The Harvard University Joint Center for Housing Studies estimates that Americans will spend nearly $160 billion for home remodeling projects over the next 12 months; will they be spending that money wisely? REMODELING magazine’s 19th annual Cost vs. Value Report—the eighth prepared in cooperation with REALTOR MAGAZINE—shows that prices continue to climb for most remodeling projects at the same time the value of improvements at resale are declining. This is a reflection of the overall market correction, and the increase in fossil fuel driving all costs up. Should you be worried about lower recoup values? Some homeowners are choosing to remodel to create their dream home rather than buy a new house, while others are renovating their homes in order to get top dollar at resale. When resale value is a major factor in a homeowner’s remodel, the best course of action is to consult with a local contractor about construction cost and an experienced Realtor who knows your neighborhood to advise you on the features that buyers are looking for today.
1: Putting a $100,000 dream kitchen in your home is fine, but if the highest priced house on your street is selling in the $400,000’s, you have to realize you are doing that for yourself and while the dream kitchen may make for a fast sell, will never recoup that money. 2: When you consider its value at resale, a home improvement project costs only 20 cents to 25 cents on the dollar. The other 75 cents to 80 cents spent on a project goes directly back into the home through increased value — not to mention increased owner enjoyment. 3: If you have been in your home for a while, increased equity will more than likely offset the out of pocket expenses, which could result in a faster sale, less holding costs and more money in your pocket.
View the
PDF version of the full report published in REALTOR® Magazine
This Week’s Real Estate Insight: In an actual real estate transaction, the “cost recouped” for a given remodeling project depends on a variety of factors, including the condition of the rest of the house, the value of similar homes, A home’s setting and the availability and cost of new and existing homes nearby. It is always a good idea to consult a Realtor before doing any major renovations; their expertise will translate into dollars in your pocket.
