Home-renovation sector sees silver lining
Landscapers expect a boost in projects, thanks to HRTC

Despite continuing reports of economic doom and gloom, Canadians are not closing the door on home renovations.

"Generally our renovators are optimistic in most areas of the country about their prospects for this coming year," says Don Johnston, senior director of technology and policy for the national office of the Canadian Home Builders' Association (CHBA) in Ottawa. "In terms of the coming year, something like 40 percent expect higher activity, compared to 25 percent who see lower activity."

Recent polls show that Canadians plan to move forward - or in some cases spend even more than they originally envisioned - on improving their homes, and industry officials remain cautiously optimistic.

Prior to last month's federal budget, which included the new Home Renovation Tax Credit (HRTC) - a one-year, temporary 15-percent income tax credit of up to $1,350 on eligible home renovation expenditures between Jan. 27, 2009 and Feb. 1, 2010 - those in the renovation sector were generally more bullish than bearish about their prospects in 2009.

Bolstering that view was a pre-budget TD Canada Trust homeowner confidence poll released in mid-January showing 53 percent of Canadians plan to move forward or increase the amount of renovation work they had planned to do, according to the poll conducted by Angus Reid Strategies.

A post-budget survey, conducted by Leger Marketing on behalf of IKEA Canada on Feb. 2-3, revealed 73 percent of Canadian homeowners believe that the HRTC will positively impact the economy and that 64 percent of the survey respondents are planning to renovate at least one room in 2009.

But the CHBA's Johnston does not see the HRTC making too much of a difference, as CHBA renovator members typically work on renovation projects costing $50,000 or more.

"People spending $50,000 or $100,000 to do a renovation are not changing their plans because of a $1,350 tax credit," says Johnston, who adds that the federal government move is still welcomed by the industry.

Landscapers are also excited by the HRTC.

"We'll definitely see some additional growth, especially with this temporary home renovation tax credit," says Joe Salemi, member services and communications manager for the Milton, Ont.-based Canadian Nursery and Landscape Association (CNLA), which represents more than 3,500 members in the landscape, retail garden centre, and nursery sectors. "For those that were sitting on the fence, this may be enough for them to move forward with their decision.

"Prior to the budget, even though we were hearing a lot of the doom and gloom with the economy, our members were still finding that people going ahead with landscape projects," he adds.

"It appears that this industry sector is still very viable even though we're in an official recession."

According to the CNLA, the industry has been growing 10 percent a year for the last 10 years.

"What we're finding now is that when times are tough, people don't vacation us much," Salemi notes. "They tend to stay home and because they spend so much time there, they want to use that outdoor space as a living space, which has really helped our industry."

A bit cooler spin on the situation comes from the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI), which represents more than 900 members in Canada and the U.S.

"Our members will be affected by an economic downturn, without a doubt," says HRAI vice-president Martin Luymes. "But we're fairly optimistic about the home renovation market."

There are two types of reno shoppers, says Luymes, those who are reactive and must fix or replace a furnace, or those who are proactive and plan to buy better and more energy-efficient equipment to replace what they currently have.

"That (proactive) aspect may be affected," he admits.

"There is hope that the HRTC will mitigate that impact - along with other government rebate programs to purchase energy efficient furnaces," he says. "Our industry provides essential goods and services, so it's a little safer and kind of buffered from the ups and downs."

The economic downturn is being reflected, in part, at some tradeshows catering to homeowners looking to renovate or update their homes.

Rick Young, president of Edmonton-based Young Marketing, which produces eight home-related trade-shows a year, says last fall's Edmonton Home and Interior Design Show was "under-attended fairly dramatically" due to the lack of consumer confidence.

"I know from my associates across Canada that homeshows in the fall suffered dramatically at the gate because of the economy and the anxiousness of the homeowners," Young notes.

Yet despite the uncertainty, the Calgary HomExpo held in mid-January by Young's group was sold out, as is the Kelowna Home Show at the end of this month, where they're even trying to squeeze in extra exhibitors.

The Edmonton Renovation Show, held just days after Ottawa announced the HRTC in late January, also saw an immediate boost.

"The stimulation package (the HRTC) probably accelerated our attendance by 20 percent," says Young. "It would have been a great show in a bad economy (without it), but with this package it became an exceptionally good show in a bad economy. If people want to know how consumers are feeling and if they're spending on their homes, we've given them two pretty good looks in Calgary and Edmonton. Consumers are healthy and they are going to continue to invest in themselves and their homes - certainly in Alberta."

Meanwhile, home-improvement retailers are jumping onto the renovation-credit bandwagon. Both Sears and Rona, for example, are offering buyer incentives to complement the HRTC. Each month, Sears will feature a home-improvement product category that will qualify for a Sears exclusive tax-credit incentive. Rona is offering cash back on materials or installation services purchased at its stores for use in a project eligible for the federal government's tax credit program, to be remitted in Rona gift cards.

On top of that, IKEA Canada and Mooresville, N.C.-based Lowe's are both in expansion mode.

IKEA has plans to open in Winnipeg, relocate and triple the size of its Ottawa store, and will renovate its showrooms in Edmonton, Etobicoke and Boucherville, Que., this spring.

"We believe in the vitality of the Canadian market and we have every indication that Canadians are still interested in investing in their homes, particularly with projects like new kitchens," IKEA Canada president Kerri Molinaro said in a press release.

"Our kitchen sales are still strong and we feel an increasing demand for our products across Canada."