Just last week I wrote a post highlighting the results of the Remodeling Magazine's Cost vs. Value study. And in this month's Realtor® Magazine, the newest results are published. The reason I like this particular study is that it breaks down the results by region. It would be great to break it down further to metro area... and then maybe ZIP code... and possibly subdivision... or even street... but that isn't happening. Region is good.
The numbers for the Southeast are interesting. The Top 5 Renovations for Return on Investment (RoI) are:
- Mid-range entry door (steel) - 135.5%
- Mid-range garage door - 91.6%
- Upscale siding (fiber cement) - 85.4%
- Mid-range basement remodel - 79.4%
- Upscale windows (vinyl) - 77.9%
There are a few things to note here... This is based on average costs and conditions. Obviously, if there are extenuating circumstances, the RoI could be more or less. If you are able to do work yourself, the RoI could be much greater. One of the assumptions here is that a contractor would be hired to do all work.
So, let's look a little deeper...
Mid-range Entry door (steel) - 135.5% The average cost on this renovation is $1098 and the increase in value is $1488. It is worth noting that a fiberglass door adds more value ($2117), but because of the significantly higher cost ($3348), yields a poorer result (63.2%). This goes to show that it may be more prudent to NOT splurge. Much of this is due to "Neighborhood Norms". If most of the neighborhood has steel doors, and you add a high end wooden or fiberglass door, you might not get the same result as going to a nice steel door. That isn't to say that using a good grade of steel door wouldn't be wise... powder-coated and rust resistant units will likely maintain their value better than low-bid doors that aren't quite as nice.
Mid-range garage door - 91.6% This is a tough one. The article suggests that an uninsulated, single wall door without windows could provide the highest RoI. However, adding windows doesn't add tremendously to the cost (maybe $200 on to the stated cost of $1178), but might add a little to the projected RoI ($1079). Insulation and windows come down to preference and usage. Those of us that use the garage for more than just a place to park a car really like the additional benefit of an insulated door and windows for natural light.
Upscale siding (fiber cement) - 85.4% The cost of this renovation was averaged at $13,106. That assumed 1250 square feet of siding, and an average amount of trim. The Added Value for the fiber cement siding came up to $11,197. Again, we need to look to what is in the neighborhood, and what is on the house. Changing out wood siding in good condition won't yield the same result in a neighborhood with brick homes as getting rid of wood siding in bad shape in a neighborhood with lots of homes already upgraded to fiber cement.
Mid-range basement remodel - 79.4% I almost hate to include this one... In my experience, it is rare that a finished basement adds significantly to the value of a home. It seems that the buyer is always looking for it to be finished differently that the seller has finished it. However, the existence of a basement DOES add significantly to the value of a home. The average cost and return from the article are $57,627 and $45,757... which means that you will still be upside-down by almost $12k after doing the renovation.
Upscale windows (vinyl) - 77.9% I was a little surprised about this... I don't normally think of vinyl windows on upscale homes, but there it is. The cost was $12,878 and it added a value of $10,027. There wasn't any additional information regarding style or number of windows for the survey, so I can't comment on that... however, I would assume that the windows would be wood on the inside (stain-grade) with heavy vinyl on the outside. This would allow for low maintenance while keeping the style of wood inside. I would also assume that the windows were low E glass and at least double paned.
A couple of important notes...
If you have the capability of doing the work yourself, it can make doing the work financially worthwhile... depending on how much you value your labor. If it will take 50 hours for you to complete a renovation, and you are saving $500 by doing it yourself, is it worth it for you to "make" $10/hour for your time?
- Even more that the numbers bear out nationally, in the South Atlantic Region, the renovations that have the best payback all have to do with "Curb Appeal. Doors, windows, siding, garage doors... The only one that snuck in there that doesn't belong seems to be the basement. This goes to show that buyers want to be 'wowed' from the moment they step out of the car. To get sold quickly and for the highest price, curb appeal is key, now more than ever. You can get down in the gutter and fight it out with the short sales and foreclosures, but many buyers are looking right past those for homes that are "ready to go" rather than "ready to work on".
- The biggest change, and one that didn't make it anywhere on the list, can be had for little money. The RoI would be off the charts... Paint. If your walls are dingy, get out the rollers and paint the interior. Use modern colors and do the job right. For just a couple hundred dollars in materials, the value of your home can go up by thousands of dollars. The impact is HUGE.
- Flashback Friday... Getting the Most for Your Renovation Dollar (lanebailey.com)
- It doesn't pay to remodel your home (money.cnn.com)
- Finished or Unfinished Basements... (lanebailey.com)
- 2009-2010 Best Value Home Renovation Projects (bargaineering.com)
Return on Investment for Renovations on LaneBailey.com