WHEN Christy Cleveland and her family outgrew their 1,800-square-foot ranch house in Long Beach two years ago, they first considered trading up. Additional expense: $400,000 to $500,000.
They next looked at adding a second floor. Estimated cost: $200,000.
Ultimately, they decided to add a rec room and extra bath at the back of the garage. Cost: $40,000.
Now not only do the family’s three boys have enough space to play video and computer games with their friends, but the Clevelands are looking at a high return on their modest investment at resale.
By visiting several neighborhood open houses well before the demo crew showed up, Cleveland learned that the market value of their pre-renovation home was about $800,000. Properties comparable to their 2,300-square-foot house today sell for up to $1.2 million.
Although most home-improvement projects are a quest to satisfy personal needs and desires, experts urge remodelers to consider resale value if there’s a chance they may move within a few years.
Determining how much any project will affect home value is inexact at best with appreciation already at a healthy clip in Southern California. Variables such as neighborhood standards, the condition of the rest of the house and the quality of the work will all play a role.
Still, square footage in the form of a den, bigger kitchen, additional bathroom or bedroom is the most direct way to add to a house’s resale price, said Hugh Evans, a real estate agent with Prudential California Realty John Aaroe Division in Brentwood.
To get an idea whether adding size makes sense, compare the square-foot cost of adding on with the sales price per square foot of homes in the area. The type and quality of the project will determine the construction costs, which Evans said could range from $250 to $350 a square foot.
“If your building costs are $300 a square foot, it’s worth it to add on,” Evans said of most neighborhoods. “Especially on the Westside, where space is selling for $750 a square foot.”
Some general guidelines for those planning to sell within a year are provided in Remodeling magazine’s annual survey of construction costs versus resale value, released last month.
In the Los Angeles metropolitan area, for example, minor kitchen remodels, major kitchen remodels and bathroom remodels reap first, second and third in percentage of costs recovered at 120.2%, 117.8% and 115.5%, respectively. Complete results of the 2005 survey are available at www.remodelingmagazine.com.
More important for a payoff at resale, though, is how a renovation project fits within a particular community, said Jim Lapides of the National Assn. of Home Builders Remodelers Council.
“While kitchens and baths usually score the highest in resale value on the survey, the kitchen remodel you choose has to relate to the neighborhood,” Lapides said. “You don’t want to change the house so that it’s the most expensive in the area.”
Remodeling projects that bring a home up to community norms should have the highest payoff.
“If every house in your neighborhood has a deck or patio except you,” he said, “you should definitely get your money back if you add one.”
To figure out what’s standard for the area, Benjamin Morey, owner of Morey Construction Inc. in Signal Hill, tells his clients to do some legwork before embarking on a project.
“I advise them to go house-hunting in their neighborhood to see how much it would cost to buy a house that has what they’re trying to achieve,” he said, “be it a larger kitchen or a rec room or an extra bedroom.”
Morey then recommends they compare the market price of those houses to the approximate amount they could get for their home.
“If the difference is, say, $200,000, it helps them put a price tag on their project and that can give them a certain comfort level,” he said.
But with any remodeling project, Evans emphasizes the importance of creating an inviting and balanced atmosphere.
Owners who stray too far into the realms of extreme personal taste by creating an entire wing devoted to Elvis memorabilia, for example, or who over-invest in certain areas of their houses may not reap the same rewards.
“If a homeowner pours money into a kitchen, but it makes the rest of the house stand out as not being so nice, that has an impact,” he said.
Updating bathrooms and improving the general feeling of a house with high-end floors and fresh paint colors might add more value than a single project, Evans said. “There are so many buyers who will pay a premium if they don’t have to do anything to a house.”
On the flip side, poorly thought-out designs and obvious do-it-yourself workmanship can detract rather than add to home value.
Although homeowners can usually tackle simple projects, such as tiling a floor or painting, said Rodger Barclay, who owns Barclay Builders in Redondo Beach, the inexperienced weekend handyman might be better off avoiding complex cabinetry, electrical or granite work.
“When the level of workmanship required is high,” he said, “it will be more obvious if the homeowner isn’t as competent.”
For those who don’t have the budget to add square footage, Barclay recommended increasing the feeling of spaciousness with cathedral ceilings, bigger windows and accessible outdoor space.
“Removing either whole walls or parts of walls can also improve the flow and enhance the amount of usable space a house has,” he said.
One of Barclay’s clients, Sharon McCandless, increased the $75,000 budget of her kitchen remodel by $12,000 to knock down two walls. She now can see through the family room to the backyard and has a large island with seating in the kitchen.
“It’s no more actual space,” McCandles said, “but it’s much more spacious.”
The kitchen renovation bumped the $1-million house into the $1.3-million to $1.4-million price range, based on the prices of similar homes in the area, according to Mary Lenahan, a real estate agent in Redondo Beach who sold the house to the McCandlesses in 1991.
“Before, it was a narrow kitchen that was only for cooking,” Lenahan said. “Now that they’ve opened it up, it’s a big, open space where the whole family can gather and go out into the backyard.”
Although high-end details, such as marble and granite counters and stainless-steel appliances, add value to a house, said Karen Zieba, a Long Beach contractor and owner of Zieba Builders, don’t count on the costs all being recouped at resale. “You can’t install a $6,000 toilet and expect to get your money back.”
And brand-name appliances can go in and out of fashion, Zieba warned.
“They are expensive to buy, expensive to install and they aren’t necessarily better than other brands,” she added.
Still, some homeowners succumb to the desire to go whole hog on upgraded design and details, even if they know they won’t get a direct dollar-for-dollar payback on them.
When Janice Szper started renovating her outdated, narrow kitchen to mesh with the open, contemporary layout of the rest of the house and make it a more functional and social area, her original budget was about $100,000.
Now the Rancho Palos Verdes resident has boosted her spending into the $200,000-to-$300,000 range.
In addition to a Sub-Zero refrigerator and Wolf range, Szper opted for custom cabinets in exotic wood, stone floors and counters and a stainless-steel tile wall behind the washer and dryer in the adjacent new laundry room.
“Sometimes you just want something,” she said. “You might think it’s overpriced, but you still just want to get it.”
Many renovation projects, Zieba said, are a step toward the romantic notion of achieving an ideal home.
“Don’t remodel the house for someone else,” she advised. “You want your home to meet your emotional and practical needs.”
It’s hard to put a price tag on that.