Nearly one in five U.S. homeowners tackles home improvement projects during three day weekends according to a survey released by Opinion Research Corporation. Their survey of 726 homeowners showed that the most popular projects planned include:
- Painting a room – 61%
- Landscaping – 58%
- Kitchen upgrade – 32%
- Bathroom upgrade – 30%
- Adding attic insulation – 14%
But, which ones pay back? Recouping your remodeling investment may be your goal when you sell your house. But when it comes to resale value, all home improvements are not created equal. As a rule, kitchen remodeling projects and bathroom additions, almost always, payback 90 percent or more of their cost. Finishing a basement, however, usually pays back less than 50 percent. Other improvements fall somewhere in between.
Consider these payback estimates for most typical home improvement projects:
Project Cost Average Payback
Add a new heating or air $2,000 to $4,500 100% for heating; 75% conditioning system for air conditioning
Minor kitchen remodeling $2,000 to $8,500 94% to 102%
Major kitchen remodeling $9,000 to $25,000 90%
Add a bathroom $5,000 to $12,000 92%
Add a family room $30,000 86%
Remodel bathroom $8,500 77%
Add a fireplace $1,500 to $3,000 75%
Build a deck $6,000 73%
Remodel home office $8,000 69%
Replace windows $6,000 68% to 74%
Build a pool $10,000 and up 44%
Install or upgrade $1,500 to $15,000 30% to 60%
Finish basement $3,000 to $7,000 15%
UNDERSTANDING PAYBACK VALUE
Payback value depends heavily on the real estate market and prevailing property values. If the market is slow, expect to see less payback than you would in a hot market. Also consider the neighborhood: if you remodel your house to twice the size of the other homes on the block, it is unlikely that you will be able to sell at double the price. Issues that can influence payback value include:
· Type of improvement
Kitchen and bathroom remodeling projects consistently return the most in resale value and almost always help sell a house. Converting a basement into a family room yields the smallest return on investment.
· Scope of improvement
Projects can be large or small. Sometimes, the cumulative effect of small projects can pay back more in resale value than that of larger projects. Small projects tend to be cosmetic in nature: fresh paint, new doors, garden windows, and ceiling fans. Large improvements involve adding or upgrading living space.
Today’s fad may be tomorrow’s standard. Backyard decks, for example, were difficult to find 30 years ago; now they are common. Decks may not have paid back very much in resale value decades ago, but as decks have become more desirable, their resale value has increased.
The price of home improvements fluctuates depending on economic conditions and region. If remodeling costs are particularly high in your area--or home sale prices are particularly low--you may not recoup as much on your investment as you would if costs were in sync with sales prices.
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