As expected, this year’s report shows significant changes in remodeling project values due to pandemic-related cost increases across the board.
The report answers a single question: What value does a particular remodeling project add to the sale price of a home?
While it gives you some general idea of what projects cost last year in your area, it does not tell you if what you are about to spend is too high, too low or a great deal. It does not tell you how unforeseen obstacles in your remodel; the existing condition of your home or your unique tastes will impact your budget.
Since the report measures the ratio of value over cost, those projects that saw the least amount of material cost increase show the highest value. That is why exterior remodels continue to show the highest (ROI) return on investment or resale value, although interior projects, such as kitchen remodels, still show a significant return on the remodeling investment.
The top three remodeling projects were garage doors, siding, and minor kitchen updates.
“Curb appeal is always going to rate high because of its first impression impact and how that colors homeowner perception once they get into the house,” explains owner John Murphy. “A shabby looking front entrance can detract from a kitchen facelift, but the opposite is also true. A beautiful new entrance can also ramp up the impact of that same kitchen upgrade.”
In the final analysis, remodeling is still one of the most subjective endeavors anyone can undertake. “Most remodeling is discretionary,” says Murphy. “And discretionary spending is very personal. So too is the value of that remodel. For some, it is primarily done to increase the value of the home, but for others, it has nothing to do with that. It’s what makes their lives better. If that also increases the eventual sales price, well, so much the better.”
Unlike the other previous 33 annual reports, the 2021 report, uses a new econometric methodology, which allows you to drill down per individual zip code to further understand costs and values in your immediate area. Previous reports relied on realtor surveys. This year’s report analyzes a range of other variables, including local (GDP) Gross Domestic Product, housing starts, existing home sales, existing home values, changes in existing home sales, and existing home values.