Should the cost of your renovations be falling along with the price of oil?
There is no question that the Calgary economy is going through a tough time. It is a stark contrast to the prosperity that we enjoyed over the past many years. One might argue that one of the biggest challenges with our past robust economy, besides finding affordable housing, was finding and accessing quality trade professionals to execute on a home repair or renovation. There was a huge imbalance in this industry. Homeowners were frustrated with timing, pricing and response time when faced with sourcing great service providers for their home. Good service pros were run off their feet and the flourishing economy opened the door to poor quality, fly by night companies looking to make quick money with little regard for long term business relationships or customer satisfaction.
What’s Happening Now
A report from Altus group states that in the early 2000, the national renovation market grew by an average of 8.7%/yr. This number has dropped to 2.75% for the last seven years. These are “national” numbers and as we know too well, Canada’s economy can vary greatly by region…what is happening here in Calgary can be very different than what is going on in Toronto. What we do know is that there have been 20,000 job losses in Alberta in 2015 which is stark contrast to the 64,000 jobs added in 2014. While homeowners have to to continue to maintain their homes, and one might argue they will choose to do this over renovating, the fact remains, spending will go down dramatically in this sector as a result of the huge uncertainty in our city. While the quality contractors and trades will likely still be busy, the pace has, and will continue to decline significantly over 2016 and into 2017.
A good solid company still has to pay for Workers Compensation, hold the proper licensing and insurance and hire the best employees. All of these items have costs attached to them and need to be factored in when quoting on all projects. The cost of some materials will have increased as a result of the sinking Canadian dollar. Many building supplies are shipped from the US.
The cost of services, however, should not be giving us the same sticker shock that they have in the past. It is a simple supply/demand problem. With homeowners opting to wait or defer a renovation or build, renovation pros will find themselves with a more manageable schedule and employees that they want to keep busy. The bottom line is that pricing should be much more competitive and the ability to focus on delivering great service should remain, or become a #1 priority. This is a welcome change for Calgary homeowners. There has been a slight shift in the power position here but homeowners need to remain realistic and fair with their pricing expectations.
You Get What You Pay For
If a deal is too good to believe, most likely it is just that! I would advise caution when getting a “real bargain” from a tradesperson on any renovation project. There are many bad scenarios that could result from entering into such an arrangement. By all means get quotes from various companies, this is more doable now than ever, but going with the bargain basement price is not always the best way to make your hiring decision.
Should contractors now be more responsive to your call – absolutely! The need to differentiate themselves in what it now a more competitive space is larger than ever. They now have the ability to focus more on delivering great service that most aspire to provide. Homeowners should feel better about the balance being restored and perhaps think about taking on that project you have always wanted to do. I cannot think of a better time than now to get started!
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