Outside Remodeling Projects Pay Off, Realtors Report

WASHINGTON – Dec. 4, 2007 – Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades, according to the report, which was produced by Hanley Wood, LLC, in cooperation with the National Association of Realtors’ (NAR) Realtor Magazine.

The study found the most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

“The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” says 2008 NAR President Dick Gaylord. “Realtors know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors add value to the real estate transaction.”

The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the report’s 10th consecutive year.

Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.

Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.

The least profitable projects were a back-up power generator, sunroom addition and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), Pacific and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.

Gaylord explains that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,” says Gaylord.

“For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,” Gaylord says. “Realtors see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”

Results of the report are summarized in the December 2007 issue of Realtor Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 60 cities covered by the report, visit www.costvsvalue.com.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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Remodeling up in 2007

WASHINGTON – May 14, 2007 – Americans will spend nearly $233 on home remodeling this year, according to the National Association of Home Builders’ (NAHB) 2007 industry forecast. That represents a 1.9 percent increase from the record $228 billion spent in 2006, according to estimates from the U.S. Census Bureau.

“Remodeling continues to show strength despite the housing slowdown,” said NAHB Remodelers Chairman Mike Nagel, CGR, CAPS, a home remodeler from Chicago. “With more than 120 million homes in the United States plus $11 trillion in owner equity, the demand for remodeling will be there now and in the future.” Remodeling currently accounts for more than 40 percent of the home construction industry by dollar volume.“Quite simply, we’re adding more homes each year than we’re tearing down, and these will eventually require remodeling,” says NAHB Chief Economist David Seiders. “Compared to other components of the housing industry, remodeling remains one of the few areas to show growth, at least in nominal terms.”

Driving the remodeling market are the size and characteristics of the housing stock. With an average age of 33 years and rising, older homes require more remodeling – both in terms of upgrading features to compete with new construction as well as maintaining their physical quality. Though remodeling is somewhat cyclical with new construction, homeowners cannot put off a major repair like a leaky roof as they can discretionary upgrades, and that stabilizes the industry during slower housing markets.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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