Values are now starting to stabilize and even rise in some markets. ROI has been a widely abused marketing tool by many entities in the business. Don’t get me wrong, I’m not ditching the principal in it’s entirety and should be a factor of many in determining a remodeling or renovation project. Some things you can’t put a price tag on. Absolute value to the homeowner and fulfilling a dream!
Neighborhood, demographics & other housing values should also be considered. You can ‘overkill’ on a renovation project just as easily as you could by cutting corners and under doing a project using substandard materials and workmanship. I’ve seen many DIY & ‘Fly-by-night’ jobs. They do not last and look cheap. Many issues arise from things that are not seen. Such as from plumbing, electrical or structural… things not done right the first time. Remember, you cannot always judge a book by it’s cover.
CHICAGO (MarketWatch) — With housing values in the tank and any substantial price appreciation in the distant future, sinking money into a remodeling project is a tough sell for many homeowners now.
In general, you won’t recoup as much of a project’s cost at resale as you might have several years ago, according to estimates from Remodeling Magazine’s Cost vs. Value Report, which weighs the costs of various improvements against their resale value. And while labor costs might be more negotiable in today’s market, materials aren’t getting any cheaper, said Sal Alfano, editorial director of the magazine.
“Homeowners right now are a little shell-shocked. Houses, up to three years ago, were like a bank account… people were spending money freely and they were always getting it back,” said David Lupberger, home improvement expert for a certain a Web site that connects homeowners with *prescreened home service professionals.
*Disclaimer: I opted not to include the actual web site name & marked the *prescreened portion as to half truth based on my own personal experience with clients that had used this unnamed service.
Those who are remodeling are generally opting for fewer frills and less expensive finishes, Alfano said. Instead of building large additions, they’re trying to better utilize space they already have. They’re seeking energy-efficiency upgrades and low-cost cosmetic improvements that make a home more comfortable and appealing.
Added Alfano: “Instead of saying ‘Yes, I want the best of everything,’they’re making choices right now. They realize they have to make a decision on materials they want to use for counters and back splashes. Their budget can’t cover the best of everything. “People are back to trade offs, projects are smaller.”
The little things
Even if resale isn’t your top consideration, a check of the Cost vs. Value Report will still give an idea of projects that pack a punch. Improvements that tend to excel on this list are those that have universal appeal — and a reasonable price tag. In terms of cost recouped at resale, seven of the top 10 projects in the 2009-2010 report were exterior-replacement projects, including windows, doors and siding.
A steel exterior door-replacement was the highest-ranked project on the list. It was also the least expensive, Alfano said. For an estimated cost of $1,172, real-estate agents who were surveyed for the report estimated that 128.9% would be recovered at resale. View the Cost vs. Value Report.
“If you have a door that really needs help, you’re not spending that much money and you’re vastly improving the first impression” of a home, he said.
Painting, replacing older fixtures, and cleaning carpets also are inexpensive ways to spruce up a home — whether you’re planning on selling it soon or not, Lupberger said. “There are a lot of cosmetic things we postpone because of how busy we are,” he said.
For budget-conscious homeowners, changing door handles and putting a new finish on interior doors can also make a huge difference, said David Mackowski, of Quality Design and Construction in Raleigh, N. C.
Remember, too, that improvements that make a home more efficient can cut down on utility bills, saving money over the long term. Some products that improve efficiency are eligible for federal tax credits through the end of 2010, and certain appliances qualify for
state rebate programs as well.
Kitchens and bathrooms are expensive rooms to remodel, but updates to these rooms can make a home more comfortable for homeowners planning on staying put for a number of years — and make the home easier to sell down the road. Today’s consumers are
reducing the scope of kitchen and bath projects, according to industry estimates.
The average kitchen remodel cost dropped to $12,500 in 2009 from $16,600 in 2008, according to data from the National Kitchen and Bath Association. The average bathroom remodel price was $7,037 in 2009, down somewhat from $7,148 in 2008.
According to the group, the most cost-efficient design options that deliver the most long-term value to consumers: Energy-efficient appliances and LED lighting, as well as less expensive countertops such as quartz, natural stone or laminate.
The minor kitchen remodel — including the replacement of cabinet fronts, the oven, the cook-top, installing new laminate counters, flooring, a sink and a faucet — returned 78.3% at resale, according to the Cost vs. Value Report. A major kitchen remodel that more than doubled the cost of the project returned 72.1% at resale.
Check the attic
Another project high on the Cost vs. Value list: Finishing an attic bedroom. The cost of the project was estimated to be about $49,346, but 83.1% could be recouped at resale. “Given the state of the economy, there are more reasons to increase the number of bedrooms. If you can do that within the existing footprint, then you’re doing it economically because adding space adds lots of value to the house,” Alfano said.
You probably won’t make that investment unless you need the extra space for your own family, but many households might share that need as kids live at home longer and multigenerational households become more commonplace.
Mackowski said a number of his clients are deciding to update the home they have instead of moving, and remodeling to use each inch of space to its fullest. To that end, a wood deck is another improvement that extends a property’s usable space. At resale, 80.6% of the estimated $10,634 cost of a wood deck addition would typically be recouped, according to the report.
Remember, though, not all found space is created equally. “Appraisers don’t look at adding basement square footage in the same way they look at adding additional square footage above ground,” Lupberger said. Above-ground rooms offer better light and livability, and typically add more value than finished basements, he said.
By Amy Hoak, MarketWatch
Contact Freedom Builders & Remodelers 815-985-0310 for a consultation on your next remodeling or renovation project