Remodeling Costs Versus Resale Value

One of the questions I am most commonly asked as a Realtor is which home improvement projects will add the most value to a home.  Every year, Remodeling Magazine publishes an annual report on the relationship between remodeling costs and resale value.  Brian Ciota at http://mcclurgteam.com has written a great article summarizing some of the most recent report and suggesting that we ask ourselves some of the following questions when considering a remodel:

  • How long do I plan to own this property? (If you’re planning to live in the home for less than five years, it may make sense to take on remodeling projects that freshen up the inside of the home and promote curb appeal.)
  • How does the value of my home compare to other properties in the area? (Generally, a remodeling project that is less than 20 percent of the average resale value in your area can be recouped when your home is sold.)
  • What do I gain by remodeling? (Many people remodel to enrich their lifestyle and enjoy their home. If you love to cook and entertain, a state-of- the-art kitchen will provide years of pleasure. If you’re a wine connoisseur, a wine cellar and bar are “must haves”. If you have a beautiful yard and want to bring in the outdoors, then add a sunroom. If these are the things that add pleasure to your life, go for it!)

According to Remodeling Magazine’s 2009-10 annual report on the relationship between remodeling costs and resale value, different remodeling projects offer a wide range of payback. The table below compares remodeling costs to resale values in the Mid-Atlantic States (including New York):

Project Avg. Cost Resale Value % Cost Recouped
Replace front entry door with steel door $1,248 $1,217 98
Vinyl siding replacement $10,908 $8,920 81
Fiber cement siding replacement $13,497 $10,710 79
Foam-backed siding replacement $13,369 $10,489 79
Vinyl replacement windows $11,408 $8,766 77
Wood replacement windows $12,410 $9,248 75
Attic bedroom addition $53,780 $39,292 73
Minor kitchen remodel $22,130 $15,973 72
Bathroom remodel $17,383 $11,817 68
Major kitchen remodel $59,905 $39,860 67
Basement remodel $67,455 $41,127 61
Master suite addition $111,857 $67,612 60
Deck addition (composite) $39,270 $22,584 58
Sunroom addition $76,580 $38,661 51

The costs recouped on a remodeling project depend on a variety of factors including 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. If resale value is a factor in your decision to remodel, consult with a local remodeler about construction costs and look closely at the comps and market conditions in your area.

Read the entire article here.

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