BMO Bank of Montreal

BMO Bank of Montreal

July 20, 2011 06:00 ET

BMO Study Identifies Top Ten Canadian Home Reno Projects

- Majority of homeowners plan to do indoor renovations

- Kitchens top the list, followed by bathroom and basement renovations

- Majority plan to use personal savings to fund their renos, while only five per cent will use a credit card

TORONTO, ONTARIO--(Marketwire - July 20, 2011) - The majority of Canadians homeowners who plan on renovating in the next year or two (83 per cent) will focus their renovation efforts on makeovers inside the home as opposed to making outdoor upgrades, according to a survey released today by BMO Bank of Montreal.

The survey, conducted by Leger Marketing, identified the top ten renovation plans among Canadian homeowners and revealed the following:

  • Nearly half plan to renovate their kitchens and bathrooms (48 per cent and 46 per cent respectively).
  • More than one third are planning to undergo exterior renovations or landscaping projects (39 per cent respectively).

"There are a number of reasons why homeowners choose to undertake renovations, from improving their lifestyle to accommodating another family member. However, if you're undergoing a renovation in order to increase the value of your home, it's important to understand that not all projects will deliver the same return on your investment," said Katie Archdekin, Head, Mortgage Products, BMO Bank of Montreal.

According to the Appraisal Institute of Canada, the most profitable home renovations are kitchens and bathrooms, which generally result in a return on investment (ROI) of 75 to 100 per cent, an interior paint job offers 50 to 100 per cent ROI, and with a finished basement homeowners can recoup 50 to 75 per cent of the original cost. In contrast, in-ground pools and skylights offer the lowest returns of zero to 25 per cent.

According to the study, the top 10 renovation plans for Canadians are:

  • Kitchens – 48 per cent
  • Bathrooms – 46 per cent
  • Landscaping – 39 per cent
  • Basements – 38 per cent
  • Exterior renovations (roof replacement, new windows) – 36 per cent
  • Bedrooms – 25 per cent
  • Family room – 21 per cent
  • Dining room – 11 per cent
  • Addition on the home – 7 per cent
  • In-ground pool – 2 per cent

BMO Economics notes that homeowners across Canada are expected to spend upwards of $45 billion on home renovations in 2011 – up moderately from the $44.6 billion Canadians dedicated to home upgrades in 2010.

For financing their renovations, Canadians seem keen to avoid taking on extra debt with the majority relying on savings (57 per cent), followed by taking out a line of credit or a home equity loan (19 per cent and 6 per cent respectively). Only five per cent plan to use a credit card.

"Using your personal savings as a means to make renovations is a great option, as you're not paying interest or taking on more debt in the process," added Ms. Archdekin.

Ms. Archdekin notes that anyone who is planning to borrow to finance a home renovation should consider low interest options, such as a home equity or personal loan.

The Leger Marketing survey was completed on-line using Leger Marketing's online panel, LegerWeb, with a sample of 1508 Canadian homeowners, 25-45 years old.

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