A home’s curb appeal is crucial because it is the first thing buyers notice about a home. That’s why Realtors rated eight exterior projects among the top ten most valuable home improvement projects in the 2014 Remodeling Cost vs. Value Report.
“With many factors to consider such as cost and time, deciding what remodeling projects to undertake can be a difficult decision for homeowners,” said National Association of Realtors President Steve Brown, co-owner of Irongate, Inc., Realtors in Dayton, Ohio. “Realtors® know what home features are important to buyers in their area, but a home’s curb appeal is always critical since it’s the first impression for potential buyers. That’s why exterior replacement projects offer the greatest bang for the buck. Projects such as entry door, siding and window replacements can recoup homeowners more than 78 percent of costs upon resale.”
Realtors judged a steel entry door replacement as the project expected to return the most money, with an estimated 96.6 percent of costs recouped upon resale. The steel entry door replacement is consistently the least expensive project in the annual Cost vs. Value Report, costing little more than $1,100 on average.
Eight of the top 10 most cost-effective projects nationally, in terms of value recouped, are exterior projects. A wood deck addition came in second with an estimated 87.4 percent of costs recouped upon resale. Two different siding replacement projects also landed in the top 10, including fiber-cement siding, expected to return 87 percent of costs, and vinyl siding, expected to return 78.2 percent of costs. Out of the top 10 projects, the fiber-cement siding replacement project improved the most since last year, with costs recouped increasing by more than 15 percent. Two garage door replacements were also in the top 10; a midrange garage door replacement is expected to return 83.7 percent while an upscale garage door replacement follows closely at 82.9 percent of costs recouped. Rounding out the top exterior remodeling projects were two window replacements; a wood window replacement is estimated to recoup 79.3 percent of costs and a vinyl window replacement is estimated to recoup 78.7 percent of costs.
According to the report, two interior remodeling projects in particular can recoup substantial value at resale. An attic bedroom is ranked fourth and is expected to return 84.3 percent of costs; nationally, the average cost for the project is just above $49,000. The second interior remodeling project in the top 10 is the minor kitchen remodel. The project landed at number seven and is estimated to recoup 82.7 percent of costs. Nationally, the average cost for the project is just under $19,000. The improvement project likely to return the least is the home office remodel, estimated to recoup 48.9 percent.
For the report, Realtors provided their insights into local markets and buyer home preferences within those markets. For 2014, the national average cost-value ratio stands at 66.1 percent, a jump of 5.5 points over last year and the largest increase since 2005, when the ratio increased 6.1 points to reach a high of 86.7 percent. For the second consecutive year, Cost vs. Value data shows that the value of remodeling is up for all 35 projects included in the survey. Additionally, for the first time in four years, improved resale value of residential housing had more of an influence in the cost-value ratio than construction costs. A modest 2.2 percent increase in average national construction costs was more than offset by an 11.5 percent improvement in average national resale value.
The 2014 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 100 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 16th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with NAR.
“Every neighborhood is different and the desirability and resale value of a particular remodeling project varies by region and metro area. Before undertaking a remodeling project, homeowners should consult a Realtor as they are the best resource when deciding what projects will provide the most return upon resale,” said Brown. “Realtors® have a unique understanding of local markets, home features and buyer preferences and know that there are a variety of factors that affect a home’s value, such as location, condition of surrounding properties and regional economic climate.”
Embrace Home Loans recommends owners focus on projects that deliver value.
Although cosmetic improvements look pretty, they make little difference in a home with outdated inner components. Functional upgrades, such as heating systems, plumbing, and sewage disposal, are crucial if you want to attract buyers. Additionally, older properties often require major upgrades to their electrical systems and overall stability. Imported marble tile will make little difference if your Victorian has outdated and dangerous wiring.
2. Exterior Improvements
Much like infrastructure, exterior items are not all that exciting. Things like siding, windows, and garage doors can add tremendous value, however. These upgrades can also modernize a home’s overall look, which can make a difference when you are trying to sell. Embrace Home Loans recommends viewing other homes in the area to determine the overall age and feel of the neighborhood. For example, you don’t want to recast your property as an English Tudor in an area dominated by contemporary ranches.
3. Adding a Bedroom
You don’t need an addition to add a bedroom. If you have unfinished space in your attic or basement, you can create another bedroom with relative ease.
4. Creating an Extra Bathroom
In past generations, families got by just fine with one central bathroom. In today’s homes, however, consumers demand an en suite bath for mom and dad with a smaller bathroom down the hall for the kids. Even a half-bath can add significant value to a home. If you simply can’t squeeze an additional bath into your existing space, put your renovation dollars to work in your existing bathrooms. Change out tired, outdated fixtures for more modern finishes. Replace old toilets and shower doors. Even fresh paint and updated flooring can make an old bathroom look brand new.
5. Upgrade Your Kitchen
Kitchens are truly the heart of the modern home. If you are planning on an entire kitchen remodel, work with a kitchen designer who can help you maximize your space. Homeowners on a tight budget can still boost their home’s value by investing in upgraded flooring, paint, and new light fixtures. More ambitious folks can try their hand at refinishing existing cabinets and swapping out old hardware.
6. Curb Appeal
Curb appeal is just as important as the stuff inside. Keep your lawn trimmed, neat, and green. If you can afford it, add some decorative items, such as privacy trees, shrubs, and flowers. Homeowners with black thumbs and green wallets can also hire a landscape architect to make the most out of their outdoor spaces.
7. Finish the Basement
If your basement is the final resting place for old toys, unused exercise equipment, and storage boxes, consider transforming it into livable space. Finishing your basement adds square footage to your home’s footprint and provides potential buyers with nearly unlimited opportunities for additional living space.
8. Extra Storage
The majority of modern consumers want a lot of storage. If your home lacks storage, invest in a professional closet system or organization solution. For a few thousand dollars, you can transform an ordinary closet into a storage sanctuary.
9. Square Footage
Although an addition is out of reach for many people, it is a home improvement that provides a large return on investment. If your home is very small, adding more square feet might be the only way to appeal to certain demographics of buyers. For example, a family of four might not look twice at your two-bedroom bungalow. By adding an additional bedroom and bath, you can expand your marketing efforts to reach an entirely new type of buyer.
10. Minor Touches
Sometimes, even small things make a big difference. Water purification systems, energy saving appliances, home theater equipment, and security systems add additional value to a home. These items are relatively minor touches within the remodeling context, but they appeal to a broad range of buyers and distinguish a home from its competitors.
Embrace Home Loans works with all types of future and existing home owners. Big or small, you can reach often reach your home improvement goals more quickly with a home equity line or credit or loan. If you need cash to finance your renovation vision, you might be able to take advantage of your existing equity to realize your dreams.
Seven of the nine regions covered in the report outperformed the national average, a distinct improvement over 2013, when just four regions performed better than average. Once again, the Pacific region, consisting of Alaska, California, Hawaii, Oregon and Washington, led the nation with an average cost-value ratio of 88 percent, due mainly to strong resale values. The next best performing region was West South Central with 76.4 percent, followed by three regions tied at 74.6 percent: South Atlantic, which improved from 63.7 percent in 2013, New England, which improved from 56.2 percent in 2013, and East North Central, which improved from 54.8 percent in 2013.