Top 10 Home Improvement Project Paybacks 

Every year I have posted on my website Remodeling Magazine’s Improvement Project Payback Reports for my clients and prospective clients looking for this kind of valuable information.  This proves that every nail, fence post and shingles should ‘improve’ your home for maintenance and your sense of well being, your sense of home, your sense of style.  Not only to improve value!  If you go down to Lowe’s or Home Depot and spend $20 in materials on your home – does it increase your home that amount?  If you spend $35,000 on a kitchen remodel does your home increase that amount?  What amount of increase do you see?

Maintenance items do not increase your homes value – all homes need a roof or there is going to be big trouble to your investment!  What a new roof does is show pride of ownership and becomes valuable when comparing similar homes with a new roof and one without.  Owning a home with a 25 year roof is obviously pushing it, where a comparable home with a new roof would provide more value to a prospect buyer.

Less work = more value!

This article will hopefully answer your questions based on regional areas of the country.  Our area in Illinois is in the North Central. Remodeling Magazine's annual report shows that maintenance-related projects and moderately priced upgrades are providing stable paybacks, even in a slower market.

Full Report 2008          Full Report 2006

Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.  Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change:  Investing in their home still pays off.

NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.

Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.

Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones.  

Many cities with the highest rates of recovery were smaller—Jackson, Mississippi, and Billings, Montana, for example—which may point to lower labor and materials costs that are easier to recoup.  

Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007.  Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices. The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country.  The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.

Once again, exterior remodeling projects lead the way for recovery on dollars spent in the 2008 Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.

1. Upscale fiber cement siding (86.7%)

2. Midrange wood deck (81.8%)

3. Midrange vinyl siding (80.7%)

4. Upscale foam-backed vinyl (80.4%)

5. Midrange minor kitchen remodel (79.5%) 

6. Upscale vinyl window replacement (79.2%)

7. Midrange wood window replacement (77.7%)

8. Midrange vinyl window replacement (77.2%)

9. Upscale wood window replacement (76.5%

10. Midrange major kitchen remodel (76.0%)

Recent renovations also make buyers’ lives easier. "Home owners who remodel their home are providing a service to future buyers," says Eileen Nelis, a broker at Savvy and Co. in Charlotte, N.C. "When buyers purchase, they don’t want to do all that painting and remodeling, and they don’t want that price tag. They may be willing to make improvements down the line, but when they purchase, they want to open the door and have everything complete. It reduces their stress."

Looking to sell or purchase a home in Chicago's Northwest Suburbs?  


Lyn Sims (847)230-7324 RE/MAX Suburban

 
Artlcle By G.M. Filisko | December 2008 in Realtor Online Magazine.