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2006
Cost vs. Value
Making
Home Improvements Pay
What’s the return for remodeling?
Prices for most remodeling projects continue to
climb, while the recoup value of improvements at resale is declining. None
of this should come as much of a surprise. This year’s recoup values
confirm the housing slowdown many parts of the country are experiencing.
With both home-sale and remodeling activity at
record levels in the last five to six years, some cooling is inevitable.
Indications are that the current downturn represents a return to “normal”
levels.
In an actual real estate transaction, the “cost
recouped” for a given remodeling project depends on a variety of factors.
These include the condition of the rest of the house, the value of similar homes
nearby, and the rate at which property values are changing in the surrounding
area. A home’s urban, suburban, or rural setting also affects its value, as
does the availability and cost of new and existing homes in the immediate
vicinity.
Replacement projects lead returns
Of the top 10 projects nationally measured by cost
recouped at resale, seven — including the top three — are replacement
projects. An upscale fiber cement siding replacement returned 88 percent of the
investment. Midrange vinyl siding replacement was second at 87.2 percent, and
midrange wood window replacement edged out minor kitchen remodeling for third at
85.2 percent. Only roofing replacement finished outside the top 10 projects, at
73.9 percent for a midrange job, and 72.9 percent for an upscale one.
Most home buyers are looking for a house with curb
appeal. If they drive up to a house with dingy aluminum siding and old windows,
the buyers automatically get a bad taste in their mouth. The old saying
‘Don’t judge a book by its cover’ falls on deaf ears with most clients.
| Cost
vs. Value 2006 |
|
2006 National
Averages |
| Project |
Job Cost |
Resale Value |
% Cost Recouped |
| Mid-Range |
|
| Attic Bedroom Remodel |
$44,073 |
$35,228 |
79.9% |
| Basement Remodel |
$56,724 |
$44,685 |
78.8% |
| Bathroom Addition |
$28,918 |
$21,670 |
74.9% |
| Bathroom Remodel |
$12,918 |
$10,970 |
84.9% |
| Deck Addition |
$14,728 |
$11,307 |
76.8% |
| Family Room Addition |
$74,890 |
$53,519 |
71.5% |
| Home Office Remodel |
$20,057 |
$12,707 |
63.4% |
| Major Kitchen Remodel |
$54,241 |
$43,603 |
80.4% |
| Master Suite Addition |
$94,331 |
$68,458 |
72.6% |
| Minor Kitchen Remodel |
$17,928 |
$15,278 |
85.2% |
| Roofing Replacement |
$14,276 |
$10,553 |
73.9% |
| Siding Replacement (vinyl) |
$9,134 |
$7,963 |
87.2% |
| Sunroom Addition |
$49,551 |
$32,854 |
66.3% |
| Two-Story Addition |
$105,297 |
$87,654 |
83.2% |
| Window Replacement (wood) |
$11,040 |
$9,416 |
85.3% |
| Window Replacement (vinyl) |
$10,160 |
$8,500 |
83.7% |
| Upscale |
|
| Bathroom Addition |
$60,535 |
$44,041 |
72.8% |
| Bathroom Remodel |
$38,165 |
$29,529 |
77.4% |
| Major Kitchen Remodel |
$107,973 |
$81,896 |
75.9% |
| Master Suite Addition |
$176,268 |
$128,096 |
72.7% |
| Roofing Replacement |
$24,693 |
$18,012 |
72.9% |
| Siding Replacement (fiber cement) |
$13,149 |
$11,573 |
88.0% |
| Siding Replacement (foam-backed
vinyl) |
$11,139 |
$9,258 |
83.1% |
| Window Replacement (wood) |
$16,910 |
$13,952 |
82.5% |
| Window Replacement (vinyl) |
$13,120 |
$11,109 |
84.7% |
|
|
