If you’re already a homeowner, or plan to be you may at some point consider improving your home. Most homeowners have a mile long list of small improvements like painting rooms, fixing squeaky doors, or replacing worn-out flooring. The big projects, like remodeling the kitchen, and adding another room are the ones we dream about. When does it pay to do the big projects, and how long will it take you to recoup your investment?
Photo mlitty via Flickr
The answer lies in part with this amazing resource put together by realtors and remodeling pros from around the country. The Costs vs. Values survey offers the 2008 numbers for Cost of home improvements Vs. Resale Value. The survey is split down by state, and city for an accurate view of your local market.
The question you need to ask yourself when considering home improvement projects is how long do you plan to stay in your home? If you plan to stay in your home for less than 5 years, most larger improvements won’t be cost effective. You will likely get more bang for your buck by improving your curb appeal.
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.
If you have a longer timeline, or your home needs major improvements to be in shape to sell, you should consider running the numbers.
Let’s take a closer look to see the real dollar value of making both a small improvement (upgrading a bathroom), and a large improvement (remodeling a kitchen). For the sake of ease we are assuming that the 2008 numbers will be similar to the next 5 years with small fluctuations.
Remodeling a bathroom can be a big project, but in our analysis a bathroom remodel includes the basics. No heated towel bars, or top of the line cabinetry here. Using the national average, we see that a typical bathroom remodel averages just over $16,000. In resale you can expect to see just under $12,000 in return for your investment. A typical bathroom remodel will likely last approximately 20 years.
To recoup the difference would take an estimate of 5 years.
Recommendations: Proceed with this renovation only if it is absolutely necessary, or you know you are going to stay in your home for longer than 5 years. To freshen up a bathroom for less, you could consider painting cabinetry, painting walls, changing lighting and faucets, and adding a more efficient toilet.
A kitchen can be done on a budget, but in this case we’ll look at a total overhaul of the kitchen replacing the cabinets, countertops, flooring, and appliances with high-end or commercial grade products. We will use an average of 25 years for this project when it is typical to replace appliances and perform a minor remodel.
The national average in this instance is just under $111,000. In resale you could expect to see a return of approx. $78,000.
To recoup the difference would take an estimate of 7.5 years.
Recommendations: Proceed with a high end renovation if you plan to stay in your home longer than 7.5 years. Consider a smaller remodel if an upscale remodel doesn’t fit with your home or neighbor’s homes (you don’t want a $100,000 kitchen in a $200,000 house or the only $100,000 kitchen on the block). For most people they will consider what is important to them, and shave thousands off the price by doing so. You could for instance go with a painted cabinet versus a wood cabinet and save thousands.
Using the survey numbers, and your own budget you can get an idea of how long it will take to make your renovations pay. For more specific information on your local neighborhood, or area contact a realtor in your area.
Remember that while home improvement doesn’t always pay when you sell your home, in most cases if your home needs improvement it is better to do it now, and enjoy the remodel whether than wait. After all a home is not just an investment, but a place you live.
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