Remodeling - Is It a Value Enhancer?

June 24, 2009

The question of remodeling surfaced this week from both a friend and in a commentary in a real estate newsletter to which I subscribe. The friend asked about approximate cost of adding a room and bath and the Inman News writer, Bernice Ross, responded to a question regarding which upgrades would produce the best return on the investment.

I remembered that in the past I had read articles from a Contractor's publication that gave prices for various additions or upgrades and also articles in real estate journals that compared the return on investment in updating a property.

When deciding about spending money to redo a kitchen or bath or adding more square footage to a house, it is important to ask how the improvements will compare with other homes in the immediate area. It is also important to ask whether the improvement you plan to make is for your benefit or whether it will be seen as a benefit to other potential owners.

Having answered the above questions, here are a few numbers for the national average costs and returns on home improvement projects.

Bathroom Addition.............cost/$36.078............resale value/$24,187.........cost recouped/63.5%

Bathroom Remodel............cost/$15,899.............resale value/$11,857.........cost recouped/73.7%

Major Kitchen Remodel....cost/$56,611.............resale value/$43,030........cost recouped/76%

Roofing Replacement........cost/$18,825.............resale value/$12,336........cost recouped/65.5%

Window Replacement.......cost/$10,537.............resale value/$8,132...........cost recouped/77.2%

These figures come from http://www.remodeling.hw.net/

Just as an aside: A few years ago when I looked at a similar chart, the percentage returned was greater than it is now. Perhaps the returns go up as home prices go up and folks are more willing to pay for the upgraded improvements.