The cost of remodeling is rising, but is the value?
In Remodeling magazine’s 2018 Cost vs. Value report, the average recoup from 20 typical home remodeling projects, as performed by professionals, was 56.8 percent in 2017, down 1.1 percent from 2016. Work done on the exterior of the home had higher return on investments than work on the interior of the home, most likely because outside improvements boost curb appeal. Higher-end and large projects were not as valuable as past years.
The project that recouped the most money in the most markets was an upscale garage replacement, with 98.3 percent cost recouped, the average job costs $3,470, with a resell value of $3,411. A manufactured stone veneer wasn’t fair behind, recouping 97.1 percent, but costing $8,221, and the average recoup was $7,896. A wood deck addition recouped 82.8 percent, costing $10,950, with a resell value of $9,065. A minor kitchen remodel, cost an estimated $21,198, and recouped about $17,193 or 81.1 percent. Siding replacement rounded out the top five, costing $15,072, with a resell value of $11,554 or 76.7 percent.
The two most expensive projects, an upscale master suite addition and an upscale major kitchen remodel recouped significantly less. The average cost for an upscale master suite addition was $256,229, and recouped only 48.2 percent, or $123,797, while the average cost for an upscale major kitchen remodel was $125,721, with a resell value of $67,212 or 53.5 percent.
The report also found that renovations typically had higher recoup value than additions, and it’s better to replace something than update it, as remodeling it tends to be more expensive in the projects analyzed.
“The 2018 Cost vs. Value Report shows some potentially notable changes, as upscale and big projects have declined in value compared to previous years,” said Craig Webb, the editor in chief of the magazine and manager of the report. “It’s not clear if this is a sign of nervousness among real estate pros in the face of a booming housing market or if nationwide affordability concerns are leading pros to question the value of renovations that would make a house even more expensive at resale – particularly with the new tax law regarding the deductibility of mortgage interest and state, local and property taxes.”