WASHINGTON Nov 10 Thinking of a home
renovation? Smaller might be better. Adding a sweet sunroom or
luxe master suite sounds great, but don't expect to recover the
costs anytime soon.
On average, U.S. homeowners who made home improvements in
2011 only picked up 58 cents in home equity on their remodeling
dollar, according to the Cost versus Value survey released on
Thursday by Remodeling Magazine. That's down sharply from the
2005 peak, when a new project immediately earned back 76
percent of its cost in higher home prices.
Homeowners who do less costly replacement projects do
slightly better at recouping their costs than do those who
spend big bucks on additions and new construction, with
projects like replacement roofs and front doors earning 64
percent of their costs back in resale value. Remodeling
projects earn back 57 percent, on average.
"The numbers are telling us that price is becoming a more
and more important determining factor," said Sal Alfano,
editorial director for Remodeling Magazine. "People are doing
the things they have to do, rather than the more discretionary
The average home improvement project cost $44,734 in 2011;
that's down slightly from the $45,593 figure for last year.
But resale values fell more, producing a 3 percent decline in
the cost-value ratio.
The good news for homeowners is that all of those projects
continue to get more affordable, as contractors keep cutting
their prices to stay busy during the ongoing housing slump.
"There is so little new construction," Alfano said. "When
commercial and new construction drop out of the picture, that
leaves remodeling. The competition is there and they are
sharpening their pencils." Prices for materials have remained
pretty constant, he said.
Alfano told Reuters that he thinks the slump in home
remodeling might be bottoming out. "We think it might start to
pick up at the end of 2012, and 2013 is where we are expecting
a much stronger growth rate."
The most popular projects tend to be ones that are more
easily affordable, like replacing a garage door or replacing
windows with more energy-efficient ones, said Alfano. Also
popular are projects that add space without increasing the
footprint of a house.
The project with the highest cost-to-value ratio on the
list for 2011 was a mid-range replacement of the front door
(with, say, a 20-gauge steel door). That cost an average of
$1,238 and raised the average sales price of a home by $903, or
73 percent of the project's initial cost. But homeowners who
upgraded their front door to an upscale fiberglass door spent
more -- $3,536 -- yet saw, on average, an increase in home
value of only $1,990, or 56.3 percent.
Another project with a relatively high cost-to-value ratio
was adding an attic bedroom. Across the U.S., the average cost
for that project was $50,148, but it added $36,346 to the
average selling price of a house, allowing the homeowner to
recoup an average 72.5 percent of the project's cost. Perhaps,
Alfano suggested, that was because there is greater emphasis on
multi-generational living, and people are seeking additional
bedrooms to house their elderly parents or their returning
Replacing cabinet doors, spiffing up the hardware and
putting in new appliances costs an average of $19,588 and
raises home values by $14,120, or 72.1 percent, according to
Upscale kitchen remodeling is less rewarding, however. It
cost an average of $110,938 to do a full-fledged upscale new
kitchen, but that only raised home values by about $63,731 or
What about those sought-after man caves? A mid-range
basement remodel costs $63,378 on average, and raised a home's
value by 66.8 percent, or $42,228, in 2011, the survey found.
And decks remained pretty popular; adding a wood deck cost an
average of $10,350, but raised home resale values by 70.1
percent, or $7,259.
Of course, homeowners usually don't go through the hassle
and the dust of a major renovation project just to sell their
home, and if they're trying to decide whether to do a big
project, the resale value shouldn't be the determining factor
of a project, Alfano said..
Families should decide how long they want to stay in the
home and whether the new project will improve their lives
enough to justify the expense. For example, if it's going to
cost an average of $83,118 to add a basic family room, and the
resell value of that project is just 60.2 percent or $50,004,
that means they can expect to spend $33,114 that they will
never recoup on that family room. If they think they are going
to stay in the home for 10 years, they can think in terms of
whether or not $3,311 is an affordable and reasonable amount to
spend every year for the pleasures of the extra space.
Put that way, it almost makes the spa room addition seem
(Editing by Beth Gladstone and Carol Bishopric)