2/28/2013 2:30 AM ET|
Remodel projects with little payback
If you're justifying home renovations thinking that you'll recover the costs when you sell, you may want to recalculate.
Homeowners who want to remodel will find both joy and sorrow in the 2013 Cost vs. Value Report, recently published by Remodeling Magazine.
The joy comes from the report's finding that remodeling projects overall could be expected to return a higher percentage of their cost at resale in 2013, reversing a six-year decline in the recovered value of such investments. Every project on the national list posted a higher return in 2012 than it did in the prior year. The sorrow is that while returns are higher than they were, they're still far short of 100%.
The complete list included 22 midrange projects, ranging from a $1,137 steel entry door replacement to a $152,470 second-story addition, and 13 upscale projects, ranging from a $2,720 garage door replacement to a $220,086 master suite addition.
In the mid-range category, the least costly project -- that steel entry door replacement -- posted the highest return at 85.6% of the cost.
Other midrange projects that returned 70% or better were an attic bedroom, basement remodel, wood deck addition, garage door replacement, minor kitchen remodel, vinyl siding replacement and vinyl window replacement. The lowest-returning mid-range project was a home office remodel, which recouped just 43.6%.
In the upscale category, the highest-returning project was a fiber-cement siding replacement, which recaptured 79.3%. Other upscale projects that returned 60% or better were a garage door replacement, foam-backed vinyl siding replacement and vinyl window replacement. The lowest-returning upscale project was the master suite addition, which recouped just 52.1%.
And in those figures also lies the sorrow. That steel entry door replacement was the only project in the midrange or upscale category that achieved at least an 80% cost recovery, nationally. The home-improvement projects returned only a 60.6% national average. That's not much of an incentive, financially speaking, for home improvements.
Replacement projects generally were a better investment than remodeling or room additions. Cost-and-value-recapture percentages varied widely on a regional basis.
Contractors agree with the positive outlook
Remodeling contractors have high expectations for 2013, according to a fourth-quarter 2012 survey by the National Association of the Remodeling Industry in Des Plaines, Ill.
The survey found remodelers reported better business conditions, more inquires, more requests for bids, more conversions of bids into jobs and a higher value of total jobs compared with the prior quarter.
Tom O'Grady, chairman of the NARI strategic planning committee and president of O'Grady Builders, a remodeling company, in Drexel Hill, Pa., said in a statement that remodelers were anticipating major growth in their businesses.
"Many (remodelers are) saying that their clients are feeling more stable in their financial future and their employment situations; therefore, they are spending more freely on remodeling needs," O'Grady said.
The 2013 Cost vs. Value Report is a snapshot of generic projects and shouldn't be applied to individual homes. Instead, homeowners should get estimates from local remodelers and discuss home values with a local real estate professional.
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I no longer think much about recouping the cost of a rennovation or remodel -- I do things because they're good for my home or because I like them. Resale down the road isn't a good basis for decisions. With market fluctuation, who can say what remodeling will actually turn into a good return? Stick strictly to what you can afford and will make your home look its best for your own pleasure in it. The greatest mistake in recent years I find is installing hardwood floors, which are NOT family friendly, pet friendly, or carefree. There are lots of easy care, cheaper floorings to consider. The same with stainless steel -- nobody who gets stainless appliances loves them for long.
We remodeled our kitchen, family room and main floor powder room about 18 months ago. We gutted the kitchen and replaced all the cabinets, added a pantry with pull out shelves, put in granite counter tops and stainless steel appliances. We put hardwood floors throughout all the rooms, replaced all the lighting and installed a furniture style vanity with a granite top in the powder room. All told, we spent about 18k on everything. I shopped sales and planned purchases like cabinetry around special offers. Since our kitchen was original and 30 years old, it was a good investment, both for function and for possible resale.
I love our hardwood floors, but we don't have pets and the grandkids aren't here on a daily basis. I find them easy to maintain and I love the look. We had laminate and vinyl while the kids were growing up. Those were much more practical.
I agree 100% with the comment written by 939pav.
I would also include adding energy efficient upgrades to lower energy costs and aging in place features to your home to make it more user friendly as you age. Also adding security monitoring camera's with a monitored alarm system would be beneficial.
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