Myrl Jeffcoat’s Real Estate News
THE REAL ESTATE NEWSLETTER FOR TODAY’S HOMEOWNER
“Making Home Improvements Pay”
Making Home Improvements
What's the return for remodeling? Remodeling magazine's annual report compares construction costs with resale values for 25 common remodeling projects in 60 U.S. markets.
Prices for most remodeling projects continue to climb, while the recoup value of improvements at resale is declining to levels last seen in 2002. These are the finding of Remodeling magazine's 19th annual "Cost vs. Value Report" -- the eighth prepared in cooperation with REALTOR® Magazine. None of this should come as much of a surprise to you: This year's recoup values confirm the housing slowdown many parts of the country are experiencing.
With both home-sale and remodeling activity at record levels in the last five to six years, some cooling is inevitable. Indications are that the current downturn represents a return to "normal" levels.
A number of improvements designed to make the report more reliable and useful has also affected both cost and value data. For starters, Remodeling took a fresh look at the specs for 25 projects in studies each year. (REALTOR® Magazine, in the past, has limited the number of projects it included in its coverage.) The cost-to-construct figures (which include labor, material, subcontractors, and gross profit) are higher than in previous years, but also more accurate. (Read full project descriptions at: www.remodelingmagazine.com).
The estimates of resale value are also more accurate than ever before, thanks to the more than 2,000 members of the National Association of Realtors® who completed Remodeling's e-mail survey this past summer.
In addition, the report introduces nine regional averages, following the divisions established by the U.S. Census Bureau. This breakdown provides higher confidence levels than could be achieved with the four larger U.S. regions measured in previous years.
(note from Myrl: I will be focusing on the Greater Sacramento area in the tables provided in this Newsletter. However these tables also provide "National Averages" ).
What the Numbers Mean
When comparing cost estimates for actual projects, remember that averaging tends to have a leveling effect on "Job Cost" data. And, seemingly small differences in size, scope, or quality of finishes can dramatically affect the final project cost. Remember, too, that, even in neighborhoods in the same city, local conditions can affect both the cost and value of a remodeling project, making our numbers appear too high or too low.
In an actual real estate
transaction, the "cost recouped" for a given remodeling
project depends on a variety of factors. These include the
condition of the rest of the 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.
Kitchen Remodel (minor)
THE SPECS Update a 200 square foot kitchen that has a functional layout by adding 30 linear feet of cabinetry and countertops. Leave cabinet boxes in place, but replace fronts with new raised panel wood doors and drawers, as well as new hardware. Replace wall oven and cook-top with new energy-efficient models. Replace laminate countertops with material of equal quality. Install mid-priced sink and faucet. Add wall covering and repaint trim. Remove resilient flooring and replace with similar flooring.
THE SPECS Update an existing 5-by-7-foot bathroom. Replace fixtures with a 30-by-60-inch porcelain-on-steel tub. Add 4-by-4-inch ceramic tile surround a new single-lever temperature and pressure-balanced shower control, standard white toilet, solid surface vanity counter with integral double sink, recessed medicine cabinet with light, ceramic tile floor, and vinyl wallpaper.
[Notes from Myrl]: I have not presented all the data in the article, but have tried to focus on projects usually found most popular here locally. In further digesting the material, I noted other "cost vs. value" remodel work in the Greater Sacramento area, didn't fare quite as well as kitchens and bathrooms did. For example, a Home Office remodel average cost recoup was 70.2%.
A Sunroom addition of reasonably good quality recouped just 64%.
For a more complete list of projects and their cost vs. value, please visit:
Also, please feel free to contact me, should you have questions pertaining to your individual home, in regards to home improvement projects.
page created: 2/26/2007