I just read the annual “Cost vs. Value” report for 2008. It shows how much common remodeling projects cost, and how much they increase the value of a home. Results are divided by region, with some particularly common projects broken down by metro area.
Guess what? In the Mountain Region, not a single remodeling project recouped its cost. In other words, remodel if you want to live in it and enjoy it. But don’t remodel to make money if you’re ready to sell. It apparently doesn’t pay these days.
Some examples: Replacing exterior siding was, nationally, a very popular option. Still didn’t pay for itself in most places. The national average gave it an 81% return on investment. In Denver, it gave an 84% return.
Adding a deck? Cost will be roughly $10,923. And it’ll add just under $9000 to the value of your home. New windows? 77% return.
And then there’s the old standard favorite, the kitchen remodel. It’ll cost around $21,000, but only add about $17,000 to the value of the home.
Why so little return from remodeling these days? Basically, construction prices are going up and home prices are remaining stagnant. So you’re paying for the increasingly expensive commodity, but not seeing a parallel increase on the return side.
Note that this is referring to remodeling jobs, not smaller “facelift” type projects. Painting, new carpet — projects like that are inexpensive, and tend to give a bigger bang for the buck at closing time. They change the “feel” of a house without the high price tag of a remodel.
So when it comes to projects that help a house to sell, think small and pretty.
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