Real Estate Blog - Kitchens Still SIZZLE as a Remodeling Investment!

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Kitchens Still SIZZLE as a Remodeling Investment!

No doubt there are many homeowners who would love to make a change to a different home but the current status of the real estate market has caused them to reconsider a move and opt for a remodel. But what the "what ifs" start creeping in too...Will I ever get the money back out of the remodel? Will the investment outweigh the value added to the home? If you are considering a kitchen remodel, it still could be good choice.

news The statement "Kitchens and Baths sell homes" is second only to "Location, Location, Location" in the real estate playbook. Okay we don't really have a playbook but the annual Cost VS Value Report for home remodels consistently shows that a higher percentage of funds used for a kitchen or bath remodel will be recouped on a sale than most other remodeling projects. In late December, the NAR released the 2008-2009 Cost VS Value Report for home remodels. This study looked at cost data, resale value and percentage recouped for 25 different projects in 80 housing markets across the United States. In Minnesota, if an homeowner does a major, mid-range kitchen remodel, he can expect to recoup about 72.7% of their expenses which is a little lower than the national average of 76% percent return on investment. A minor kitchen remodel, spending roughly $21,000 in Minnesota will be recouped at a rate of 73.3% again this is less than the national average of 79.9% but a reasonable return. (View all the statistics from the Cost vs. Value Report 2008 for the Mpls/St Paul area.)

Before a undertaking a kitchen remodel it is best to understand the "Why" of the project. Is it because your home-sweet-home is perfect except for a kitchen so small that people trip over each other on the way from the refrigerator to the table? Or is it because you want to move and the 1980's country blue counter and white department store brand appliances have seen better days and should be put out to pasture? The approach to the perfect remodel will be different if you are planning to stay in the home for the long term.

Take a Family Lifestyle Inventory
If you are designing the perfect kitchen for your family, take a lifestyle inventory. This is a process where you answer questions to understand what will be the most important needs specific to your family for the new space. It will help you and your designer to incorporate important details into your plan.

Consider cooking habits: One cook or two? Baker? Left-handed? Do you do dishes as you cook? Lots of Gadgets? Buy in Bulk? One oven or two?
Consider eating habits: Family gatherings? Everyone for themselves? Eat outdoors? Need morning sunshine? Entertaining?
Other Considerations: Flat screen TV in kitchen? Computer or home office needs? Homework? Laundry? Recycling? Will the family grow? Older relatives? Handicap Accessibility requirements?

All of these are things to consider when making a decision on whether and how to remodel your kitchen. Work with a designer or use a remodeling design software that will take into account the important specific needs of your family.

Hot Trends for Today's Kitchens

For a remodel to add value at resale, you must consider current needs and trends. So what are the hot for trends for kitchens today?

Open to Family Room or Great RoomCustom cabinetry in a variety of heights with lots of moldings and unique woods...Maple and Cherry are preferred to Oak.
Retro-look Appliances with Energy Star ratings.
Energy saving induction cook tops separate from ovens.
Ceramic tile back splashes.Green flooring choices like bamboo, cork and eucalyptus.
Sinks with instant hot water systems.
Pantries and abundant, easy access storage.
Multiple types of lighting (bright to work, indirect for mood). Avoid track lighting.
Windows for Natural LightQuartz-based granite-like product like Cambria, Silstone and Zodiac, for counters and islands, as health conscious people trend away from granite. Too expensive to do the whole kitchen in quartz? Consider just the island in the expensive stuff and do the rest of the kitchen counter in a complimentary colored laminate.

Stick to Your Budget

It can be easy to get caught up in the remodeling process and go over budget. Take time from the start to reflect on your family's needs and reasons for the remodel. Consider options that make the most sense for your family, budget and neighborhood. Make certain that the kitchen isn't designed and constructed at a quality far beyond the value of the rest of the home. Remember remodeling for family use tends to cost more than a remodel for resale.

If remodeling specifically to put your home on the market, go for the minor remodel and take into consideration the quality and condition of the rest of home. Remember you will not recoup 100% of your investment. The changes are being made to make the house more saleable in a down market. A good REALTOR® will give you the best advice as to what is necessary and what is over the top. If you are in an upscale neighborhood where homebuyers will expect high-end quality, don't make discount-store decisions. Likewise, if your home is in an area of modest or lower value homes, skip the granite and go for the laminate to replace the counters. Understanding the market place you live in will help make the best choices to recoup the most from your investment.

Spending a little extra time in the planning stage can reduce the headaches and heartaches of a construction project that does not meet expectations. Taking your time will allow you to make the wise decisions that add value to your most important financial investment, your home.

Wondering about a bathroom remodel? Check out this article: Remodeling Investments for 2009: Bathrooms Continue to be a Good BET!

If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me a call or visit my website for a FREE Relocation Packet or Homebuyers Success Packet. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Buying a Home? Check out my new HOME BUYER'S BLOG!

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If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me a call or visit my website for a FREE Relocation Packet, Homebuyers Success Packet or sign up for Listingbook Twin Cities Home Search. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Buying a Home? Check out my new HOME BUYER'S BLOG!

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Posted by Teri Eckholm, REALTOR® Anoka County Acreage & Lakeshore Homes on 02/01/2009 12:54 PM

Comments (48)

Cost v.s Value in the Home Improvement Channel

cost vs value, kitchen remodel, kitchen trends, kitchen updates, lifestyle inventory, minnesota real estate, minnesota realtor

Originally posted at: Twin Cities Real Estate Blog: Kitchens Still SIZZLE as a Remodeling Investment!

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48 Comments on Kitchens Still SIZZLE as a Remodeling Investment!

FEB

Teri -- a very nice post, with lots of good tips. It is important not to remodel in a way which does not fit with the general "value" of the other homes in the neighborhood.

Hi Teri,

Good info for anyone considering a remodel. And your comment about a "lifestyle inventory" makes a lot of sense to me. What's trendy or works for one family may be not a good investment of time or money for another.

I just read about the seller that put a $100,000 improvement to the bath and then moved in two years. We do have to be smart about the improvements and your analysis is right on thanks for the post.

I don't believe that an owner should invest in a new kitchen to sell. An existing home should be priced to sell in it's present condition.

HOWEVER, I do believe that kitchens should be remodeled every 7-8 years or so for the benefit and enjoyment of the present owners. That way, it's always "state of the art" if someone decides to sell.

Two Years ago, I worked with agents that would insist that their sellers have Granite counters in the kitchen AND all bathrooms.

But today, the competition are mostly short sales so investing in a new kitchen to sell your home, probably isn't a great idea.

BUT - We are slowly but surely remodeling ours - One appliance at at time. I am constantly shopping for "deals" -

Great Blog - Thanks

great post! I dont cook but I do love kitchens! My listings with fantastic kitchens are always the first to go!

Hi Terry, congrats on your feature! This is a great fact filled post helping anyone gauge where the dollars should be spent. Very nice.

I love the look of a nicely updated kitchen. Buyers like them too. Sellers don't always see value in updating for the buyers. Congrats on the feature!

Teri, what a terrific post, and it is full of great advice. I really love my Silestone countertops. They are scratch proof, hot pot proof, and they don't show the cat's paw prints when they jump up on the counter to eat their Purina.

Kitchens are the most important rooms in the home as far as investment goes. Actually a kitchen can make or break a home.

Hi Teri, I believe that investing in an updated kitchen is important. In a Seller's market when there isn't much inventory...maybe not. But, it is a definate perk for buyers these days. Great info.

What a great post Terri. Kitchens are indeed so important in the sale of most homes

Don

Teri - Congratulations on your star. Cost vs value, sticking to a budget, lifestyle habits very wise words.

Dear Teri,

This is a great post! Congrats on your star!

I am so glad that you emphasized the relationship between the price of the house and the quality of remodel!

Remodeling is always a good idea but my take has always been do it becuse you like it and works for you. Hopefully it will for the next owner.

Teri You really "nailed it down" Nowadays, most people buy what they see there is very little envisioning anymore, Art

Teri I have to agree with the man just ahead of me - he has good market insight Karen

I have a client who called and is thinking about putting their 1940's house on the market. To fix their kitchen, they will have to bumb out the entire back of the house. They're looking at changing the 2 bedrooms down into a master suite. They'll still have 2 nice bedrooms up and a bath. In this case I think it might have a better return on the dollar.

And BATHROOMS -- don't forget the "other end" of the equation.

Sorry, that was bad. But it's a slow market day -- Super Bowl Sunday and all. Had to think of something punny.

But bathrooms and kitchens DO sell a home!!

Ironic . . . isn't it?!?! (Insert glib smiley face here)

Go Steelers!

Oh, now I want to remodel my kitchen! You are so right...A kitchen can make or break the ability and time it takes to sell a home. I agree with Carla, Master Bathrooms are second!

Greatg info for anyone considering a remodel. Kitchens are the heart of the home

Teri

Terrific blog that covers all details in a kitchen remodel. Great!!

Hi Teri;

Great post! Good info for homewoners considering a remodel. I believe that an owner should invest in the kitchen and bathroom.

Teri, This is such wonderful information. I know people wonder about whether to put money into their kitchens and worry about selling down the road. I believe it's one of the rooms that help a house SELL. You gave excellent tips about what they are--and aren't looking for.

Doing a remodel in Manhattan is extremely difficult. The permit process and approval process for the building is expensive, time consuming, and extremely aggravating. A simple remodel that would cost 20k in a residential neighborhood, might cost twice that here. It really is amazing.

In preparing many of my homes for sale, ripping out appliances and countertops and replacing them with stainless steel appliances and granite is a must......in the upper price range.

Yes, yes, look at the kitchen and master bath. Wish sellers could see thing as buyers do. Great post

Thanks for the investment tips on the kitchen. My buyers love to hear energy effecient in anything in the house! Great Post!

I love that report and refer to it often. Great way to use the information!

Another GREAT post!! I love the new picture.

Teri: What a great and informative post.. A kitchen can make or break the sale of a home.

In this market we can't recommend that someone upgrade in hopes of selling faster, at more money , etc -- in this market , here in Arizona anyway , this is not a good reality.

FEB

Teri lots of good information and well said in terms of the other things that help to sell homes. Whenever I talk to sellers who are also thinking of renovating the first thing we talk about is the kitchen. Take care and happy blogging!

That is good to know that kitchen remodels still bring value

Joan--I think that is an important consideration even if the remodel is for yourself. You never know when you will have to move and if you put in too (or too little) it really will affect your bottomline and ability to sell.

Lynda--Exactlly...make sure the kitchen will work for your family first. :)

Terry--That was not a smart move! Be conscious of what you are spending because you will never get it all back.

Lenn--I am with you on this. I do counsel some sellers to make minor cosmetic changes like removing dated wall paper and updating lighting and plumbing fixtures. Sometimes a new laminate counter or adding a over-the-range microwave. Usually under $1000, the updates will pay off. But major remodels are not recommended for the sale of a home...Especially in this market!

Paul--That is the best way to update...gradually and with a budget!

Jennifer--Mine too! Kitchens and bathrooms sell homes!

Gary--Thanks! I try to do an update on this information every year as it is very important to most homeowners.

Lizette--Those beautiful kitchens make an impression with the buyers...Outdated ones do too but they are memorable for the wrong reasons!

Patricia--Hmmm...I will have to give Silstone another look for my new countertops. (Updating for me not a sale!)

Bill--It certainly can make or break whether or not the buyer even considers the property.

Hi Teri: Do you know that I grew up in Circle Pines? Grades 1 through 6 at Centennial. Loved your kitchen remodel piece. I used Cambria quartz in my kitchen remodel last summer. Also, another green choice in flooring is marmoleum planks. I would think that would be very popular in a climate such as Minnesota's.

Anonymous--Buyers are discerning in this down market but remodeling to sell is risky in a down market. Best to make simple inexpensive changes if you need to sell now as most money won't be recouped.

Donald--We all know how important that kitchen really is don't we?

Sandra--Thank you...making smart choices for your family is what it really is all about when you remodel.

Barbara--Thanks...I have seen too many homes with overdone (and underdone) improvements.

Scott--Agreed! If you are not going to recoup 100% why would you remodel only thinking about what future buyers might want...You have to put YOUR families needs first when remodeling and stick to a budget!

Art--Have you been taking out my buyers? :) Absolutely...with all the inventory buyers have to choose from, they won't bother envisioning anything...they just move on. Smart updates in this market. Ask a REALTOR what makes sense.

Karen--I agree...he is a very smart man!

Connie--This is a scary market to do a major remodel. Sound like they made a smart move in calling in a local real estate expert before making the changes.

Carla--LOL...Didn't forget the bathroooms. I posted that article last week. Just added the link above.

Diane--Bathrooms are important too...And a good bet. I added a link to last weeks post above.

Michael--They certainly are the heart of the home!

Kathy--Thank you!!

Carole--Glad you enjoyed the post. It is important to consider what the family wants and needs first but take resale into consideration because you never know when you will have to make a move.

Anthony--If they are going to do any upgrades, those are the two areas to consider first.

Douglas--Good point. These numbers are for my market in the Twin Cities metro area but the report does give different numbers for another 70-80 cities. Probably for that very reason.

Tim--In the upper price range certainly granite and stainless are a must! Lower price ranges any newer appliances can help along with a neutral laminate counter and new flooring!

Gina--Some sellers do get it and their homes sell much more quickly. But in this market, they have to be very smart about any remodel.

Kristi--Going GREEN is hot and helps sell these days!

Margaret--It is great information for any homeowner...knowing how much you can expect to recoup on a remodel is knowledge that a homeowner cannot do without.

Marchel--Thank you! :)

Roland--Kitchens and baths are the things buyer scrutinize the most!

B&C--I don't think anyone should do a remodel in this market just in hopes of selling either. Maybe a few updates but nothing major. Better to lower the price and take the hit that way.

Jason--Sellers need to consult with local experts like yourself before upgrading just to sell as doing the wrong updates can be costly.

Russ--While nothing is 100%, more funds spent when remodeling a kitchen can be recouped than in other areas of the home.

Elizabeth--I didn't know that..Circle Pines is a very small community. I have a wonderful townhouse listed there right now! People love the Centennial School district! I will have to look into marmoleum planks. I have seen some bamboo flooring in models around here, which is also considered greener, but us practical Minnesotans are very cautious about trends. :)

If you know in advance that you are only going to get three quarters of your money back, why undergo the time and effort. why not bank the money and put it into the next house?

Brian Madigan

Right on with this post here, Teri! With a tough economy people are cooking more at home and they need something they can move around in.

FEB

Nice post. People do have a vision but find it more difficult when it includes more than flooring and paint. To me, the kitchen and baths are very important. Why not update them now, enjoy them instead of updating and then selling.

Kitchens go out of style quicker than any other room. My daughter put an offer on a house that needed the baths and kitchen redone. In her calculations she included new appliances. I told her if she would like mine she could have them and I will buy new - they would be perfect for her upgrade and the type of house. Meanwhile I feel I have contributed in a good way.

Teri, yet another good post. Most of the appraisers here in our area aren't even looking at the bells and whistles including granite in the kitchen or a pool anymore. I personally think though that the points you mention about kitchen and bath are HUGE selling features. ;-)

FEB

Brian--If you are only planning to update to move I would only spend on those items that are detrimental to the sale of the home. But homeowners who are not moving but are considering upgrading should do it smart as they will not recoup 100% should they need to sell a year or two down the road.

Karen--People need to enjoy their homes as it is more difficult to sell and move up in this market. Upgrading to a kitchen you love to be in is a smart move.

Joyce--Exactly! And upgrades don't have to break the bank...just make sense. I have had clients buy at "scratch & dent" appliance stores to get great deals on new upgraded appliances to make their home more saleable.

Teri--They rarely ever did look at the upgrades around here to add value. But I have recently seen appraisals noting the poor condition of homes and knocking the value for it. Buy what you want but choose wisely as you will not recoup what you have invested if you overspend.

FEB

Different price points demand different kitchens - consult a RE expert as to what you should proceed on before you start.

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