Home improvement projects across the board are giving home owners a greater return on their investment when it comes time to sell. Find out which projects "open the door" to buyers and where remodeling dollars stretch the furthest.
As existing-home sales and home prices make remarkable strides upward nationwide, remodeling projects are also continuing to make a comeback in a big way.
This is the second year in a row that all 35 projects in Remodelingmagazine's Cost vs. Value Report saw more home improvement dollars recouped upon resale of a home than the previous year.
Existing-home sales reached 5.02 million in 2013, a 9.1 percent increase from 2012, according to the National Association of REALTORS®. Home prices also rose in 2013: Existing homes commanded a median price of $197,100, up 11.5 percent from the 2012 median price of $176,800. This is the largest price gain since 2005.
Also for 2013, the cost-value ratio of remodeling projects nationwide averaged 66.1 percent, up 5.5 points over the previous year - which is, like median price, the largest increase since 2005.
Remodels That Payoff
The fan favorite in the 16th annual Cost vs. Value Report, which was released this month, was again the steel door entryway. Topping the list last year as well, this project is ideal for clients considering a quick update to the curb appeal of a home. The survey shows that a new steel door, with an average cost of $1,162, will recoup 96.6 percent of the remodeling cost at resale.
Making the biggest gain in percentage of recouped costs was the addition of a backup power generator. This project, averaging $11,742, jumped 28 percent in estimated resale value, recouping 67.5 percent of its cost in 2013. Usually at the bottom of the list, this project now ranks 25th out of the 35 projects. The increase is attributed in the report to 2013's "unpredictable weather and multiple large storms."
The report also shows where remodeling dollars go the furthest.
Topping the list for remodeling costs recouped upon resale were Honolulu and San Francisco, at 110.8 percent and 109.4 percent, respectively. San Jose, Calif., came in third, with just shy of 100 percent of remodeling costs recoupedon average. San Diego came in fourth, with 89.8 percent of costs recouped at resale; and fifth was Bridgeport, Conn., bringing in 85.9 percent of remodel costs at resale.
Also signifying distinct improvements over last year, seven of the country's nine regions outperformed the nationwide cost-value average of 66.1 percent.
Holding onto their positions as the top two regions for recouping remodeling costs were the Pacific (Alaska, California, Hawaii, Oregon, and Washington), with an 88 percent cost-value ratio, and West South Central (Arkansas, Louisiana, Oklahoma, and Texas), with a 76.4 percent cost-value ratio.
The award for most improved region could go to New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), which moved from sixth to third this year with an overall cost-value ratio of 74.6 percent.
The two regions that held lower cost-value ratios than the national average were the Middle Atlantic (New Jersey, New York, and Pennsylvania) and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), with cost-value ratios of 63.2 percent and 57.3 percent, respectively.
If your clients are considering a home improvement project to boost the quality and appeal of their home, pass on this list of top 10 midrange and upscale projects from the 2013-14 Cost vs. Value Report:
Top 10 Midrange Projects
1. Entry Door Replacement (steel) Job Cost: $1,162 Resale Value: $1,122 Cost Recouped: 96.6%
2. Deck Addition (wood) Job Cost: $9,539 Resale Value: $8,334 Cost Recouped: 87.4%
3. Attic Bedroom Job Cost: $49,438 Resale Value: $41,656 Cost Recouped: 84.3%
4. Garage Door Replacement Job Cost: $1,534 Resale Value: $1,283 Cost Recouped: 83.7%
5. Minor Kitchen Remodel Job Cost: $18,856 Resale Value: $15,585 Cost Recouped: 82.7%
6. Window Replacement (wood) Job Cost: $10,926 Resale Value: $8,662 Cost Recouped: 79.3%
7. Window Replacement (vinyl) Job Cost: $9,978 Resale Value: $7,857 Cost Recouped: 78.7%
8. Siding Replacement (vinyl) Job Cost: $11,475 Resale Value: $8,975 Cost Recouped: 78.2%
9. Basement Remodel Job Cost: $62,834 Resale Value: $48,777 Cost Recouped: 77.6%
10. Deck Addition (composite) Job Cost: $15,437 Resale Value: $11,476 Cost Recouped: 74.3%
Top 10 Upscale Projects
1. Siding Replacement (fiber-cement) Job Cost: $13,378 Resale Value: $11,645 Cost Recouped: 87.0%
2. Garage Door Replacement Job Cost: $2,791 Resale Value: $2,315 Cost Recouped: 82.9%
3. Siding Replacement (foam-backed vinyl) Job Cost: $14,236 Resale Value: $11,124 Cost Recouped: 78.1%
4. Window Replacement (vinyl) Job Cost: $13,385 Resale Value: $10,252 Cost Recouped: 76.6%
5. Window Replacement (wood) Job Cost: $16,798 Resale Value: $12,438 Cost Recouped: 74.0%
6. Grand Entrance (fiberglass) Job Cost: $7,305 Resale Value: $5,163 Cost Recouped: 70.7%
7. Deck Addition (composite) Job Cost: $35,158 Resale Value: $22,881 Cost Recouped: 65.1%
8. (tie) Bathroom Remodel Job Cost: $51,374 Resale Value: $32,660 Cost Recouped: 63.6%
(tie) Major Kitchen Remodel Job Cost: $109,935 Resale Value: $69,973 Cost Recouped: 63.6%
9. Roofing Replacement Job Cost: $34,495 Resale Value: $21,731 Cost Recouped: 63.0%
10. Bathroom Addition Job Cost: $72,538 Resale Value: $43,936 Cost Recouped: 60.6%
The data used in the Cost vs. Value Report was collected with the help of REALTOR® Magazine in an online survey between August and October 2013. More than 4,500 NAR members participated from 101 U.S. cities, up from 81 cities included in last year's survey.Source: RealtorMag By Erica Christoffer