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Remodeling's Payoff
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
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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.
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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. |
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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.
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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. |
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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. |
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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. |
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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. |
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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. |
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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. |
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