Remodelings that Pay Off
By Kristi Vaughan
As any homeowner knows, home remodeling is big business. In fact, in recent years the amount of money spent on new kitchens, bathrooms, decks and the like has topped $214 billion per year. And the spending is rising. But how do you ensure you are getting your money's worth?
Broadly speaking, there are two types of remodelings: Those you do because you derive such pleasure from them that you have little regard as to return on investment, and those where you hope to recoup your investment or even more.
Know your market
Before you undertake a major remodeling, consider future buyers. Will anyone, besides yourself, and perhaps your immediate family, be excited about the greenhouse addition you are planning? And is that refinished basement a true add-on or just somewhere for the kids to hang out?
By using a bit of common sense and taking some time to investigate the market around you, you can avert some costly remodeling choices. Or, at the very least, go in with your eyes wide open.
Take for example, the idea of a backyard pool. Sure, on a hot July day it is an enticing thought, but if you are living in the cold climes of Maine or Minnesota will you get your money back? And how about that spa-like bathroom? Is that standard for your neighborhood or would it be considered "over the-top?"
To get an idea of what buyers in your area are seeking, start asking questions. Talk with local real estate salespeople. What are buyers asking to see? Talk with home improvement centers to learn what is selling. And talk with your friends about they'd most like to have, if they could buy all over again.
For a more scientific look, consider statistics compiled by Remodeling magazine in its annual report on cost vs. value. The 2003 survey shows, for example, that the national average return for a 16x20 foot deck addition is 104 percent. A major kitchen remodeling in the mid-priced range of around $43,804 would return only 74.9 percent of the original investment. The report is based on information from the 35 cities considered top remodeling markets by the Harvard University Joint Center for Housing Studies. Because cost vs. value can vary widely, national averages should be considered guidelines only. In central Arizona, for example, the payback for a new bathroom, according to the Remodeling survey is only 61 percent compared to 95 percent, in large part because so many new homes are available for purchase. And in Minnesota the city of Bloomington Housing and Redevelopment Authority estimates that a bathroom addition could return 80 percent but a deck only 65 percent.
So before you leap into a major, and costly, remodeling, it can pay to think about whether you are doing this for yourself or the payback!
