What to know
- GTA home sales have declined significantly from the record-setting market of 2020 and the busy market of 2021.
- Some homeowners considering selling or moving are instead choosing to renovate, according to Toronto contractor Nancy Vu.
- Renovation costs have also increased, with Vu saying some projects are now $15,000 to $25,000 more expensive than they were a year ago.
- Older Toronto homes can come with unexpected costs, including outdated wiring, plumbing issues, asbestos and water damage.
- Homeowners considering a renovation should account for a 10 to 20 per cent contingency budget and finalize the scope and design before construction begins.
With home sales now significantly lower than a few years ago, many homeowners are opting to renovate their homes instead of selling or moving. But is this change always the best choice?
Over the past year, Toronto’s housing market has made headlines for its declining sales and prices. After a real estate boom in 2021 and 2022, the market seems to now be going through a slow patch.
According to the Toronto Regional Real Estate Board (TRREB), sales have significantly declined this August compared to last year at this time, with only 5,057 homes being sold through the MLS System in the GTA.
At this time of the year back in 2021, 8,596 units were sold in the area, according to the board, when the city recorded its third busiest August market ever. A year before that, in 2020, the market had reached its record at 10,738 sales in August.
With the slower market, prices also seem to be declining, having dropped below $1 million twice in 2026, after remaining above that for over five years before that.
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With buyers choosing to remain on the sidelines and prices continuing to decline, Nancy Vu, co-founder of M&S Construction Group, says some homeowners who were considering upsizing, downsizing or moving are instead opting to invest in renovating their homes.
Why are homeowners choosing to renovate?
According to Vu, the M&S Construction Group has seen a 10 per cent increase in renovation inquiries over the past year from families who were originally considering selling their homes.
She tells Now Toronto that homeowners are facing uncertainty in the market right now, between declining prices, fluctuating mortgage rates, and additional costs. In this context, a lot of them are finding that staying put is a better option for now.
“They tell us they are locked into lower mortgage rates from a few years ago. Moving means giving that up, plus paying land transfer taxes and realtor fees,” Vu told Now Toronto.
“They fear buying into a market where they are not sure prices have bottomed out yet. So, when they run the numbers, the money they would lose in transaction costs could instead fund a meaningful renovation.”
Renovations come with significant costs and challenges
Although staying put might seem like a more stable option, it also comes with its unique set of challenges and significant costs.
Vu said she has seen costs go up across the board over the past few years, while the tariffs imposed by the U.S. President Donald Trump on several materials add yet more pricing pressures to the mix.
“Steel, aluminum, cabinetry, fixtures, and other finishing products we regularly use cross the U.S. border into Canada, so prices can fluctuate between the quote and the install. That’s why we add a bit of cost padding for these anticipated hikes, without passing unexpected costs onto our clients. It’s part of every contractor’s reality,” she explained.
On top of economic uncertainty and tariffs, Vu said labour costs have also increased significantly due to a shortage of skilled tradespeople across the GTA.
Over the past year alone, the cost of certain renovations have gone up about $15,000 to $25,000, according to Vu. Meanwhile, basement renovations have gone from about $40,000 to $70,000 in the same period.
“We renovate many older homes in Toronto, and they come with hidden surprises we budget for, including outdated wiring, plumbing, asbestos, and water issues that only show up when you open a wall,” Vu added.
In addition to costs, renovating a home comes with several challenges, including obtaining the necessary permits, which could take up to months to be approved and delay the renovation.
For families that choose to stay in the home during the renovation, construction can also be quite disruptive. A lot of the time, Vu said homeowners need to deal with not having a functional bathroom or kitchen for weeks, which could be especially difficult for those with children.
Is renovating still a good option right now?
With several costs and challenges associated with renovating, it’s important that homeowners carefully consider whether a renovation is best for them.
According to Vu, whether buyers should invest in a few upgrades and stay put or wait for the market to stabilize and move depends on the kind of life they want to have in their homes.
“If you love your neighbourhood, your kids are happy and settled at their school, and your home issue is more about the layout, then renovating makes more sense,” she said, adding that certain upgrades like redoing a kitchen or bathroom can also add value to a home in the long term, which could be beneficial for a resale.
“That said, if you want to live in a different location, have more land, or the renovation cost you have in mind surpasses your home’s future value, then I would hold off.”
How to manage renovation costs
While renovations can come with surprise costs and difficult timelines, Vu shared a few tips that can help homeowners save when upgrading.
Firstly, she recommends setting a realistic budget along with a 10 to 20 per cent contingency margin, especially for those living in an older home.
“Agreeing on scope and design before construction starts is also important, since changes midway are where budgets start to balloon out of control,” she explained.
Having a solid plan can also help homeowners work around U.S. trade war price hikes, since it gives developers some time to order materials in advance.
“In these uncertain economic times, renovating can be one of the smartest moves you make as a family. You get to keep your community, your mortgage rate, and end up with the home you’ve built to your dream design spec. The key is to go into the process with a solid plan, a realistic budget, and a qualified team,” Vu added.
