What's the best renovation project if you want to add resale value to your home? Most of us would say improving the kitchen or bathroom, but the correct answer is adding an income suite, says Scott McGillivray, a real estate investor, contractor and the host of Income Property on HGTV Canada.
McGillivray was recently the guest speaker at a media event held by Moen Canada to introduce its newest line of faucets and accessories. While McGillivray acknowledged that kitchens and bathrooms are also money in the bank when renovated, he says adding an income suite to a home can offer the greatest returns.
A recent report by Scotiabank says renovation spending has been the fastest growing segment of the housing market in Canada. "Fuelled by rising home prices, tight resale market conditions, attractive financing costs and government tax credits, real renovation outlays increased at an average annual rate of over six per cent from 2000 to 2012," says the report. "This is double the three-per-cent average annual increase in new construction."
The report says Canada's housing market is likely to slow down in the next couple of years, which will also cool the renovation market somewhat.
"Renovation spending tracks sale transactions, given relatively large outlays undertaken by new buyers and, to a lesser extent, sellers preparing their homes for sale. Even so, an expanding housing stock and high homeownership rates should continue to support modest growth in renovation spending," says Scotiabank.
Moen Canada, which conducts research on the changing market twice a year, has no concerns that the renovation market is slowing. Garry Scott, the company's vice-president, wholesale marketing and brand development, says 84 per cent of Canadian homeowners say they did some kind of renovation work in the last 12 months, and 66 per cent replaced a faucet.
"The renovation market is not slowing," says Scott. "It's going to continue to stay strong or even pick up. Seventy-six per cent of those we surveyed say they are planning a renovation in the next six months."
Moen's research also says that 58 per cent of homeowners say they will "never move" out of their current homes, although many of them will. The research also says that most homeowners say they renovate to improve their lifestyle.
Even if you are not selling your home immediately, adding an income suite allows you to increase your equity while using rent from the suite to help pay off the mortgage. Many homeowners are also using the suites to create space for their multi-generational families. McGillivray says the number of multi-generational households has increased by 20 per cent during the last 20 years.
Kitchens are second on McGillivray's list of best renovations to add to the value of your home, with bathrooms a close number three.
"The kitchen will make or break a house sale for many people," he says. For those on a budget, he says refacing kitchen cabinets and replacing the fixtures are a way to add value without spending a lot of money. For those with more cash to spend, the trend to open-concept kitchens is "only getting more popular," he says.
Updating a bathroom to add value can be a one-day job if you install a new vanity and accessories to update the look, he says. Second bathrooms can be created in small spaces, but not all renovations are a good idea.
"I've seen a shower unit placed right in the middle of a bedroom. That is not adding value."
McGillivray says reglazing or replacing a bathtub is a good way to add value. Free-standing bathtubs have also made a comeback. In Moen's latest offerings there is a collection of freestanding tub-filler faucets. Scott says the tub fillers are designed to be "considerably more secure than others on the market, eliminating that ‘wobble' that often accompanies floor-mounted units."
Adding fixtures is number four on McGillivray's list of best ways to add value to the home. "It can be simple, like changing door hardware or a faucet or a light fixture."
He says when potential buyers are touring a home, what they touch and smell in the home is important. They will notice if they have to touch a grungy faucet or open a door with a loose handle.
"When do-it-yourselfers want to know what they can do on a budget, I tell them that changing out the fixtures and accessories can make all the difference." He says a great renovation can turn people off if "there's a 24-cent light switch cover with paint all over it." Potential buyers may wonder what other parts of the renovation have been finished in a sloppy manner.