Monday, January 18, 2010

Cost vs. Value Report -- 2009-2010

Remodeling Magazine, published by Hanley-Wood, LLC, Washington, D.C., has been publishing the "Cost vs. Value Report" annually for more than twenty years. The 2009-2010 version compiles information for 80 markets, (up from 79 in the last report) on 33 home improvement projects included in the analysis by HomeTech Information Systems (, which publishes estimating software for professional remodelers. This information is collected and compiled from their national network of remodeling contractors and suppliers. Adjustment factors are employed to account for regional pricing differences.

What do the latest numbers have to say? Being pragmatic seems to rule the day as lowered home values have moved remodelers to those projects which don't require, in most instances, large outlays of capital. Six of the top ten projects involve home maintenance that costs less than $14,000. A couple of more pricey projects made the list involving the expansion of livable space within and around the home.

The least expensive of the 33 projects, a mid-range entry door replacement, actually had the highest return on investment nationally at 128.9% and 128.0% in the Pacific region. Mid-range projects had the best returns overall so the if the objective is to have the possibility of a good return on money invested, the best approach is foregoing the expensive and going with the mid-range. Owners stand a better chance with mid-range projects to reap incremental value.

Higher cost estimates for projects coupled with lower resale prices have tipped the percentages to below 100% with one exception -- the previously mentioned the mid-range entry door replacement. The report's findings underscored the fact that the percentage of cost recouped on upscale additions and remodels were lower than mid-range additions and remodels. As you might suspect, many upscale projects are not undertaken using an investment return mentality.

If interested, check out the full national Cost vs. Value Report. A map on the site shows cost comparisons by region. You may click on the region to make the information more relevant to your needs. For instance, click for the Pacific region report.

Here are selected 2009-2010 mid-range projects for the Pacific region along with its average percentage of cost recouped (last report values in parentheses):

* Bathroom addition - 68% (76%)
* Deck addition (wood) - 91% (97%)
* Family room addition - 73% (75%)
* Master Suite addition - 72% (74%)
* Bathroom remodel - 77% (76%)
* Home office remodel - 56% (65%)
* Major kitchen remodel - 84% (87%)
* Minor kitchen remodel - 94% (96%)(project I have advised my clients to consider)
* Roof replacement - 68% (79%)
* Siding replacement (fiber cement) - 92% (84%)
* Windows replacement (vinyl) - 88% (94%) (project I have advised my clients to consider)

Hope this information is of help to you as you decide on remodeling projects to either enhance the value of your home for immediate reselling or to enjoy the lifestyle benefits of the improvements and have no plans to sell. Please remember that not all remodeling projects will result in higher resale values. Many folks think that someone will want to pay $100,000 more for their remodeled home that costs them $50,000 to complete. Perhaps, but it depends upon on the project, the neighborhood, the likely market conditions upon completion, and other factors. If you are considering remodeling for a sale or just want to see what projects may cost and understand the process, I recommend reading the book "Remodel or Move?" by Dan Fritschen. His website has a remodel or move calculator to help you with your decision.

For more information and to view the entire Cost vs. Value Report online, please visit Of particular note, this article includes a section devoted to the 10 Big-Impact, Low-Cost Remodeling Projects that I highly recommend you check out.

If you want a professional opinion of how the market will react to your proposed project and as a way to save time, money and hassle, please contact me. I would provide you a market assessment of your contemplated remodeling project and if you want, a referral to a licensed trades-person who can provide free estimates or just to talk it over with as you firm up your plans, please let me know. I would do this whether or not you would be doing the project for resale as I work exclusively by referral so regularly provide referrals to my clients to help them maintain or improve their homes. By the way, the only thing I get for a referral of this type is the satisfaction that you will be well-cared for by a licensed professional.

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