Selected 2009 Cost vs. Value Report Statistics - Average
Nationwide Return
on Investment:
2009-10 Cost vs. Value Report: Small Projects, Big Bang
Judicious home remodeling is still
worth the investment, according to Remodeling magazine's
annual "Cost vs. Value Report."
By G.M. Filisko | January 2010
Uncertainty and restraint are the order of the day in
this economy, and that sense of caution is reflected in home owners' return
on their investment in remodeling projects, according to REALTORSR in 80 metropolitan
markets surveyed by Remodeling magazine for this year's Cost
vs. Value Report.
The majority of the 10 remodeling projects with the
best return on investment nationally are a testament to pragmatism.
Six of the 10 projects-siding and window replacement using a variety
of materials-involve home maintenance that costs less than $14,000.
Two more-adding an attic bedroom or a wood deck-reinforce
the notion that boosting the amount of livable space
in and around your home will attract buyers who are increasingly
looking for more room for their buck. In past years,
converting an attic into a bedroom was a project that
landed squarely in the middle of the rankings, but this
year it leapfrogged over other categories into third
place. It's an admittedly pricey project, with an average
national cost of nearly $50,000, but it generates an
average national return of 83.1 percent and a better-than-100
percent return on investment, according to REALTORSR
in 14 of the 80 cities surveyed. Adding a wood deck is
much more economical, with an average national cost of
slightly more than $10,000. Its average national return is 80.6
percent, but in six cities, its return is estimated at 100 percent or greater.
The six siding and window home maintenance projects
in the top 10, combined with the project with the biggest return on investment-a
mid-range entry door replacement-prove something that every sales associate
tells sellers throughout the country: First impressions count. A mid-range
entry door replacement, a project new to the survey this year, is
the only home remodeling project that REALTORSR expect to generate
a full return for the money nationally. It's the least expensive of the 33
projects included in the analysis, yet it brings a whopping average national
return on investment of 128.9 percent. It generates a better-than-100 percent
return in 48 of the 80 cities, according to REALTORSR surveyed, and in several
cities, its return is estimated at more than double its cost.
Additional data prove the value of restraint. Upgrading
kitchens and baths is still a smart bet. However, home owners will recoup
the greatest share of their costs by foregoing super-deluxe projects in favor
of mid-range kitchen and bath remodels. A mid-range kitchen remodel brings
an average 72.1 percent return on investment, while an upscale kitchen
re-do returns only an average of 63.2 percent of the money invested. A mid-range
bathroom project has an average 71 percent cost recovery, but the average
recovery on an upscale bathroom project is nearly 10 points lower, at
61.6 percent.
The only upscale projects that cracked the top 10 were
the home maintenance projects of fiber-cement siding replacement and vinyl
window replacement. The average cost of fiber-cement siding is more than
$13,000, but its return on investment reached 83.6 percent, placing it squarely
in second place in the survey. The average cost of vinyl window replacement
is nearly $14,000, and it generates an average return of 76.5 percent, or
tenth place in the survey. Of the 12 upscale projects, nine landed in the
bottom half.
Overall, home owners recouped an average of 63.8 percent
of their investment in 33 different home improvement projects, according
to REALTORSR who responded to the survey. The expected cost recoup was
generally down from previous years in line with the drop in home prices nationally. The return on home owners' investment in remodeling
projects has declined an average of 3.5 percentage points between
2008 and 2009. That's down from the 2.7 point drop between 2007 and 2008 and
much less than the 5.5 point drop between 2006 and 2007 and the 10.5 point
drop from 2005 to 2006.
Zooming in from the national to the city level, Honolulu
sits atop the rankings for having the most projects-18-that generate
at least a full return on investment. In Honolulu, adding a wood deck,
completing a minor kitchen remodel, adding fiber-cement siding, and replacing
an entry door bring the highest returns, ranging from 121.1 to 195.3
percent return on investment. San Francisco is closest behind with 10 projects
generating at least a full return on investment. Adding a master suite,
doing a minor kitchen remodel, and replacing an entry door have the
biggest returns, producing between 112.2 and 119.1 percent return on investment.
One surprise: Despite the common perception that contractors
are hungry for work and therefore willing to wheel and deal, the average
national cost of every project surveyed has gone up, though at a slower
rate than in the previous year.
