Yeah! The housing market is pulling out of the recession with sales figures rising steadily as has the value of our homes.
Understandably my fellow realtors and I are receiving more calls from homeowners who have decided that it’s time to get off the fence and list their homes in the improved marketplace.
At the same time, homeowners are spending more time and money making improvements to their homes, not that they will get back all of their investment on the upgrades, but it will make their homes more attractive to the buyer, whether the project makes the home more beautiful, comfortable or energy-efficient.
Right now, it is relatively inexpensive to finance home improvements with low-interest on home equity lines of credit. There is also more negotiating power with home construction way down (although that is improving too) and with contractors more willing to cut the kinds of deals they would not have considered five years ago.
It is important to know which improvement projects will add the most value to your home. To know that, Interest.com recently researched the annual cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors, which gathers this information from 60 cities.
Based on that research and the percentage of the cost recouped at resale, here is the list of the 10 best home improvements to consider:
1. Upscale siding replacement costs $13,177 and adds $11,424 to a home’s value, or 86.7% of the cost.
2. Adding a wooden deck costs $10,601 and adds $8,676 in value, 81.8% of the cost.
3. Minor kitchen remodeling costs $21,246 and adds $16,881 in value, 79.5% of the cost.
4. Replacing windows with midrange wood replacements costs $11,512 and adds $8,946 in value, 77.7% of the cost.
5. Midrange bathroom remodeling costs $15,899 and adds $11,857 in value, 74.6% of the cost.
6. Renovating an attic into a bedroom costs $48,398 and adds $35,694 in value, 73.8% of the cost.
7. Finishing a basement costs $61,011 and adds $44,467 in value, 72.9% of the cost.
8. Adding a second story costs $146,538 and adds $103,553 in value, 70.7% of the cost.
9. Adding a garage costs $57,272 and adds $38,161 in value, 66.6% of the cost.
10. Adding an upscale bathroom costs $74,345 and adds $49,100 in value, 66.1% of the cost.
In considering the different levels of improvement, let’s say for a bathroom, a minor facelift would include such things as replacing faucets, adding new flooring, new wallpaper or tile, or new doors for the shower. Mid-range remodeling would add new vanities and countertops, mirrors, medicine chest and maybe replacing the toilet and doing a new tub surround.
If the prices of the projects seem more than you might expect, there are several reasons. Averaging can skew costs higher than taking the mean of all costs. For example, if three people remodeled their kitchens at a cost of $10,000, $15,000 and $100,000. The median price would be $15,000 because half of the projects cost more and half cost less. But the average would be $41,666.
The prices also include professional labor, which is about 30% of the cost.
When you are deciding which project to do, the maxim that a little is good and a lot is much better doesn’t always apply in the realm of real estate. Improvements should reflect the realty of the neighborhood. While people living in $500,000 homes were investing as much as $100,000 in an upscale kitchen a few years ago, it wouldn’t make sense now in terms of recouping the investment.
But, on the other hand, if your neighborhood has mostly three-bedroom, two bath houses, and your house has only one bathroom, you’re at a disadvantage when it comes time to sell, so it would make a bigger difference to add a bathroom.
Once you know the math, it’s all common sense, really.
Bill Primavera is a realtor associated with Coldwell Banker and a marketing practitioner who writes regularly as The Home Guru. For questions or comments, or for information about buying or selling a home, he can be emailed at bill@PrimaveraHomes.com or contacted directly at 914-522-2076.