The 2018 Cost Vs. Value Report is out and it shows a slight decline in value vs. cost overall. Last year, the upscale master suite and upscale bathroom remodel enjoyed some of the biggest gains in value, while this year the largest shift appears to be towards exterior "curb appeal" related projects.
Thinking curb appeal and ROI, it is obvious that siding, roofing, windows and doors are properly associated with a homes curb appeal projects but, it is important to think beyond these items. There are many examples of "dated" homes that get siding, roofing etc... that while it is a step in the right direction, still looks like a slightly fresher version of the same dated style.
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"We have found that clients willing to spend a bit more consider new features such as a front porch or entry addition," explains John Murphy, owner Murphy Bros. Design | Build | Remodel. "They also look at altering or adding to an awkward roof line that could have been the result of a previous homeowners mediocre remodel. Thinking beyond the ordinary can transform a simple home siding project from a "that's nice" to a "WOW!" impact," explains Murphy, "Which can also mean a higher resale value when the time comes."
Costs are also heading up some 3%-5% and in hot markets such as the Twin Cities it can be more than that, which is no surprise to us. We were telling everyone who would listen that this time last year costs were already on the rise and this was before the fall hurricanes hit. And it's not just the cost of weather-driven demands for materials, but the skilled labor that goes along with it.
The report covers the 21 popular remodeling projects in 149 markets with the value those projects retain at resale in 100 U.S. markets.
The chart above, from the Cost Vs. Value Trends Analysis page, illustrates the historical price changes of remodeling costs and the change from year to year from a ROI (Return on Investment) perspective. It is important to note that what has happened recently is that a project that cost about $85K in 2016 will cost close to $100K in 2018. That's an increase of nearly $15K in two years and that does of course play into the lower ROI over this same period. Borrowing money in 2016 at 4% would have cost lest than $6800 over that same period which would have saved the home owner at least $8,200 in just two years not including possible income tax savings.
Even if you're not looking to sell and move anytime soon, you're still looking at reasonable returns. Major bathroom remodels came in at a bit over a 70% recoup of project costs. Be that as it may, the real story here is the rising costs and the essential need to find and keep skilled labor. Waiting year to year on a project is definitely going to cost more which will also impact the "recoup value" on that investment.
However, the return on any investment is more complicated that just the raw numbers. There's the return on enjoyment that can be just as important in factoring in whether a project is worth doing or not.