Homeowners often wonder whether renovations will pay off when they eventually decide to sell. A new report by Remodeling magazine, a trade publication for remodeling professionals, shows how much certain projects affect a home’s resale value, with projects that boost curb appeal having the highest returns and remodeling projects beating out additions.
For its Cost vs. Value Report, which has come out annually for the past three decades, the magazine looks at 20 theoretical projects, such as midrange or upscale bathroom and kitchen remodels, master-suite additions and window replacements, and compares the cost of the project to the estimated resale value.
To get the resale value, the magazine surveys thousands of real estate professionals in 149 metro areas around the country, asking them how the projects would push up the value of a home if the house sold within a year.
In the New York market, which includes Long Island, adding manufactured stone veneer to the front of a house, a midrange project that was estimated to cost $8,949, boosted resale value by $10,615, recouping more than 118 percent of the cost. Replacing a garage door for $3,955 increased resale value by more than $4,500.
On the flip side, adding a backyard patio for more than $68,000 and an upscale master suite for more than $308,000 provided the lowest returns, at 50 percent for the patio and nearly 55 percent for the master suite.
Lower-cost projects generally had a higher return, particularly because labor costs are lower, says Craig Webb, editor-in-chief of Remodeling magazine and manager of the report.
“Interior remodeling projects are also much more a case of personal taste,” Webb says.
Both midrange and upscale major kitchen remodels recouped about 62 percent of the cost.
In general, payoffs for projects to replace something that needs to be fixed are higher than remodeling jobs, with a bigger difference than in previous years of the report, Webb says.
Overall, the cost of all projects went up between 2 and 5 percent, Webb says. In two-thirds of the projects, the recouped cost went up.
The survey is also a good indication of what real estate agents think of their respective markets, Webb says.
In markets such as New York, where the payback for projects is higher than the national average, it means agents are feeling good about the local market. A midrange siding replacement had a 93 percent return in New York, versus nearly 77 percent for the rest of the country.
But, the national results seem to indicate a softening in the market around the country.
“This year, it appears that across the country real estate professionals were putting a little less boost behind the idea of doing a big-dollar project, like a two-story addition,” Webb says. “I think this indicates that home prices may be peaking. There’s an upper limit as to overall where prices are headed.”