2.11 CHBA Pulse Survey: Renovator Highlights

Peter Norman Chief Economist, Altus Group

CHBA Renovators’ Council February 23, 2011

Pulse: what it is and how we do itPulse: what it is and how we do it

Mail survey

Typically 6-8 page questionnaire

Tracking questions, as well as new issues each survey

Sent to all CHBA builder members (new home builders, renovators)

External sponsors – CMHC and Natural Resources Canada

Analyzed by Altus Group Economic Consulting

A valuable source of informationabout the homebuilding industryA valuable source of informationabout the homebuilding industry

Up-to-date monitoring - takes the “pulse” of the homebuilding industry

Gets the views of both new home builders and renovators

Trending – tracks how key aspects of the homebuilding industry are changing over time

Regional results - can look at variation across the country

Benchmarking - lets individual homebuilders gauge their performance against other builders

Fills the gaps – allows exploration of issues not covered by other sources that are important to the homebuilding industry

Recent Pulse HighlightsRecent Pulse Highlights

0.0

20.0

40.0

60.0

80.0

BC Alberta Man/Sask Ontario Quebec Atlantic Canada

Higher Lower

Source: CHBA Pulse Survey, Winter 2011Source: CHBA Pulse Survey, Winter 2011

% of Renovators% of Renovators

Renovators in all regions except Ontario reported higher activity on average in past year…

Change in renovation activity in last 12 monthsChange in renovation activity in last 12 months

37

70

83

32

16

24

36

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

BC Alberta Man/Sask Ontario Quebec Atlantic Canada

Source: CHBA Pulse Survey, Winter 2011Source: CHBA Pulse Survey, Winter 2011

% of Renovators% of Renovators

… and in general were relatively optimistic about increased work for the next year

Expected change in renovation activity in next 12 monthsExpected change in renovation activity in next 12 months

36

25

6 7 7

18

35

26

7 6

11

15

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Zero 1-24% 25-49% 50-74% 75-99% 100%

2010 2011

Source: CHBA Pulse SurveySource: CHBA Pulse Survey

% of Builders% of Builders

Almost two-thirds of CHBA builder members involved in renovation work to some degree

% of Total Revenues Generated by Renovation Work% of Total Revenues Generated by Renovation Work

24

17 16

4449

353230

18

26

4044

2832

0.0

10.0

20.0

30.0

40.0

50.0

60.0

BC Alberta Man/Sask Ontario Quebec* Atlantic Canada

2010 2011

Source: CHBA Pulse Survey, Winter 2011Source: CHBA Pulse Survey, Winter 2011

About 1 in 4 builder members generate at least half of revenues from renovation work

% of Pulse Respondents Reporting at Least 50% of Revenues% of Pulse Respondents Reporting at Least 50% of RevenuesIn Past Year Generated from Renovation WorkIn Past Year Generated from Renovation Work

17

1

5

4

9

6

3

15

42

10

9

7

6

6

6

4

54

1

10

5

9

6

3

8

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Underground economy

Mold

Increasing Builder Liability

Insurance Rates/Premiums

Consumer Confidence

Builder profitability

Insurance Coverage

Shortages of trades/labourWinter 2011

Winter 2010

Winter 2009

Source: CHBA Pulse SurveySource: CHBA Pulse Survey

% of Renovators% of Renovators

This year’s top critical problems for renovators

18

13

20

27

14

9

1513

26

19

14

11

0.0

5.0

10.0

15.0

20.0

25.0

30.0

$10,000 orless

$10,001-$25,000

$25,001-$50,000

$50,001-$100,000

$100,001-$200,000

$200,001+

Winter 2010

Winter 2011

Source: CHBA Pulse SurveySource: CHBA Pulse Survey

% of Renovators% of RenovatorsAverage size: Average duration:Average size: Average duration:

$50,000$50,000 8 weeks8 weeks

$50,000$50,000 8 weeks8 weeks

Almost half of renovation projects by CHBA/APCHQ members valued at more than $50,000

Altus Group’s Outlook for Renovation Spending

Altus Group’s Outlook for Renovation Spending

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

Q11993

Q11994

Q11995

Q11996

Q11997

Q11998

Q11999

Q12000

Q12001

Q12002

Q12003

Q12004

Q12005

Q12006

Q12007

Q12008

Q12009

Q12010

Source: Altus Group based on Statistics Canada dataSource: Altus Group based on Statistics Canada data

2002=100 (constant dollars)2002=100 (constant dollars)

After more than doubling in previous 10 years, real renovation spending stallsAfter more than doubling in previous 10 years, real renovation spending stalls

Source: Altus Group, The FIRM Residential Mortgage SurveySource: Altus Group, The FIRM Residential Mortgage Survey

% of Homeowners Agreeing Completely Planning Renovations over $5,000% of Homeowners Agreeing Completely Planning Renovations over $5,000

Homeowner renovation intentions Wane

1211

1011

1011

14

12 1211

10

1312

0.0

4.0

8.0

12.0

16.0

20.0

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Source: Altus Group, The FIRM Residential Mortgage SurveySource: Altus Group, The FIRM Residential Mortgage Survey

% of % of HomeownersHomeowners Agreeing Completely That They Plan to Undertake Renovations Agreeing Completely That They Plan to Undertake Renovations of At Least $5,000 in the Next Yearof At Least $5,000 in the Next Year

Renovation intentions by region

1011

17

1312

17

13

7

13 13

10

12

7

10

0.0

4.0

8.0

12.0

16.0

20.0

B.C. Alberta Man./Sask. Ontario Quebec Atlantic Canada

Sept.09 & Dec.09 Sept.10 & Dec.10

Source: Altus Group Economic Consulting based on Statistics Canada dataSource: Altus Group Economic Consulting based on Statistics Canada data

Total Residential Renovation Spending, Canada, $Billions, CurrentTotal Residential Renovation Spending, Canada, $Billions, Current

Home renovations, an estimated $59 billion industry

30.333.3

37.441.5

45.950.6

53.1 54.458.6 57.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011f

HLOCHLOC

27

16

13

7

6

4

3

3

3

2

2

1

13

0 5 10 15 20 25 30

Renovations

Purchase a vehicle

Debt consolidation

Daily spending

Non-RRSP investment

Travel/vacation

RRSP

Finance home

Education

Vacation property

Auto repairs

Small business

Other

2000

2010

Main Purpose of New Borrowingwith HELOCsMain Purpose of New Borrowingwith HELOCs

% of Borrowers in Past Year

Source: Altus Group/Ipsos-Reid, The FIRM Household Borrowing Survey

Methods of Borrowing to Finance RenovationsMethods of Borrowing to Finance Renovations

31

1

27

24

19

10

9

3

6

28

1

20

16

19

5

5

3

4

0 10 20 30 40 50

HELOC

LOC secured by other assets

Unsecured line of credit

Financial institution credit card

Refinanced mortgage

Retail/home improvement centre card

Personal loan

Private loan

Other

% ofborrowers*

% of dollarsborrowed

% of Homeowners, 2009

* Respondents could choose more than 1 method

Source: Altus Group/Ipsos-Reid, The FIRM Residential Mortgage Survey, December 2009

Main Reason for Refinancing a Mortgageto a Larger AmountMain Reason for Refinancing a Mortgageto a Larger Amount

24

22

29

12

4

2

1

1

1

0

0 5 10 15 20 25 30 35

To directly finance renovations

To consolidate debt originally incurred on renovations

To consolidate other debt

To purchase another home

To purchase a vehicle

To finance a small business

To purchase a vacation property

To purchase an investment property

For other investments

To finance children's education

2000

2010

As % of Mortgage Holders Who Refinanced toa Larger Amount in Previous 2 Years

Source: Altus Group/Ipsos-Reid, The FIRM Residential Mortgage Survey

Questions?Questions?