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Greetings!
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Numbers can tell a story and help us communicate messages. Sometimes it's good news, other times bad news.
Unfortunately in our culture, bad news captures more interest, so the media delivers more bad news than good. Are you tired of all the bad news? The good news is there but you have to look for it. It's your outlook that will make a difference so in 2008, why not start seeking out what's good?
There really is a lot of good news in real estate today. This month's feature article summarizes the key messages found in Remodeling magazine's 2008 Cost vs Value report.
Wishing everyone a year of new possibilities, where we turn adversity into lifestyle changes and simpler, happier lives.
Tina Gleisner, Everyone's Handywoman PS Please let me know what topics you'd like me to discuss on our new blog, Nuts & Bolts, i.e. I posted a mini article on generators given all the storms we're having. |
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2008 Remodeling Cost vs Value 
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Your perspective influences how you process information. Let's start with some comparative scenarios for home investments and what happened in 2008.
- With $250,000 in the market, you're lucky if you only lost 30% ... ending with $175,000
- A $250,000 after applying the national average, lost 7% ... making it $232,500 today
---------------------------------------------------------------------------- - A $25,000 car, after 5 years might lose 75% of it's value ...and be worth $6,250
- $25,000 invested in smart home improvements, could recoup 75% of the cost ... and be worth $18,750 (almost $24,000 with 5% appreciation/yr over 5 years)
Many people are wondering where to put their money these days. For some, investing in home improvements provides a great alternative or balance in your portfolio. Others might need to pay off credit cards first or build up their emergency funds. Remodeling magazine's 2008 Cost vs Value report provides data to help you evaluate different projects based on projected value when selling your home. For example, if you invest in a minor kitchen remodeling project, you can expect to recoup 79.5% of the cost on resale. Statistics from the National Association of REALTORS® show that home prices have fallen an average of 7% nationally while the value of home improvements has declined only 3.86%. In fact there are hot cities like Charlotte, NC. where some remodeling projects are projected to recover more than 100% of their costs. The remodeling projects with the highest cost to value ratios are holding steady year-to-year (see earlier articles/newsletters) with the following Top 10 projects: These projects have a high correlation with the most critical factors that influence home sales, namely curb appeal (siding, windows and decks) and kitchens and bathrooms. In addition to increasing your home's value, new energy efficient windows and siding (enable you to add insulation) provide great opportunities to lower your energy costs year after year. >>> Watch for our Upcoming Home Energy Report <<<
If your top priority is more living space, here is how those projects rank in terms of value (projected increase in home's selling price): - Decks (top 10) provide some of the best returns with wood decks value of 81.8% and composite decks resale value - midrange 73.7% and upscale at 63.2%
- Attic-to-bedroom conversion projected to return 73.8%
- Basement entertainment area with bathroom should return 72.9%
- Two story addition (family room, bedroom and bathroom) is the second largest project with a projected cost of $146,538 but you should recoup 70.7% on resale.
- Garage additions provide resale value at 66.6% of initial cost.
- Master bedroom suite over a crawlspace offers a projected return of 66.0%
- Family room on crawlspace foundation (keeps cost down) has projected value of 65.9%
- Sunrooms are costly averaging $71,745, and return only 56.7% on average.
- Home office remodeling projects are expensive at $28,094 and offer relatively low resale value at 54.6%.
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Planning Tips Your Remodeling Project
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Maybe there is a project you'd like to start but aren't
sure how to proceed. Here are a few recommended steps for using the
data in the 2008 Cost vs Value report to turn your ideas into reality:
- Pick 1 or 2 projects you'd like to research in depth, using the information provided here.
- Access
the project definitions (links above), cost and
value data for your location. Remodeling magazine has data for the US, 9
regions and more than 75 cities
 . - Review
the project description and list the cost components, separating out
labor and materials which each contribute cost to the project.
- Compare
the total cost to your budget for the project. If your budget is lower,
identify which items you can remove from your project.
- Identify
which items you can complete yourself to save money BUT be realistic,
as My/Mr Handyman sometimes undoes what a homeowner has tried to do. The best home owner tasks are buying and transporting
materials plus demo. My son recently remodeled his
kitchen, removing the cabinets plus floor and wall tile.
- For
smaller projects, call your local Mr/My Handyman company.For
larger/specialty projects you will need to find the appropriate
contractor for the job. Calling your local My/Mr Handyman owner
for recommendations is a good place to start.
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