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rob carrick

You can't have a serious conversation about housing affordability without considering gazebos.

Last year, 20 or so homeowners applied to the city of Ottawa for a permit to build a gazebo on their property. The cost of these projects cost ranged, for the most part, between $3,000 and $25,000. When considering whether you can afford to own a home, remember to leave room for gazebos and other renovations.

Those who say housing affordability in Canada is fine live in a self-servingly fake world where income and debt are the only considerations. They never factor in expenses such as daycare, saving for retirement or basic maintenance to fix the things that go wrong in every home ever built. They also leave out renovations, which most homeowners will undertake at some point.

Whether you like it or not, you have to do a least some renovating when you own a house. If you see your house as an investment, and most people do, then you want to protect and enhance it over the years. Pink toilets, linoleum floors and electrical baseboard heating are turnoffs to buyers and could force you to reduce your selling price to compete with comparable homes. "Keeping a place current is so important," said David Fleming, a Toronto real estate agent who runs "The best houses sell for the best prices."

Also, houses are subject to a kind of natural decay. Unseen dampness issues can gradually ruin a bathroom and require a complete redo. Kids and pets can grind your floors down.

Finally, you'll renovate to add your personal touch to your home. You know you want to. Big box home-improvement stores make it look easy, and there's endless inspiration from those TV shows where glamorous reno guys come to rescue doofus couples from their drab lives.

For some real-world examples of this kind of spending, let's look at Ottawa's online database of construction, demolition, and pool enclosure permits issued monthly. In addition to gazebos, porches are popular. Last April, for example, one family wanted to construct a front porch at an expected cost of $12,000, another wanted to enclose a porch at a cost of $88,000 and another wanted to remove a porch and construct an addition for $23,000.

Sun rooms came up six times in April – both heated and unheated. The bargain project of the bunch was a three-season sun room with deck for $9,000; the others were expected to cost between $21,000 and $35,000. Bathroom renos in the month started at $4,500 and topped out at $45,000 for a combination bathroom and "retreat area."

Additions were also popular in April. One family planned to add a $123,000 second level to a one-storey house; another planned to build a $72,000 third storey on a two-level house; still another planned to add a second and third level addition to a three-storey house for $79,000.

Buying a house isn't the end of your striving to find a comfortable place to live – it's the beginning. The amount of money Canadians spend on renovations has risen at roughly 7 per cent annually in recent years and, according to the consulting firm Altus Group, total expenditures have exceeded spending on construction of new homes. There's reason to expect renovation spending to increase at still faster rates in the years ahead, thereby adding to the financial strain on households.

In a report last year, CIBC World Markets economist Benjamin Tal said expensive house prices are causing an increasing number of people to renovate rather than move up to a bigger or more suitable home. An aging population of people eager to stay in their homes could increase demand for renovations that make homes more accessible to seniors with declining mobility.

Home equity lines of credit are the best way to fund renos that you can't pay for in cash, because they come with low interest rates in the area of 3.5 per cent. If you spend $15,000 on a reno – a CIBC study from 2013 said that was the national average – then you're looking at minimum payments of almost $44 a month. That's just interest – you wouldn't be paying off any principal. Pay increases down the line may help you afford renovations, but rising interest rates would definitely complicate things - read more on that in a recent column, online here.

Try my Real Life Ratio spreadsheet to see whether you can afford a house and then see if there's any money left over for renovations. Bet you there won't be.

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