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2008 Cost vs. Value Report: Still Many Happy Returns for Home Rehabs


Remodeling magazine's annual report shows that maintenance-related projects and moderately priced upgrades are providing stable paybacks, even in a slower market.

By G.M. Filisko | December 2008

Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.

Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.

NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.

Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.

Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones. 

Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup. 

Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices. 

The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.

 

Top 10 Project Paybacks 

Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
 

1. Upscale fiber cement siding (86.7%)

2. Midrange wood deck (81.8%)

3. Midrange vinyl siding (80.7%)

4. Upscale foam-backed vinyl (80.4%)

5. Midrange minor kitchen remodel (79.5%) 

6. Upscale vinyl window replacement (79.2%)

7. Midrange wood window replacement (77.7%)

8. Midrange vinyl window replacement (77.2%)

9. Upscale wood window replacement (76.5%

10. Midrange major kitchen remodel (76.0%)

   
   

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 2008 List Issue: Home & Design


Your home savvy is put to the test every day as you whip less-than-perfect listings into shape and answer buyer questions about the care and feeding of a home. Here are dozens of tips you can use to help sellers get top dollar by making their homes current, clean, and green.

 

8 Quick Fixes to Increase Value


 


8 Quick Fixes to Increase Value


With buyers scarcer, sellers must up the ante to convince them that their property offers what many want most — top value for dollar expended. Here are eight fast fixes:

1. Buff up curb appeal. You’ve heard it before, but it’s critical to get buyers to want to look on the inside. Be objective. View listings from the street. Check the condition of the landscaping, paint, roof, shutters, front door, knocker, windows, house number, and even how window treatments look from the outside. Add something special—such as big flower pots or an antique bench — to help viewers remember house A from B.

2. Enrich with color. Paint’s cheap, but forget the adage that it must be white or neutral. Just don’t let sellers get too avant-garde with jarring pinks, oranges, and purples. Recommend soft colors that say “welcome,” lead the eye from room to room, and flatter skin tones. Think soft yellows and pale greens. Tint ceilings a lighter shade.

3. Upgrade the kitchen and bathroom. These make-or-break rooms can spur a sale. But besides making each squeaky clean and clutter-free, update the pulls, sinks, and faucets. In a kitchen, add one cool appliance, such as an espresso maker. In the bathroom, hang a flat-screen TV to mimic a hotel. Room service, anyone?

4. Add old-world patina. Make Andrea Palladio proud. Install crown molding at least six to nine inches in depth, proportional to the room’s size, and architecturally compatible. For ceilings nine feet high or higher, add dentil detailing, small tooth-shaped blocks used as a repeating ornament. It’s all in the details, after all.

5. Screen hardwood floors. Buyers favor wood over carpet, but refinishing is costly and time-consuming. Screening cuts dust, time, and expense. What it entails: a light sanding, not a full stripping of color or polyurethane, then a coat of finish.

6. Clean out, organize closets. Get sorting—organize your piles into “don’t need,” “haven’t worn,” and “keep.” Closets must be only half-full so buyers can visualize fitting their stuff in.

7. Update window treatments. Buyers want light and views, not dated, fancy-schmancy drapes that darken. To diffuse light and add privacy, consider energy-efficient shades and blinds.

8. Hire a home inspector. Do a preemptive strike, since busy home owners seek maintenance-free living. Fix problems before you list the home and then display receipts and wait for buyers to offer kudos to sellers for being so responsible.

 



 


Then and Now: How Home Construction has Changed


Besides building homes bigger, construction has evolved drastically over the last decade. Here are just a few ways:

  • Swankier modular construction. Forget thinking that modular homes are tacky, small, and amenity-free. Homes built mostly in a factory and completed on-site can be big, stylish, loaded with bells and whistles, and indistinguishable from stick-built houses.
  • Better energy efficiency. HVAC systems outfitted with furnaces that have computer-controlled chambers can sense outside temperatures and adjust interior heat or cold. More windows come standard with low-E glass and vinyl-clad rather than aluminum frames for better heating and cooling transfer. Also, roof insulation has more than doubled to R-38 or R-42 from R-19.
  • Greater severe weather tolerance. Houses used to be able to withstand 80- to 90-mile-per-hour winds, but with structural steel plates and rods and huge fastening systems, exterior walls now can hold them in place from the roof to the foundation footers during 120-mph storms. Metal roofs also are favored since they remain intact, unlike asphalt or fiberglass shingles that may crack.
  • Healthier materials. Anything that had contained toxic ingredients in the past—paint, carpeting, adhesive, stain, or glue — has been replaced with healthier variations. Many are water-based rather than oil-based, which also has driven down costs.
  • Changes in layouts. The dining room may still be alive and well, even if infrequently used, but more homes are built with a casual living space instead of a formal living room. Gaining popularity instead are first-floor master suites, gourmet kitchens, laundry and mud rooms, a shaft for a future elevator, wiring for a media center rather than a separate theater, and screened porches with the option of glass panes for three- or four-season use.
  • Greater detailing. Instead of spare spaces that often look cold, many builders now fashion warm, inviting interiors with carved cabinetry, crown and baseboard molding, and lavish paint finishes.
  • Radiant heat. No more surges of power to heat and cool, radiant tubing distributes heat evenly throughout a house, and can be controlled by a thermostat, and even zoned.
  • Synthetic decks and porches. Manmade materials — wood chips and plastic formed into boards — are replacing wood and pressure-treated wood to save trees, cut mildew and rot, eliminate poisonous materials leaking into the soil, and make outdoor living areas impervious to weather.
  • Smart wiring. With easier living a goal, improved technology now allows sprinklers, lights, audio-video systems, and security to be programmed from an office or any computer connection rather than flicked on and off at home.

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