could result in the denial of a claim.

For more on this, visit Vancouver Sun's Website

Think about health insurance. Providers can charge you a higher premium if you fit a profile that indicates you are at higher risk of medical ailments. Though you can’t be denied coverage because of pre-existing conditions anymore, they can still make your rates higher. Such conditions can also apply to those who are older, live in a location with statistically high health problems, smoke, or have a higher body mass index.

The same principle applies to homeowners insurance. Purchasing a home that has had past claims for structural problems or has characteristics making it more susceptible to damage will increase the premium a new home owner pays. Oftentimes, it’s not until a sale contract is signed and a home inspection is completed that a home buyer catches wind of possible issues with a house. By then, they’ve already fallen in love with the place, and unfavorable inspection results can be devastating.

But there are ways for buyers to spot problem properties before they get too invested in any particular home. “You want to look at the condition of the house from an insurance perspective,” says Jeanne Salvatore, senior vice president of the Insurance Information Institute. “It can save a lot of time and money.”

For ways that Buyer can tell if a home is "healthy" or not, visit REALTOR Mag

When Selling a Luxury home, it is important to keep some of this in mind:

Outside is the new inside. The first thing a buyer is looking for when they pull up to your property is whether or not your home represents the price tag through its curb appeal. A well landscaped yard is imperative to first impressions and an impressive backyard space leaves a lasting one. Container plants add beautiful welcomes to entrance ways and patios where potential buyers enter and exit the house. Add a fresh layer of mulch to garden beds.

Showcase your interior to its highest potential. The staging of luxury property involves creating an exceptional theme within a neutral palette with powerful pops of color compliments.  Hiring a professional home stylist can make a huge difference. The staging company can rework your own furniture and art decor or can bring in furniture, lighting, artwork, plants, and all accents if required.

Do not overprice high-end real estate. With the hot real estate market in Greater Vancouver and the Fraser Valley, sellers may think that they can push the price tag slightly higher to give themselves some wiggle room. From a luxury home standpoint, this may represent a substantial increase and should be avoided. To remain competitive the property should be offered at market value keeping aligned with price per square footage for the area.

Effective advertising and marketing requires exposure through a multitude of channels including print, online, and social media. Professional photos and a virtual tour is a must have. In addition, promoting the community and neighbourhood and the entry into a particular way of life can be a desirable motivator for potential purchasers. Further, an agents personal brand can create credibility and a Realtor with an established network inclusive of other realtors, can leverage their business network to help gain traction and get their high-end buyers and their agents to set up a private viewing of your home.

If you have a creative eye and would like to be your own home stylist, here are some DIY tips:

Keep it clean and clear: Buyers want to walk into a property that they can imagine coming home to and relaxing in, so it’s essential to clear away all your mess and clutter and keep the place immaculately clean while you’re showing it.The kitchen and bathrooms are key areas, so add a bowl of fruit in the kitchen, white towels in the bathrooms and ensure both rooms are spotless.

De-personalize: It may sound harsh, but homeowners should remove all personal pictures and art containing people, animals and religious content. You still want to keep things that give it a homey touch.

Keep the accessorizing to a minimum: You should introduce accessories that make your décor shine – but over-decorating your house should be avoided. Too many pillows, artwork, vases and flowers end up creating new clutter.

Repair any obvious problems: As a potential buyer walks through a house and notices little things that are wrong, such as a dripping tap or a door that won't shut, they become emotionally detached. Also, a fresh coat of paint will really improve the look of your rooms and pay dividends.

Use proper lighting: Light is very important, so keep on all lights during showings and turn blinds to the half-open position. A dark and dreary home will be extremely hard to sell at any price.

Get some curb appeal: Think a planted urn or a welcome mat. You need to get rid of any junk that's sitting in front of the house. Make sure walkways are swept, the grass is cut and the garden is pruned and neat.

Pay attention to furniture placement: A common example of improper furniture placement can be found in the bedroom. People might put a high dresser on a wall that you're facing as you walk in, and that makes the room feel very closed in. Try to arrange furniture so that the room seems airy and spacious.

An initial investment in home staging is much more affordable than reducing your selling price so if you are considering selling your home be sure to consider this option. 

A typical high-rise condo in Vancouver has embedded costs of more than $500,000 before it is even finished, according to a series of studies of land values, construction costs and municipal fees and levies.

A year ago, the Urban Development Institute, Pacific Region studied the input costs for a high-quality, high-rise concrete tower in Vancouver with 115 condos of 800 square feet each, based on 2013 prices. BIV has updated the numbers to current values to see what it would cost to deliver each condo in the same hypothetical condo tower today.

Based on recent Vancouver multi-family land sales outside of the downtown core, land values equate to an average of $280 per square foot, according to the Metro Vancouver Land Share report from Colliers International. 

The hard construction costs to build a high-quality, high-rise condo tower in Vancouver, according to 2015 Construction Cost Guide from Altus Group, works out to $282 per square foot.So, the land and hard construction costs combine equate to a per-condo price of $449,600, or $562 per square foot.

Then comes City of Vancouver development fees and levies. First, the city charges community amenity contributions (CAC), based on 75% of the increase in land value after zoning to higher density. The UDI reckoned that, on this sample building, the CAC would amount to $48,295 per unit. The city also charges development cost levies and demolition fees that add a further $14,427 per unit. 

The city requires that all new developments subject to rezoning meet LEED Gold, sustainability standard. This adds $11,718 to each condo price. Vancouver also has levies to collect money for district energy use, car share programs, electric vehicle charging stations and public art, which tally, in this sample, to an estimated $1,704 per condo unit.

All in, Vancouver carries city fees levies pencil to $76,154 per condominium. At this point the new concrete apartment has embedded costs of $525,754, or around $657 per square foot.