Sign of the Times
Remodeling magazine just released their annual Remodeling Cost vs. Value Report for 2010-2011 which compares the cost of various types of remodeling projects with their resale value. It provides data for the national averages and for specific regions of the country. At the peak in remodeling value in 2005, the national average percentage of recouped value for all types of projects was 86.7%. This year, the ratio has dropped to 60%, reflecting the instability in the national real estate market due to tight lending practices and uncertainty over foreclosures and distressed properties. Keep in mind that these numbers are driven by the cost of remodeling and the value of homes in all markets.
In our local area, where housing values have remained more stable, the return on remodeling costs is much higher. Some types of projects recoup over 100% of the value when the home is sold. An entry door replacement that cost $1,546, will return $2,029, or 131.30% of the cost in resale value. Similarly, a bathroom remodel that cost $22,014, will return $22,440, or 101.90% of the cost upon sale. Major projects, such as additions and kitchen remodels, while they do not recoup 100% of the cost, are still able to recoup approximately 95% of the cost upon resale. Of note, these figures represent averages for good quality (not luxury) projects. High end projects with expensive finishes and fixtures recoup less overall than projects of good quality.
At the national level, the first 10 places in the ranking are held by 13 projects (includes ties.) It’s a sign of the times that 10 of them are exterior replacement projects such as windows, doors, and siding. Replacement projects have always performed better in resale value than remodeling projects, partly because they are among the least expensive and partly because they are need-based improvements that contribute to the home’s curb appeal and protect the owner’s investment. To read the full article and view charts for all types of remodeling projects and areas of the country, see the Remodeling 2010-11 Cost vs. Value Report on the Remodeling magazine website.