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Natural disasters impact home renovations

Natural disasters impact home renovations

Posted on: 5/15/2018 | Author: ATB Financial's Economics + Research Team

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Albertans watched in sadness as the people of Fort McMurray were forced to flee their homes, businesses and communities two years ago. The fires that ravaged the area were devastating, and among the most expensive natural disasters Canada has ever seen.

The impact of natural disasters shows up in the data on residential home spending—not as new housing starts, but rather as “renovations.” While few would consider the rebuilding of a home destroyed by fire as a renovation, it is technically counted as such.

The graph below shows home renovation spending per person for Canada and Alberta over the last 20 years. Despite generally having more disposable income than other Canadians, Alberta’s per capita spending on renovations is remarkably close to the national average.

At two points, though, we see Alberta spending on renovations jump noticeably above the rest of the country—and in each case, a natural disaster is a factor.

In late 2013 and early 2014, renovation spending in Alberta jumped above $400 per person. That was the impact of the 2013 floods in southern Alberta. And renovation spending spiked to a record high of $536 per person towards the end of 2016, about five months after the fires.

The three most recent data points—for the second, third and fourth quarters of 2017—show a deep dip followed by a strong come-back. The dip in the middle of the year was caused by owners delaying renovations at the tail end of the recession. The resurgence at the end of the year suggests homeowner confidence is returning.

Home renovations, graph

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