We’ve all seen the numbers on the amount of money you can recoup from doing a home improvement project. Some of them are quite exaggerated, and others seem to peg the costs at a pretty low point, misleading Houston homeowners into thinking they can get something for nearly nothing.
Here’s what you need to know. The official Cost vs. Value report is researched and reported by Remodeling magazine, a trade publication for remodeling contractors. We subscribe. In fact, we recently were selected by the magazine for their Big 50 award, which recognizes the 50 best remodeling contractors in the country.
Remodeling editors identify a number of typical remodeling projects, such as attic remodel or window replacement or major kitchen remodel. Then they identify typical elements of such a project and price a typical and upscale project. WARNING: the pricing on these projects can – and usually seems to – vary considerably from the pricing on the project you may be considering. This is one of the concerns about this report. Too often, homeowners think this is an average price or a price for their project. There are so many variables the costs of the projects can vary considerably.
After establishing a price, the editors turn to real estate professionals and appraisers and ask them what they would anticipate that project would add to the resale value of a home after two years. That last point is important, because historically, real estate has increased in value, so the value of an improvement project would increase over time. They then report the cost recouped as the value returned.
Take a look at the full report www.costvsvalue.com. You can also download the report for the Houston market, although the numbers in any given market are more volatile than the national numbers because the number of professionals reporting is significantly smaller. Less data means less reliability. Still, overall the Houston numbers tend to fare better than national figures.
How does this help your decision-making process for home improvement? I know very few people who take on a remodeling project to increase the value of their home. They do it for lifestyle considerations. They want a home that works for the way they live their lives. But when you’re deciding between a new kitchen and a new car, you have to remember that your investment in the kitchen will ultimately be recouped. That car is just going to decrease in value over time.
The most important project you can take on to increase the value of your home? Maintenance. A study by the Joint Center for Housing Studies at Harvard’s Kennedy School of Government showed that for every dollar spent on home maintenance, home values increased two dollars. By any measure, that’s a good investment.