‘You remodel your home because you want to enjoy it over the years not simply because you want to boost the value of your home.’
The original article was geared toward Kitchen Remodeling specifically. However, the basic principal above applies to bathroom remodels, basement finishing and all other remodeling, home improvement & renovation applications. I, as a remodeling contractor, have always approached projects with my clients best interest, comfort level and future in mind. This statement is a mouthful. Simply put, the most bang for the buck without over or under doing a project.
Your home is just that, YOUR HOME and IS typically one of largest investments most people make. Return on investment is an important consideration in planning a project. However, the marketing strategies of many companies have abused or ‘hyped’ this detail. One thing you can not put a price on, giving the client what they want which makes a house into their home. In fact, in a lot of cases today, home remodeling and improvement costs are less than trading up to a new place
One trend we’ve noticed is that return-on-investment (ROI) paradigm of the boom years—the idea that upon selling your home you’d get back most of the money you put into your new kitchen if not all of it or perhaps even realize a profit—has gone the way of the Hummer and the no-money-down home purchase.
Nostalgic for those old times? Here’s what the National Association of Realtors had to say about kitchen remodeling in December 2005: “In some cases, the value of the remodeling project at resale is more than 100 percent of its original cost. This usually happens in markets where property values are rising very rapidly, but it can also occur when buyers regard certain types of remodeling projects as ‘standard.’ For example, in a neighborhood where most homes have an updated kitchen, remodeling a kitchen may well increase the resale value of the home beyond the cost of construction. In some cases, in fact, not redoing the kitchen could cause the home to sit on the market for much longer than normal and to eventually sell for less than similar homes in the area.”
Today’s dose of reality is reflected in the ROI figures from Remodeling magazine’s annual “Cost vs. Value Report.” According to the magazine’s “Cost vs. Value Report” for 2012-13, the national average cost of a midrange major kitchen remodel is $53,931 and the resale value is $37,139, producing an ROI of 68.9% percent. For a midrange minor kitchen remodel, the figures are, respectively, $18,527, $13,977, and 75.4% percent. A look back to the magazine’s 2005 edition of the report reveals not only lower project costs but also a significantly higher ROI. A $ 43,862 midrange major kitchen remodel returned $39,920, for an ROI of 91 percent. A midrange minor kitchen remodel that cost $14,913 had a resale value of $14,691, an ROI of 98.5 percent.
Today’s perhaps more grounded view of a project centers around what some industry folks are calling “live-in value”: You remodel your home because you want to enjoy it over the years not simply because you want to boost the value of your home.
It’s a logical if not obvious approach in a depressed housing market when fewer people are moving and flipping a home no longer seems like such a bright idea.
Contact Freedom Builders & Remodelers 815-985-0310 for a consultation on your next remodeling or renovation project.