Remodeling's Payoff

Bathroom Remodel Attic Bedroom Addition
Attic Bedroom Addition Deck Addition
Basement Remodel Window Replacement
Roofing Replacement Family Room Addition
Home Office Remodel  

The “Cost vs. Value Report,” published each year in conjunction with Remodeling magazine, gives you a city-by-city guide on what various home projects will pay back at resale. This year’s report features data for five more markets than last year* and a new project—a mid-range home office remodel.

On a somber yet optimistic note, we included New Orleans’ results, compiled before Hurricane Katrina, with the firm belief that in time the Big Easy’s real estate market will once again be thriving.

Where we get the data

Cost data for the report come from HomeTech Information Systems, a remodeling estimating software company in Bethesda, Md. HomeTech collects current cost information quarterly from a nationwide network of remodeling contractors and employs an adjustment factor to account for regional pricing variations. Construction cost figures include labor, material, sub-trades, and contractor overhead and profit.

Resale values (“cost recouped” in the tables) are aggregated from estimates provided by National Association of REALTORS® members. E-mail surveys containing construction costs and median home price data for each city were sent to more than 20,000 appraisers, brokers, and salespeople, yielding data from more than 1,600 respondents (an 8 percent response rate).

Specpan, an Indianapolis-based market research company, hosted the Web-based survey and collected and compiled the data. Farnsworth Group, a sister company to Specpan, analyzed survey data and provided pre- and post-survey consulting.

What do the numbers mean?

If some remodeling job cost figures appear too high or too low, one cause is the leveling effect of averaging. The demand for—and cost of—remodeling services can vary greatly within a given metro area.

Averaging also affects the value side of the equation. The amount recouped for an actual remodeling project depends on the condition of the rest of the house, as well as the value of similar homes nearby, the availability of new homes, and the rate at which property values are changing. Location in an urban, suburban, or rural setting will also affect a home’s value.

In some cases, the value of the remodeling project at resale is more than 100 percent of its original cost. This usually happens in markets where property values are rising very rapidly, but it can also occur when buyers regard certain types of remodeling projects as “standard.”

For example, in a neighborhood where most homes have an updated kitchen, remodeling a kitchen may well increase the resale value of the home beyond the cost of construction. In some cases, in fact, not redoing the kitchen could cause the home to sit on the market for much longer than normal and to eventually sell for less than similar homes in the area.

Keeping up with the Joneses can be a savvy investment move. But ultimately, the best reason for a remodel is to enjoy it. —Sal Alfano, editorial director of Remodeling magazine, and Christina Hoffmann Spira, managing editor of REALTOR® Magazine

Bathroom Remodel
Job Cost: $13,695
Resale Value: $23,107
Cost Recouped: 168.7%

Update an existing 5-by-7-foot bathroom that’s at least 25 years old. Replace all fixtures to include 30-by-60-inch porcelain-on-steel tub with 4-by-4 ceramic tile surround, 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.
Bathroom Remodel

Minor Kitchen Remodel
Job Cost: $17,399
Resale Value: $26,564
Cost Recouped: 152.7%

In a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and countertops, leave cabinet boxes in place but replace fronts with new raised-panel wood doors and drawers. Replace wall oven and cooktop with new energy-efficient models. Replace laminate countertops. Install midpriced sink and faucet. Repaint trim, add wall covering, and replace existing flooring with resilient flooring.
Kitchen Remodel
Attic Bedroom
Job Cost: $50,240
Resale Value: $76,148
Cost Recouped: 151.6%

In a house with two or three bedrooms, convert unfinished space in the attic to a 15-by-15-foot bedroom and a 5-by-7-foot bath with shower. Include a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space. Retain existing stairs, but add rail and baluster around stairwell.
Attic Bedroom Remodel
Deck Addition
Job Cost: $13,385
Resale Value: $21,355
Cost Recouped: 159.5%

Add a 16-by-20-foot deck using pressure-treated SYP (southern yellow pine) joists supported by 4-by-4 posts set into concrete footings. Install composite deck material in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing system using either a matching system made of the same composite as the decking material or a compatible vinyl system.
Deck Additon
Basement Remodel
Job Cost: $63,068
Resale Value: $87,461
Cost Recouped: 138.7%

Create a 20-by-30-foot entertaining area with wet bar, a 5-by-8-foot full bath, and a 2-by-12-foot auxiliary room. Painted drywall throughout; exterior walls are insulated. Include five six-panel primed hardboard doors. Main room: Fifteen recessed ceiling light fixtures, three surface-mounted light fixtures, and a snap-together laminate flooring system. Bathroom: Toilet, vanity with cultured marble top, resilient vinyl flooring, two-piece fiberglass shower unit, a light/fan combination, and recessed medicine cabinet. Bar area: 10 linear feet of raised-panel oak cabinets with laminate countertops, stainless steel bar sink, under-counter refrigerator, and vinyl floor tile.
Basement Remodel
Window Replacement
Job Cost: $11,299
Resale Value: $14,919
Cost Recouped: 132.0%

Replace 10 existing 3-by-5-foot double-hung windows with wood replacement windows, double-glazed and exterior clad in vinyl or aluminum. Wrap existing exterior trim as required to match. Don’t disturb existing interior trim.
Window Replacement
Roofing Replacement
Job Cost: $15,763
Resale Value: $18,104
Cost Recouped: 114.9%

Remove existing roofing to bare wood sheathing and dispose of properly. Install 30 squares of 235-pound fiberglass asphalt shingles (minimum 25-year warranty) with new felt underlayment, galvanized drip edge, and mill finish aluminum flashing. Assume a 5-square hip roof, custom flashing at two average-sized skylights, and custom cap treatment at vented ridge.
Roofing Replacement
Family Room Addition
Job Cost: $69,376
Resale Value: $74,637
Cost Recouped: 107.6%

In a style and location appropriate to the existing house, add a 16-by-25-foot room on a crawl space foundation with vinyl siding and fiberglass shingle roof. Include drywall interior with batt insulation, prefinished hardwood floor, and 180 square feet of glazing, including windows, atrium-style exterior doors, and two operable skylights. Tie into existing HVAC. Add electrical system to code, including 12 recessed ceiling lights.
Family Room Addition
Home Office Remodel
Job Cost: $16,504
Resale Value: $19,016
Cost Recouped: 115.2%

Convert an existing 12-by-12-foot room to a home office. Install custom cabinets to include 20 feet of laminate desktop, a computer workstation, and wall cabinet storage. Rewire room for computer, fax machine, and other electronic equipment, as well as cable and telephone lines. Include drywall interior, painted trim, and commercial-grade carpeting.
Home Office Remodel
Contact Me | Site Map
CalBRE #00881757