Remodeling magazine’s annual project report ranks with home improvement efforts pay off.
Homeowners looking to make improvements to their residences often scrutinize expensive remodeling wish-list items carefully and determine which projects offer the best return on investment — especially if they plan to sell their property anytime soon.
That’s why many look to Remodeling magazine’s annual Cost vs. Value Report for clues and trends into what would be the best projects for their homes.
This year’s edition, published in cooperation with the National Association of Realtors, reveals some surprising new findings that may make homeowners rethink where they want to invest their renovation dollars for improved resale value.
For instance, adding a backup power generator to your home made the biggest gain on the list in terms of percentage of recouped cost, rising 28 percent to return 67.5 percent of its $11,742 average cost in 2013. The next biggest gains were for attic bedroom remodels (up 15.6 percent, recouping 87.4 percent of its $48,438 average cost) and basement remodels (up 10.4 percent, recouping 77.6 percent of its $62,834 average cost).
Topping the overall improvement list for midrange projects was steel entry door replacement ($1,162 average cost, 96.6 percent cost recouped), followed by a wood deck addition ($9,539 average cost, 87.4 percent cost recouped). Other projects in the Top 10 include garage door replacement, minor kitchen remodel, wood and vinyl window replacements, vinyl siding replacement, and composite deck addition.
Further, for the second year in a row, the report’s data demonstrate that the value of remodeling is up for all 35 projects surveyed. The cost-value ratio, which expresses resale value as a percentage of construction cost, started dipping in 2006 but began rebounding last year. In 2014, the CVR has risen 5.5 points to 66.1 percent — the largest increase since 2005.
Cannon Christian, president of Renovation Realty in San Diego, sees value in the Cost vs. Value report but doesn’t necessarily agree with the project rankings.
“If I were making my own list, I would start from the front of the home with the garage door, landscaping, front door, exterior paint and vinyl windows. These are smaller scale renovations that will add a quick revamp to your home, as you want the best first impression and curb appeal for your property,” Christian says. “Kitchens and baths, which are higher in cost, would be next on my list of the best renovations to tackle for a good return on investment.”
Bob Hoebeke, president/CEO of Hoebeke Builders in Dallas, isn’t surprised that five of the top seven greatest recoup gainers on the list can be seen in space and life enhancement projects.
“This reflects the market’s desire to once again improve our quality of life over simply maintaining it,” Hoebeke says.
The report can also be a helpful point of comparison for home shoppers.
“Homeowners are famous for overestimating the value of their own houses, so the report provides valuable context,” says Colby Sambrotto, founder/CEO of USRealty.com.
But Sambrotto cautions homeowners to take the report with a grain of salt.
“Nothing beat a local apples-to-apples comparison, he says. “To really understand what improvements deliver high return on investment, you have to understand your local market.
“Local norms always should take precedent over surveys,” Sambrotto says.
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