Remodeling: Cost vs Value 2005

February 20, 2006

The National Association of REALTORS® and Remodeling Magazine issued their 2005 Cost vs. Value Report back in December (we are a little slow to catch up). The survey found that the top 4 investments are upgraded kitchen, remodeled bath, new siding and window replacement. Here is an excerpt from the report:

FEATURE: 2005 COST vs. VALUE REPORT

Remodeling's Payoff

The annual report compares construction costs with resale values in 58 markets.

The "Cost vs. Value Report," published each year in conjunction with Remodeling magazine, gives you a city-by-city guide on what various home projects will pay back at resale. This year’s report features data for five more markets than last year* and a new project—a mid-range home office remodel.

...

Since 2002 four projects, reported each year since 2002, have shown the greatest return at resale on a national basis. Two of the projects, siding and windows, reflect the importance consumers place on curb appeal and insulation; the others, a kitchen and a bath project, are consistently high performers in most markets.

The full article can be read here. The print publication has these projects calculated for all 58 major metropolitan areas of the US.

This is timely because we have a few clients considering upgrades as a way to be more competitive when they are ready to go on the market. The key question is: What is the market value without the upgrades versus with them. If there are unrealistic expectations on the first part of this question (current market value) then upgrading won't matter.

In the Northern Virginia market, buyers are consistently looking for bells and whistles in a home, mainly in the kitchen: upgraded cabinets, granite counters and stainless steel (or maybe black) appliances. If you are selling a home in the upper brackets (north of $500,000) without these, it is hard to compete since so many homes built in the last few years had these amenities added during construction. With the inventory of homes for sale at such a high level, you either have the amenities or drastically lower the price to compete. It's a tough call.

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