What's the Payoff for Remodeling?

published 1 October 2006

Remodeling projects are enticing investments. You get to play the Iron Chef in a new, modern kitchen or pamper yourself in a spa-style bathroom, then recoup your money when you sell your house. In fact, anticipating that payback is often a driving force in convincing yourself—or your spouse—that a project is worth the money. But how much return can you count on? The "2005 Cost vs. Value Report" from Remodeling magazine says it’s not uncommon to recover 86% or more.

Despite unrelenting new construction, the average U.S. home is 32 years old and in need of lifts, tucks and add-ons. As a result, home remodeling has become a national obsession. The National Association of Home Builders expects Americans to spend more than $160 billion on home improvements in 2006.

The table below shows the average price tag for a dozen popular projects, based on figures provided by HomeTech Information Systems, which develops software for estimating remodeling costs. The percentage of cost recouped at resale is based on estimates by members of the National Association of Realtors. The numbers are national averages (single-city reprints for 60 cities can be ordered for $9.95 per reprint at www.remodelingmagazine.com). The payback can vary dramatically by region.

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Sal Alfano, editorial director of Remodeling magazine, notes that in extremely hot markets and those with a lot of new construction, resale values may slip below national averages. That’s because buyers would just as soon purchase a new house with all the amenities than a remodeled home.

A dozen popular projects

Check out the average cost nationwide for 12 remodeling projects, plus estimates of how much of that cost you would recoup when you sell your home. Keep in mind that payback can vary dramatically by region, however. In the case of a minor kitchen remodel, for example, recovery ranges from 85% in the Midwest to 112% in the West.

Swipe to scroll horizontally

PROJECT	PRICE	% OF COST RECOUPED
Minor kitchen remodel, mid-range	$14,913	99
Major kitchen remodel, mid-range	$43,862	91
Major kitchen remodel, upscale	$81,552	85
Bathroom remodel, mid-range	$10,499	102
Bathroom remodel, upscale	$26,052	93
Bathroom addition, mid-range	$22,977	86
Bathroom addition, upscale	$47,212	86
Master suite, mid-range	$73,370	82
Master suite, upscale	$137,891	80
Window replacement, mid-range	$9,684	90
Window replacement, upscale	$16,096	89
Siding replacement, upscale	$10,393	104

Source: Remodeling Magazine 2005 Cost vs. Value Report

Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.