After rising to a record high last year in Canada, spending on home renovations fell off a cliff in the early days of the COVID-19 pandemic.
But the months of lockdowns and the seemingly endless purgatory of working from home have Canadians once again opening up their wallets to make their temporary workplaces as tolerable as possible.
In a recent report, Toronto-based real estate consultancy Altus Group calculated that Canadians spent more than $80 billion on home improvements last year, a tally that outpaced growth in the overall economy.
And the year’s home reno boom was especially impressive, considering that the sector shrank by more than five per cent the year before.
“If we go back to last spring, interest rates were tumbling, so we were riding quite high,” CEO Peter Norman said in an interview with CBC News.
The $80.1 billion that Canadians spent on fixing up existing homes last year was more than they spent on new ones — and it was a big reason why businesses that tailor to that market were feeling hopeful that 2020 was going to be another strong year.
Then COVID-19 struck — and just as the pandemic had a negative impact on almost everything else in the economy, it brought that spending to a grinding halt. What was shaping up to be a strong year for renovations cooled off completely in March and April.
Altus Group is now forecasting that after a record 2019, spending on home renovations will fall in every province this year.
Roofers wear face masks for protection while working on a three-storey house in Toronto in April. (Frank Gunn/The Canadian Press)
Norman said there’s a delay of a few months in the data, so only now is there some sense of what sort of activity was taking place in May and June. But it seems that all those months cooped up at home compelled Canadians to move ahead with home reno projects they either weren’t planning before or put on pause in March and April.
That’s no surprise to Melanna Giannakis. As a branch manager with Meridian Credit Union, she said the activity at her branch in Fonthill, Ont., a community in the Niagara region of southern Ontario, mirrors the trends that Altus is seeing across the country: booming demand, followed by a complete deep freeze and now a resurgence.
Line of credit debt grows to pay for renos
Much of that activity is being paid for by homeowners borrowing against the equity in their property to tailor their house to the new reality of their lives.
“At the beginning of the pandemic, the annual growth rate of home equity lines of credit doubled and nearly tripled for personal use,” Giannakis said in an interview.
Some of that money was likely used to pay the bills as incomes fell and job losses added up in the early days of March and April.
Melanna Giannakis, a branch manager with Meridian Credit Union in southern Ontario, says the desire for more space is what’s driving home sales and renovation projects right now. (Meridian Credit Union)
But a lot of it has been going to pay for home renovations.
“One of the main things I’m finding is people are less concerned about where they are living and more concerned with how they are living,” Giannakis said.
The massive rise in the number of people working from home has changed the game for real estate, as millions of Canadians are now less tethered to downtown offices. That’s leading to a real estate boom in remote, less dense environments.
Those staying put in urban centres want to spend money to make their homes better suited for them in the new reality, Giannakis said.
“People want more room and more space — home offices with nice backdrops for video conferencing, for example, home gyms, finished basements, backyards pools…. They want their own little hideaway they can hunker down in.”
It’s not just a Canadian trend, either. Bank of Montreal economist Sal Guatieri noted in a recent report that after plummetting in March and April, U.S. consumers are spending more than ever on their homes again. In June, spending on household furnishings, equipment and maintenance eclipsed $650 billion US in June and is now back above its pre-pandemic level.
“Telework has already spurred spending on home comfort,” he said, especially for one type of renovation: home offices. “Demand for in-home office renovations looks to have risen sharply.”
After plunging because of COVID-19, U.S. consumer spending on household furnishings, equipment and maintenance surpassed pre-virus levels in June. (Tim Kindrachuk/CBC)
That’s not to suggest that homeowners are spending willy-nilly. Norman cited Altus data showing that the number of homeowners planning renos costing at least $5,000 has declined compared with last year, but it’s still rising from its March low.
While indications are that the reno market is recovering strongly, the decline was so steep that even with the current boom, it’s unlikely that spending in 2020 will come out ahead of last year’s strong pace.
“We do expect things to be a little bit subdued this year relative to the last year,” Norman said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
