With new-home prices still on the rise in 2007, a growing number of Albertans who already own homes will opt to stay put and renovate their investment.
It's a fact of real estate life that makes Bob Schulz cheer - and shudder.
Schulz is president of The Renovation Corp., an Edmonton-based firm that specializes in residential redevelopment.
He also chairs the Renovation Council for the Canadian Home Builders Association - Edmonton Region, and is the Alberta rep to the Canadian Renovation Council.
Like others in the residential renovation industry, his days are consumed by the need to meet consumer demand for the product he creates.
Unlike some, Schulz also worries about his particular industry's reputation. "You never hear any of the good stories, all you hear are the horror stories."
That's partly due to the fact residential renovations are fraught with complications, yet the industry attracts a lot of contractors with the lure of what looks like "easy money," says Greg Dudar of Spacecraft, a Calgary-based redeveloper. These days, Dudar's company spends most of its time reshaping homes in Calgary's older neighbourhoods.
The average cost of a Spacecraft renovation: $350,000.
Dudar says when he hears people talk about how they don't build homes like they used to, "I say, 'Thank God for that!' " He's convinced Alberta's new home industry builds some of the best product in the world. He's also convinced those who renovate older homes need to enter the redevelopment with their eyes open, especially if the home has already been renovated - and the current home owner isn't privy to the real scope of work.
Dudar has seen electrical services that can no longer pass code, carpet covering asbestos tile and heating ducts drilled through structural support beams.
"The homes we go in to renovate (were often built when) there were no true standards."
With client expectations rising alongside new-home prices, Dudar says experienced reno contractors are increasingly important - and harder - to identify.
The "total value of renovations done across Canada could reach $50 billion in 2007," says Michael Nyikes, director of technical affairs for the Calgary Region Home Builders Association (CRHBA). He says about half of that is probably residential spending, a figure that does not include an estimated $9 billion in lost tax revenue in Canada due to the underground economy of illegitimate renovators.
In Calgary, where the average cost of a new home is expected to hit $487,000 in 2007, up from $354,000 the year previous and from $316,000 in 2005, about 60 to 65 per cent of overall residential construction is likely linked to redevelopment, says Nyikes.
With more and more people investing in their own homes, industry insiders such as Nyikes and Schulz are actively looking for ways to encourage renovation companies to meet industry standards for workmanship and customer service.
Renovation councils in Edmonton and Calgary think they've found that in a new program called RenoMark.
Developed by the home-builders' association in the Greater Toronto Area, the RenoMark program will be rolled out to renovators in Edmonton and Calgary this year. It features a code of ethics specific to renovators, stipulates the parameters of contracts and scope of work, offers homeowners a two-year warranty on parts and labour (up from the industry standard of one year on new homes) and establishes a $2-million minimum for builders' liability.
RenoMark companies must carry Workers' Compensation Board coverage and, where appropriate, secure all municipal licences. Consumers will also be able to use the program to access testimonials (positive and negative) of a RenoMark company's work.
The program gives consumers a good place to start their search for a professional contractor, says Don James of Jameswood Contracting Ltd., Calgary. His company is already listed on the new RenoMark website.
James, who chairs the CRHBA's renovation council, says RenoMark builds legitimacy, especially since complaints against RenoMark members will be posted.
He and James say the program, once recognized by consumers, should encourage more renovators to join the regional builders' associations.
To date, less than 20 of an estimated 250 renovation companies in Edmonton belong to the regional home builders' association. Calgary fares a little better, with about 40 of an estimated 300 reno companies belonging to the CRHBA.
With RenoMark, "we're offering those renovators the opportunity to join something that's going to be meaningful for them," notes Schulz. Anecdotally, he's heard home owners in the Toronto region are refusing to sign on with contractors who don't belong to RenoMark.
He expects the program will prove its value in times of boom and bust. "Should Alberta not continue to boom at this rate and things slow down and people start fighting and chewing over business, we still want (consumers) to be sure they're going to get what they pay for."
Dudar says RenoMark is on the right track. His company doesn't yet belong to the regional builders' group, but Spacecraft relies on its reputation for new business - and favours raising the bar in terms of expected standards.
"Right now, obviously, it's nuts. You just have to have a truck and cellphone, and you can be a renovator," says Schulz. "Anything that improves the professionalism of the renovation industry in the consumer's eyes has to be a worthwhile program."
Web Watch: www.renomark.ca (Joy Gregory can be reached at joy@businessedge.ca)
