Newport Daily News
Home & Garden-Spring 2008
You want to sell your house, but the kitchen yearns for a makeover, the exterior needs a new coat of paint, windows rattle in the slightest breeze and the bathroom has seen better days.
When buyers were plentiful and affordable homes were in short supply, sellers could look forward to recouping most if not all of the thousands they plunked down for major interior renovations such as a new kitchen or bath, in anticipation of a fast turnaround once they put their house on the market. That’s no longer true, housing experts say.
In today’s crowded buyer’s market, it’s not what you do to the inside of your home that matters. What counts is curb appeal, what your house looks like from the outside. Upgraded siding, wood replacement windows or a new wood deck can bring would-be buyers to your door, but don’t count on getting the heady 90 percent or better return on your investment that until recently helped define the seller’s market.
That’s borne out in the results of the 10th annual “Remodeling Cost vs. Value” study conducted by Hanley Wood LLC, a company7 that monitors and reports on housing and construction industry trends. The study, available online at www.costvsvalue.com, compares remodeling costs with resale values in 60 markets nationwide.
The results, covering 29 typical midrange and upscale remodeling projects in nine U.S. regions, are based on information gleaned from remodeling contractors and suppliers and nearly 3,000 National Association of Realtors sales agents, brokers and appraisers who responded to an e-mail survey. Supplied with project descriptions, construction costs and median home prices for each city, they were asked to estimate the value the remodeling projects would add to a house at resale in the current market.
“Realtors visit hundreds, if not thousands of homes with their buyer-clients each year, and have a unique understanding of what home buyers value in their local markets,” explains NAR senior public affairs associate Stephanie Singer, who tracks consumer trends. “They have insight into what projects really make a difference in the buyer’s eyes, when it comes to remodeling.”
The study found that nationally home owners who spent about $10,000 to $13,000 to replace existing siding with upscale products made of fiber-cement or foaming based vinyl, recouped 88% of the cost when the home was sold. Adding a $10,000 wood deck or allotting $12,000 to about $20,000 for wood window replacements returned 85% and 81%, respectively.
The only interior project returning more that 80% of its cost was minor kitchen remolding. While there are regional price differences, nationally, home sellers recouped 83% of an average $21,185 outlay to update an outmoded kitchen, redoing countertops, replacing cabinet doors and pulls with raised panel wood fronts and new hardware. An energy-efficient wall oven and cook top, amid-priced sink and faucet, a new laminate floor, repainting trim and wallpapering are included in the cost.
Ironically, even though the recoup rate is 78% of what is spent, a $16,000 midrange bathroom-remodeling project still is popular among home sellers.
That kitchen and bath remodeling and other home improvements have declined in value has not gone unnoticed by kitchen and bath industry expert Ed Pell, manager of market research for the National Kitchen and Bath Association. Pell points out that as recently as 2005, 10 of 22 projects tracked in the annual Cost vs. Value Report returned more than 90 cents on the dollar. That hasn’t stopped the home remodeling industry from growing, said Pell. In 2007, homeowners spent $70.2 billion on remodeling bathrooms, a 3.5% increase form the previous year.