Smart Buying
Live Better and Sell Higher
Will remodeling pay off when you move? Check out the national average costs for popular remodeling projects and estimates of how much of the cost will be recovered when you sell.
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, June 2005
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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 latest report from Remodeling magazine says it's not uncommon to recover 80% or more.
Despite unrelenting new construction, the average U.S. home is 32 years old and in need of lifts, tucks and add-ons. So, home remodeling has become a national obsession. In 2004, Americans spent $186 billion on remodeling, according to Harvard University's Joint Center for Housing Studies.
The accompanying table shows the average price tag for a dozen popular projects, based on figures provided by HomeTech Information Systems, a company that 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; the full report (which can be ordered for $37.50 at www.remodelingmagazine.com) includes estimates by region and for 60 cities. The payback can vary dramatically by region.
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 house.
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-- Research: Katy Marquardt
