Cleaning Up by Adding Bathroom

You won’t “take a bath” when you add a second bathroom to a house that has only one, but you might think twice about taking a plunge with a new pool.

That’s one conclusion from the 1988 Cost vs. Value Report appearing in the current Remodeling magazine, published by Hanley-Wood Inc.

The national survey compares the average cost of 14 remodeling projects with the amount those improvements add to the resale value of a hypothetical 17-year-old, three-bedroom, one-bath house, with 1,600 square feet of living area, valued at $90,000 before remodeling.

Generally, the survey shows, improvements in high-cost areas, such as Boston and Los Angeles, return more of their value than similar improvements in Dallas-Ft. Worth, Sacramento and Portland, Ore., where housing values are either not appreciating much beyond the inflation level or are depreciating in real terms.

Identified Typical Cities

The values for the 14 projects are determined for 18 cities ranging in population from 68,000 (North Little Rock, Ark.) to 6.2 million (Chicago). The average home prices of the 18 cities range from as low as $60,211 in South Bend, Ind., and $64,900 in Portland, Ore. to as high as $123,482 in Portland, Me., $125,595 in Atlanta and $182,900 in Boston.

Home-Tech, a Bethesda, Md.-based remodeling consulting firm, helped identify typical cities and provided the cost figures for each remodeling project. A Century 21 realtor in each city estimated the probable pay-back value each project would realize if the remodeled house were sold. A local appraiser estimated the equity value of each improvement.

The only California city on the list is Sacramento, where housing values are considerably lower than those in many areas of the Southland. The average--1986 values are used--home price for Sacramento was $106,179, while the October, 1986, average home price for Los Angeles County was $180,000, according to the Real Estate Research Council of Southern California. The October, 1988, average home price for Los Angeles County was $270,200, according to the council.

The projects are: Room addition (15-by-25-foot), major kitchen remodeling, minor kitchen remodeling, adding a full bath, remodeling a bathroom, adding a fireplace, adding insulation, constructing a greenhouse addition, new siding, replacing windows and doors, adding a skylight, reroofing, adding a wood deck and adding a swimming pool.

A room addition costing from about $25,000 to about $36,000-- depending on the community--returns as high as 90% in North Little Rock, Ark., 82% in Anderson, Ind., and 75% in Chicago. The return is only 44% in Sacramento and 54% in Las Vegas.

Kitchen Remodeling

The major kitchen remodeling, costing $23,089 in Sacramento, returned only 43% on resale; in Bellingham, Wash., the same job, costing $21,866, returned 90% of its cost.

A minor kitchen remodeling, with refaced cabinets, new counters and new hardware, cost $8,840 in Sacramento and returned 57% of its value. The return was much higher in such places as North Little Rock, 99%; Austin, Tex., 96%; Raleigh-Durham, N.C., 95%, and Boston and Atlanta, 90%. Most of the expert respondents felt that a minor kitchen remodeling will return at least 70% of its value when the house is sold.

By way of contrast, adding a $20,000 swimming pool will return only 20% of its value in Atlanta, 31% in Boston and 25% in Chicago. Only 20% of the experts--”mostly from sunny states”--project a return of more than 50% on the cost of adding a pool.

Ten of the 18 realtors surveyed estimated that the $8,000-$12,000 cost of a second bath would result in a return of 100% or more of the cost on resale.

Bathroom Investment

A typical comment from Fair Oaks (Sacramento), Calif. realtor Jack Lewis about adding a bath: “This would probably be the best return on investment.”

Remodeling an existing bathroom is also a good investment everywhere but Sacramento, where the return was only 38% on a $7,846 investment. It was 80% in Syracuse, N.Y., 75% in Atlanta, 128% in Austin and 63% in Las Vegas.

Adding a fireplace at $2,800 to about $4,000, is also a good investment, according to the survey. The return was a resounding 155% in Boston, 138% in Bellingham, Wash., 135% in Chicago and 126% in Chandler, (Phoenix) Ariz. But it was only 64% in Las Vegas and 74% in Sacramento.

Updating insulation, replacing inefficient windows and doors and reroofing are good investment improvements, according to the study, with typical returns of about 50% to 75%. In some areas, adding insulation can result in as high as a 120% return (Austin) or 100% (Raleigh-Durham, N.C.).

Skylights can be a good investment in places like Boston, where the $3,902 investment can result in a 115% return in a climate where the skies could be cloudy all day, or a poor investment in the usually sunny Las Vegas, where a similar investment can bring only a 26% return, the survey notes.

Reprints of the 16-page article that ran in the October, 1988, issue are available for $4.50 each from Remodeling magazine, 655 15th St., N.W., Washington, D.C. 20005.