Home Remodeling Value Gaining Strength With Housing Recovery
By Christina Hoffmann
2013 is shaping up pretty sweetly for homeowners. First, there were the home owner-centric tax benefits (energy tax credits, PMI deduction, mortgage debt forgiveness) that Congress and the president extended through 2013; and now, we're seeing that our home improvement dollars are working harder. After several bruising years, spending on remodeling projects is up and so too is your return on your remodeling dollars. The national average percentage recoup on all 35 projects in Remodeling magazine's 2013 Cost vs. Value Report rose since last year. What a different story from 2012, when the ROI dropped in all but three categories.
The annual report is based on a survey that asks Realtors around the country to estimate what specific projects, from adding an attic bedroom to installing new windows, would recoup in their market at resale under current conditions. Of course, what you recoup depends on the specifics of your project, your market, and when you sell. But the report offers a great bird's-eye view of project costs and returns. So which projects offer the best value for the money?
Exterior projects like siding, window, and garage door replacements took seven of the top 10 spots in this year's list. (See a slideshow with the cost-vs-value details on exterior remodels.) That makes sense since Realtors always say curb appeal is half the battle when you're trying to sell.
Although it's not in the top 10, I was gratified to see that the backup generator project is up about 5 percentage points since 2012. One of our bloggers, Lisa Kaplan Gordon, invested in a portable generator last year after one too many storms and power outages, and despite the learning curve, she was glad she did. She had power when a lot of her neighbors didn't; she even shared power.
Indoors, the top-10 projects include a minor kitchen remodel (involving cabinet refacing and new countertops and appliances), which recouped 75.4% nationally. Kitchen redo aside, replacement projects, such as installing an entry door or new siding, tend to have a higher cost-to-value ratio than remodeling projects. But now that housing has turned a corner, homeowners are stepping up their remodeling plans.
Harvard's Joint Center for Housing Studies saw a 9 percent growth in remodeling in 2012 and predicts that trend will continue as more and more distressed properties are bought and rehabbed. The housing group says interest in energy-efficiency updates will keep on trucking, too. It's the one area where spending on remodeling projects rose during the recession. I'm betting the revived energy tax credit will add fuel to that trend.
This article was originally published on HouseLogic.
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