To say there's a glut in the housing market is a vast understatement as anyone who's thought about putting a home on the market lately will confirm. With so many homes in foreclosure and others sitting empty or greatly reduced, it remains a buyer's market.
Therefore, if you were thinking about selling your home you might be tempted to spend a little money on upgrades with the hopes of recouping that investment when you sell your home.
If that's your strategy, you can stop right there. A new survey by Remodeling magazine in partnership with the National Association of Realtors (NAR, not to be confused with the NRA or National Rifle Association) found that no upgrade will earn back 100% of the money you spend.
In fact, the best you'll do is 80% and that's if you install new fiber-cement siding, which costs an average of $13,382.
You can be fairly certain that any remodeling will cost you a lot more than what you get back in return when you sell your home. On average, the most you'll recoup is about 60%. And this year is worse than last. A homeowner doing a remodeling job recouped, on average, 16% less value than they had in 2009, the steepest slide the survey has recorded in its nine-year history. This happened despite the fact that construction costs declined for the first time since 2004.
Adding a new mid-range bath, for example, returned nearly 100% of its $15,000 cost back in 2003. Today, the same job costs more than $40,000 and only returns about half its cost.
The report said that exterior improvements mostly performed better than interior ones, owing to the necessity of maintaining a home's "curb appeal." Lawrence Yun, chief economist for NAR said that "in today's buyer's market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside."
In general, the more spent for a job, the lower the percentage of return. That's apparent in comparing kitchen remodels. A mid-range kitchen remodel costs nearly $60,000 and returns just 70% of that expense at resale. A high-end renovation adds just 60% of its $113,000 cost.
The lowest return of any job was for a midrange home office renovation, which cost an average of $28,888 and added $13,235, just 45.8%.
But even low cost exterior improvements do well. An exterior steel door replacement returned 102% of its $1,218 cost and new garage doors recoup 84% of theirs.
Two jobs tied for the best return on any midrange remodeling investment costing more than $10,000. Adding a wood deck or doing a minor kitchen remodeling, which involves replacing cabinet doors and counters, buying new appliances, sinks and faucets and repainting walls and trim, both recouped 72.8% of their costs.
Here are a list of various home improvement jobs followed by how much they cost, how much they recouped and the 80% of the recoupment.
- Fiber-cement siding $13,382, $10,707, 80.0%
- Wood deck $10,973, $7,986, 72.8%
- Minor kitchen remodel $21,695, $15,790, 72.8%
- Vinyl siding replacement $11,357, $8,223, 72.4%
- Wood window replacement $12,027, $8,707, 72.4%
- Upscale bath addition $78,409, $41,562, 53.0%
- Master suite addition $232,062, $122,370, 52.7%
- Sunroom addition $75,224, $36,540, 48.6%
- Back-up power generator $14,718, $7,136, 48.5%
- Home office remodel $28,888, $13,235, 45.8%
