With home values nationwide still well below the historic average highs set prior to the housing collapse, homeowners are considering making improvements to their homes rather than trading up for a bigger, better model.
Remodeling magazine conducts an annual Cost vs. Value Report that presents the national midrange cost for a variety of renovation projects and the typical cost recouped at sale. Note that these numbers are national data and expenses may vary regionally.
Remodeling Cost Vs. Value 2011-20121
|Deck addition (composite materials)||$15,579||$9,780||62.8%|
|Deck addition (wood)||$10,350||$7,259||70.1%|
|Family room addition||$83,118||$50,004||60.2%|
|Kitchen remodel (major)||$57,494||$37,785||65.7%|
|Kitchen remodel (minor)||$19,588||$14,120||72.1%|
|Master suite addition||$106,196||$62,874||59.2%|
|Siding replacement (vinyl)||$11,729||$8,155||69.5%|
|Window replacement (vinyl)||$11,319||$7,692||68.0%|
|Window replacement (wood)||$12,229||$8,258||67.5%|
Bigger Isn’t Always Better
If you focus on an upscale project with high-end materials or a more budget-conscious approach, the initial cost of the job and the cost recouped at sale will vary accordingly. For example, the difference between a minor kitchen remodel and a major kitchen remodel lies primarily in the design and materials used to renovate a 200-square-foot kitchen. Variables include semi-custom cabinets vs. existing cabinet boxes with new doors and drawers and the presence of a 3-by-5-foot island in the major kitchen remodel.
Ironically, the data show that the minor kitchen remodel recoups a higher percentage of its cost than the major kitchen remodel. Spending your money wisely, vs. spending the largest amount of money, may be more worthwhile financially.
The renovations that recoup the greatest percentage of their initial cost are those that residents are likely to use frequently or that enhance energy efficiency. Bathrooms and kitchens, which typically are used daily, tend to be important to potential home buyers. Vinyl siding and window replacement can potentially enhance energy use.
Before embarking on a renovation project, consider whether you are likely to recoup a good portion of the cost over the long term. This approach may help to focus your thinking on long-term value.
1Source: Remodeling, “2011-2012 Cost vs. Value Report” (www.remodeling.hw.net).