Home Buying
What Improvements You Can Do For The Best Return on Your Money
Home Ownership! It's Still the American Dream?
Many of us own homes or look forward to owning a home someday.
Although homes are meant to be enjoyed, for most of us they are also our largest investment.
In order to maintain and/or increase your investment you should consider what improvements you want to do to your home to help maintain it's value and recoup our costs in the future.
Two important questions on the minds of most remodeling customers:
How much will my project cost, and will I get most of my money back when I sell?
I am going to share info from Remodeling Magazine's annual Cost vs. Value Report that gives you information about the interior and exterior projects that bring the biggest return.
About the Survey:
Construction cost estimates for the Cost vs. Value Report come from HomeTech Information Systems, a remodeling estimating software company based in Bethesda, Md., which regularly collects current cost information from a nationwide network of remodeling contractors and suppliers and applies an adjustment factor to account for regional pricing variations. Construction cost figures include labor, material, subtrades, and contractor overhead and profit.
First let's Define Types of Improvements:
•· Additions / Remodel / Replacement
•· Midrange vs. Upscale
Regional Costs Differences:
•· Study showed differences in costs and wide regional swings.
Example: a midrange bathroom remodel can recover 78% of its cost in the South vs. 63% in the Midwest.
•· We are grouped with South Atlantic states
Results of Study:
Of projects that saw cost recovery rates of more than 80 percent in 2007--
Only one was a strictly interior job.
•· Minor Kitchen Remodel - 83% of approx $20,000 cost was recovered.
Take a functional but dated kitchen leave cabinet boxes in place but replace fronts with new raised-panel wood doors and drawers, including new hardware. Replace wall oven and cooktop with new energy-efficient models. Replace laminate countertops; install mid-priced sink and faucet. Repaint trim and walls, and replace flooring.
The others were exterior improvements:
•· Upscale siding replacement using fiber foam-backed vinyl - Recouped 88% of approx. $8,900 cost
Replace existing siding with new foam-backed vinyl siding, including factory trim at all openings and corners.
•· Wood deck addition - Recoup 85% of approx. $9,000 cost
Add a deck using pressure-treated joists supported by 4x4 posts anchored to concrete piers. Install pressure-treate
d deck boards in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing system using pressure-treated wood posts, railings, and balusters.
•· Upscale vinyl and midrange wood window replacements - Recoup 81% of approx. $9,000 cost.
Replace existing double-hung windows with insulated vinyl replacement windows. Wrap existing exterior trim as required to match. Do not disturb existing interior trim.
Other Projects that got the best return on the investment:
Basement Remodel - Return of 80% of cost of approx $53,000
Finish the lower level of a house to create an entertaining area with wet bar and a full bath; enclose mechanical area. Walls and ceilings are painted drywall throughout; exterior walls are insulated; painted trim throughout. Include doors with passage locksets. Electrical wiring to code. Main room: Include recessed ceiling light fixtures and surface-mounted light fixtures, and a snap-together laminate flooring system. Plus Bathroom and Bar area
Attic Bedroom Remodel - 78.8% recouped of approx. $41,000 cost.
Convert unfinished attic space to a 15-by-15-foot bedroom and a 5-by-7-foot bath with shower. Include a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space; provide electrical wiring and lighting to code. Retain existing stairs, but add rail and baluster around stairwell.
On most projects, the value of remodeling trended down in 2007 compared with 2006.
No project exceeded an 88 percent return. The likely culprits for the year-to-year drop:
•· rising remodeling costs and
•· slowing home appreciation brought on by the lackluster housing market in many areas.
Nationally, projects at the bottom of the cost-recovery ladder include:
•· home office remodels (57 percent),
•· installing a back-up power generator (58 percent), and
•· adding a mid-range sunroom (59.1 percent).
To Put Costs and Values in Context, here are some considerations:
Looked at over a number of years, some projects appear to recoup considerably less than others.
•· Home office remodels, for instance, have been at or near the bottom of the national averages since 2005. A prospective buyer with different space needs won't see the value, regardless of the cost.
•· On the other hand, minor kitchen remodels have consistently ranked among the highest-value projects, according to practitioners surveyed.
•· It's also important to consider whether a remodeled space reduces the perceived number of rooms or available square footage. For example, carving a half-bath out of unused storage space under a staircase is an obvious gain in usable space. But converting an existing bedroom into a master bath, while a positive development in many respects, may reduce the number of bedrooms below the minimum expectation of some prospective buyers.
•· Similarly, the cost recouped on a given remodeling project depends on a wide variety of factors. These include the condition of the rest of a 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.
In Summary:
Remodeling is still a pretty good investment. Two-thirds of this year's projects return between 65% and 80% at resale. That means homeowners are still paying just 20 cents to 35 cents on the dollar for adding more space, or creating better space.
If you would like more information about Home Buying or Selling in Maryland.
CALL ME:
Barbara Michaluk, Realtor
Weichert Realtors
Phone 240-506-2434
