As appraisers, we at The Coyle Group are constantly being asked by homeowners "what is the value of my remodel" or "how much value will I add if I redo my" kitchen, bath, basement, etc. This is often difficult for us to respond to and our answers are typically difficult for homeowners to hear.
Well, the good folks at Remodeling Magazine have just released their annual index that examines those questions and provides answers on a regional basis.
In a nutshell, there are very few improvements or remodels that a homeowner can do in this economy that will generate "dollar-for-dollar" return on their investments. Be sure to visit the link at the bottom of the article.
Remodeling Magazine Releases 2008–2009 Cost vs. Value Index
The results of Remodeling magazine’s 2008–2009 Cost vs. Value Report, which helps guide home improvement decisions by comparing construction costs, are surprising considering the sluggish real estate market and the volume of foreclosures. The ratio between a project’s cost and the value at resale was expected to decline by more than 8 percent. However, the ratio declined only 3.86 percent.
This year’s data mirrored last year’s trend of higher returns on smaller, lower-cost projects. Siding and window replacements held seven of the top 10 projects for return on investment. The high value of window replacements may indicate that rising energy prices continue to influence remodeling decisions. For the third year in a row, siding replacement (fiber-cement) projects reported the highest percentage of cost recouped. The second and third projects with the highest recoup ratio include deck addition (wood) and siding replacement (vinyl). “Items that add to curb appeal will always have higher returns,” said Sean Remington, a Realtor with Keller Williams Realty in Albuquerque, N.M.
Projects with the lowest recoup percentage include home office remodel and sunroom addition. While Realtors in Florida and New Mexico report that their oppressive climates make sunroom additions and other outdoor projects undesirable, Realtors in South Carolina, Georgia and Massachusetts report that such projects can be beneficial. “We spend a lot of time outdoors here [in Georgia],” said Lauren Holmes, managing broker at Crye-Leike Realtors, Atlanta, Ga. “A nice outdoor kitchen or sunroom can add a lot to a home.”
The four most expensive projects—upscale master suite addition, upscale major kitchen remodel, two-story addition and midrange master suite addition—ranked among the six projects that lost the highest recoup percentage. “The credit crunch and energy crisis are kind of making us rethink the idea that we need the biggest car and the biggest home on the block,” said Jane Paulus, a Realtor with Edina Realty, in Minnesota.
For more information on Remodeling magazine’s 2008–2009 Cost vs. Value Index, visit www.remodeling.hw.net/2008/costvsvalue/national.aspx.