As records are being set across the GTA on every property type, the premium paid for renovated homes appears to be growing disproportionately.
In the past, premiums for renovated homes allowed buyers to save on time, stress, and lack of knowledge as it pertains to managing a renovation. The increase to the renovation premium in 2021 factors in a price hedge. The same renovation that cost $150k in 2019 can become $200k-$250k today with total uncertainty to timelines and no guarantee of completion. The additional premium paid now eliminates the significant covid price creep as seen across construction and is a form of a project guarantee.
Current situation, no price guarantees = no budget. Lumber prices have come down, yet material and labour shortages are still very real. In many cases suppliers can’t hold pricing for more than a week, and to skip the line on a backorder you will be paying a low digit multiple of the original price. Custom home construction with basic finishes was in the ~$250/sq. ft range pre covid, that number can easily eclipse $300+/sq. ft. now for the same finished product with no cost cap or recourse for missed timelines with all risk passed on to the end consumer.
Residential construction is a well understood and commoditized process; overages and delays while common are quantifiable. With current disruptions in supply chains, home buyers are voting with their dollars by paying bigger premiums for renovated properties and a sure thing.
