The Problem with the Renovation Building Boom in Canada

Every region likes to see a boom in their economy and for a very long time, the renovation building boom in Canada was much appreciated. While this had some very good aspects associated with it, there is a downside to it as well.

The boom in the housing market with respect to houses being bought and sold led many to consider renovating their homes. Some did so in the event they could sell their homes for a higher price. Others did so rather than having to move because they couldn’t afford the high prices.

Often what happens during renovations is that many people do not have the actual cash to pay for these addons. So they end up borrowing the money for the same. This increases their debt ratio and can easily put them into a tight financial position.

Another step that some people take is they will use the equity in their home for the renovations. This is essentially weakening their financial security. Some homeowners opted to take out a second mortgage on their home to use as a source of funds for the renovations. This could put them at risk for higher interest rates in the future. This form of funding for the renovations at the present is tempting because the interest rates are low, but there are no guarantees that they will remain that way in the future.

All of these factors will lead to the end of the boom, but there are still many renovations that are necessary. These should be considered for the proper reasons, such as increasing space, or keeping up with the updates that are absolutely necessary.

The housing renovation boom came into being because of a shortage of houses in the market for purchase. Until this levels out, there is a chance that boom will refuel itself.

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