Realtors recently rated exterior improvements as among the most valuable home investment projects as part of Hanley Wood's Remodeling Cost vs. Value Report, completed in partnership with the National Association of Realtors.
The 2011-12 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 14th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed with NAR.
“This year’s Remodeling Cost vs. Value Report shows the value of putting your home’s best façade forward, so to speak,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Inexpensive exterior replacement projects are not only crucial to a home’s regular upkeep, but are also expected to recoup close to 70 percent of costs.”
Realtors judged an upscale fiber-cement siding replacement as the project expected to return the most money, with an estimated 78 percent of costs recouped upon resale. Two additional siding replacement projects were in the top 10, including foam-backed vinyl siding, expected to return 69.6 percent of costs, and upscale vinyl siding, expected to recoup 69.5 percent of costs.
Three door replacements were also among the top exterior replacement projects. The steel entry door replacement is the least expensive project in the report, costing little more than $1,200 on average and expected to recoup 73 percent of costs.
The upscale garage door replacement jumped seven spots to number six this year, primarily due to the average cost of the project declining more than 15 percent nationally. The upscale and midrange garage door replacement projects are expected to return more than 71 percent of costs.
One window replacement project – upscale vinyl – rounded out the last exterior replacement project in the top 10, expected to recoup 69.1 percent of costs.
Overall, realtors estimated that homeowners would recoup an average of 57.7 percent of their investment in 35 different improvement projects, down from an average of 60 percent last year. Due to a weak economy, high unemployment in the construction industry and the increasing cost of materials, the price of remodeling projects have risen, leaving many homeowners hesitant to tackle projects or encouraging them to scale back on their plans.
Three interior remodeling projects are also considered worthwhile investments. A midrange attic bedroom is expected to return 72.5 percent of costs upon resale; of all the projects in the report, it is the least expensive way to add a bedroom and bathroom within a home’s existing footprint. A minor kitchen remodel, expected to return 72.1 percent of costs, is fourth overall, ranking two places higher than last year.
Nationally, the average cost for the project is just under $20,000 and is the least expensive way to give an existing kitchen a complete facelift. A wood deck addition, landing at number seven overall, is expected to recoup 70.1 percent of costs. Improvement projects that are expected to return the least are a sunroom addition and a home office remodel, both estimated to recoup less than 46 percent of costs.
“Resale value is just one factor among many that homeowners need to take into account when making a decision to remodel,” said Veissi. “The desirability and resale value of particular remodeling projects also varies by region and metropolitan area. A realtor can help homeowners decide what low-cost improvement projects will provide the most upon resale in a particular market.”
Most regions followed the national trends; however the Pacific region, consisting of Alaska, Hawaii, California, Oregon and Washington has the highest average cost-value ratio in the country, at 71.3 percent. This is largely because the high cost of remodeling in the region is more than offset by high values at resale. The next best performing regions were West South Central (67.7 percent) and South Atlantic (67.3 percent), mainly due to the low construction costs in the areas and relatively strong resale values.
The regions in which the cost-value ratio is slightly above the national average are New England (60.5 percent), East South Central (59.8 percent) and Mountain (58.5 percent). Three remaining regions performed slightly below the national average. These are the Middle Atlantic (56.8 percent), East North Central (55.3 percent) and West North Central (49.5 percent).
Results of the report are summarized on HouseLogic.com. To read the full project descriptions and access national and regional project data, visit www.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.