Remodel may not bring payoff
Are you sure your $50,000 kitchen remodel will reap $50,000 when the house sells? And are you certain of big returns on that new master bath?
Although the price tag for installing granite countertops and steam showers has steadily risen, the resale value of those home improvements has decreased, according to agents and remodelers who participated in Remodeling magazine’s 2006 “Cost Vs. Value Report.” The study compared construction costs with resale values for 25 common remodeling projects in 60 U.S. cities.
Kitchen and bathroom remodels still gave homeowners the most bang for their buck when they sold their homes, but they garnered far less than in 2005. The return on a $54,241 mid-range kitchen remodel in 2006 was $43,603, or 80.4%, a big drop from the 91% return on a $43,862 remodel in 2005. The average bathroom remodel in 2006 was $12,918 and recouped 85% of its cost, compared with a 102.2% return on last year’s $10,499 average remodel.
The downward trend reflects the general shift in the nation’s real estate market, agents said.
The remodeling project nationally that proved most profitable at resale was mid-range vinyl siding replacement, at 87.2%. The least profitable project was a home-office remodel, at 63.4%.
National Assn. of Realtors President Pat Vredevoogd Combs said that the resale value of any remodeling project depends in part on the property’s overall value, including the “availability and condition of surrounding properties, location and regional economic climate.”
