Find out which projects will give you the most bang for your buck!
Remodeling Magazine recently came out with their “Remodeling 2014 Cost vs. Value Report.” They looked at 35 remodeling projects to determine how much value was returned to a home after investing in the cost of a particular project. For 2014, the national average cost-value ratio stands at 66.1%, up 5.5% over the 2013 figure. The cost-value ratio expresses resale value as a percentage of construction cost. When cost and value are equal, the ratio is 100%; when cost is higher than value, the ratio is less than 100%; when the value is higher than cost, the ratio exceeds 100%.
When we breakdown the data to the East North Central Region and further to Chicago, what we find as the top projects in the “midrange” category based on cost recouped are: Garage Door Replacement, Deck Addition, Bathroom Remodel and Minor Kitchen Remodel. All four of these have a cost ratio greater than 100%, meaning your home will gain more value than the cost of the project. The cost-value ratio only occasionally exceeds 100% and typically indicates either strong appeal for a particular project, a strong housing market or both. While the Cost vs. Value Report makes the distinction between “midrange” and “upscale” projects, keep in mind the size or scope of a project, or the quality of finishes and accessories the homeowner chooses can dramatically affect the price. The designs and material specifications used in the Report were for a “typical” project.
Continuing with the Chicago-specific data, a bathroom remodel in both the “midrange” and “upscale” cataegories outperformed a kitchen remodel. The only project to return less value in 2014 vs. 2013 was a two-story addition. The cost recouped on all considered projects in Chicago outpaced the average cost recouped for projects in the North Central Region with the exception of an “upscale” fiberglass grand entrance installation.
In what is perhaps the most positive sign in this year’s data, for the first time in four years improved resale values of residential housing had more of an influence in the cost-value ratio than construction costs. A modest 2.2% increse in average national construction costs was more than offset by an 11.5% improvement in average national resale values.
The data used in the Cost vs. Value Report was collected with the help of REALTOR® Magazine in an online survey between August and October 2013 to more than 200,000 member agents, brokers and appraisers to obtain estimates of resale value. More than 4,500 responded from 81 U.S. cities included in the survey so you can find specific metro-area market data. RemodelMax, a publisher of estimating tools for remodelers, used ClearEstimates remodeling software to generate cost estimates for all 35 projects in the 81 cities.
Please feel free to contact me at (312) 285-6644 with any questions you might have. And if you are a neighbor in Bowmanville, please say hello!
Heather McRae is a residential mortgage lender. She was first introduced to the real estate industry in 2001. Heather lends throughout the State of Illinois and specializes in condos within the City of Chicago. She is a proud resident of Lincoln Square’s Bowmanville neighborhood.