Returns on remodeling : Rooftop Views

Rooftop Views

Returns on remodeling

The National Association of Realtors recently completed their annual survey on the costs of remodeling projects in various parts of the country and the returns that Sellers can expect when they go to sell after the remodeling is completed.

For the first time in several years, the returns did not keep pace with the costs. This trend reflects a return to a more balanced real estate market in many areas of the country. As in 2005, kitchen and bathroom remodels are still near the top of the list in terms of costs recouped, on a national average.

In 2006, the national average cost for a major kitchen remodel was $54,241, and the return was $43,603, for an 80.4 percent return on investment. By comparison, in 2005, a major midrange kitchen remodel cost an average of $43,862 and returned $39,920, or 91 percent of the costs to remodel. Midrange bathroom remodels recouped 85 percent of their cost in 2006, with remodeling expenses averaging $12,918 and resale values averaging $10,970. Last year, the same project cost $10,499 and returned $10,727, or 102.2%.

The report compares construction costs with resale values for 25 common remodeling projects in 60 cities. This year the report provides data for nine U.S. regions, rather than four as in years past, following the divisions established by the U.S. Census Bureau. The projects represent additions, remodels and replacements. Nationally, replacement projects tended to return more value than additions or remodels, but, as in previous reports, the desirability of different remodeling projects varied by region and metropolitan area.

The most profitable projects nationally, from a resale value, were midrange vinyl and upscale fiber cement siding replacements, at an average of 87.2 and 88 percent costs recouped, respectively. Most of the regions reflected that, as well; some type of siding replacement ranked among the top three projects in terms of costs recouped in every geographic area except the Mountain region, composed of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming. The least profitable project was a home
office remodel; this project returned the lowest percentage of remodeling costs at resale in all but the South West Central (Arkansas, Louisiana, Oklahoma and Texas) and Pacific (Alaska, California, Hawaii, Oregon and Washington) regions.

To read the entire report please go to www.remodelingmagazine.com