As you maneuver around your kitchen this holiday season, you may reach a decision: it's time to remodel! You've enough of the traffic pattern, or the dingy old cabinets, or the old decor. The only question you have is how far you go? What do you want vs. what makes sense to do? If you sell, what will you get back in resale value?
Kitchen remodeling can be a costly project, especially if you're talking about knocking down walls, rerouting water and utility lines, and adding custom upgrades. Remodeling Magazine, which puts out an annual survey about remodeling payback, notes two interesting things. First, remodeling costs have dropped 10 to 15% over the last five years, even as materials rose 17%. If you are remodeling with an eye to making your kitchen a place that will serve you and your family better for years to come, this is a great deal.
Consider The Rate Of Return
On the other hand, the return on remodeling investment continues to erode in line with falling housing prices. As of 2005, an investment of $31,932 offered and 86.7% payback. This dropped 10% in 2006 276.1%. In that 2011 to 12, an investment of $44,734 brought back only 57.7% or $25,829 at time of sale. This means that if you are thinking about selling, you need to consider what you need to do in the kitchen to make it competitive with homes in your neighborhood. If you live in the only un-remodeled home in an upscale neighborhood of 40-year-old houses, you may need to put major bucks into the endeavor if you want to sell your house for a decent price.
Consider A Midrange Remodel
Renovating the kitchen always makes the list of top 10 remodeling projects that offer decent payback, but the magazine distinguishes between a midrange minor kitchen remodel vs. a major remodel. A midrange remodel forgoes moving walls and more utilities in favor of more cosmetic updates that includes a new sink, faucets, and appliances in the mix. A remodel like this might run $20,000 vs. one that caused three or more times as much. In the Louisville area, a major remodel brings back 65.7% while a minor one brings back 71.1%. The difference in the percentage points might seem low, but difference in the dollars going out are large.
Consider Curb Appeal
While prospective homebuyers might love of evidence of major remodels, they are not willing to pay for it in proportion to the cost. Concentrating remodeling efforts on necessary maintenance and replacements and what will increase curb appeal makes the most sense. Of 1,954 homeowners and 1,051 renters surveyed by Handling Woody, a real estate analytics company, of the 60% who had done remodeling in the past two years, 65% said it was for maintenance and repair while 42% said it was to improve energy efficiency. While 30% wanted to improve their homes resale value and 30% wanted to reduce future maintenance, only 24% made repairs to add amenities.
Three Roads To Kitchen Remodel
The September 2013 issue of HDTV Magazine offered an interesting comparison of what it means to replace, reface, or renew your kitchen.
- Replace: You may change your layout as you add new cabinets make the kitchen more functional add the best new appliances and add a new backsplash flooring in countertops from brand-name companies.
- Reface: You make no changes to the layout and reuse what you can. You may add new doors and drawers or reface the ones you have, update the hardware, add more storage, and perhaps replace floors, countertops, and backslashes with moderately priced materials.
- Renew: You may change the color and finish of your cabinets and floors but make few other changes.
Needless to say, these divisions are not mutually exclusive. Depending on your home, you may remove a non-loadbearing wall to create a more open floor plan. Even if you need to reinforce a beam, your costs might be modest. If you like the layout your kitchen, but love the look of quartz countertops, you might splurge in that area and make minor changes elsewhere. If you are able to competently do some of the work yourself, while outsourcing what you can do to a contractor, you can cut your labor costs.
HDTV, in conjunction with Home Depot, offers these helpful tips.
- When remodeling, consider splitting your budget in three equal parts, with a third going to cabinets, a third to labor, and a third to appliances, colors, faucets, and flooring.
- A kitchen remodel should cost between five and 15% of your home's current value. If you live in a neighborhood where you can get a great family house for $85,000, it is foolish to spend $100,000 on a kitchen remodel.
- If possible ,take advantage of remodeling to add more storage to kitchen, especially if you are replacing or refacing it.
As you think about what you'd like in your kitchen and how much it would cost to get things the way you want, you might come to the conclusion that the best way to get your dream kitchen is to move to another house with upgrades more in line with what you want. If you have come to that decision give me, Jessica Gaines Jarboe, a call. I can show you what's available in our area. Since I'm a renovator myself, I can also give you suggestions to on renovations you might do that make sense in your area when considering future resale. At Louisville Gaines Real Estate, we love to see you in your perfect home.
Comments(0)