Remodeling projects add home value.
The trend is borne out in statistics compiled and published each year by Remodeling Magazine, an authoritative source for the industry.
The 2017 report, just published, suggests the overall average return on investment for remodeling projects this year – large and small – will be “three quarters of a penny” higher than in 2016.
“Those changes are minimal because the differences in the underlying numbers are minimal,” explained the magazine. “The average cost for those 24 projects rose 3%, while the value that real estate pros put on the projects went up 4.2%. Minor gains, yes, but welcome ones compared with the trauma induced by the Great Recession nearly a decade back.”
As it has for just about every year since the magazine started publishing the report 30 years ago, the 2017 report data suggests curb appeal projects – windows, doors, siding – will have a higher ROI than projects inside the home.
And even though more expensive than superficial projects, it is the major indoor projects which – over time – tend to add the most value to a home.
“In contrast, several of the most expensive projects—the upscale bathroom remodel, upscale master suite, two-story addition, grand entrance, and family room—saw the biggest year-over-year percentage increases in value, rising between 5.6% and 7.4%,” said the magazine’s report. “All those increases outpaced the rise in cost to accomplish the projects, and suggest that real estate pros are rating such home improvements more highly than they did half a decade ago. Why? Because the real estate market continues to recover.”
But costs and ROI are not uniform across the nation. In fact, they vary from region to region.
In what the magazine calls the South Atlantic Region – Delaware, Maryland, West Virginia south along the coast to and including all of Florida – both the overall project costs and the overall ROI tended to drop from 2016 to 2017, although many mid-range and upscale projects also lower costs combine with higher ROI.
The cost of a universal design bathroom remodel, for example, fell by nearly $1,500 while they tended to increase the re-sale value of the home by almost $600.
The cost of a complete bathroom remodel fell by almost $2,000 but ended up statistically detracting from the home’s resale value by almost $500.
As you can see from the chart below, the national averages for what the magazine calls upscale projects was something of a mixed bag for individual projects. Some increased the overall value and some did not.