by Sandy Griffis, Executive Director, Yavapai County Contractors Association
Aword to the wise about home improvements. Home improvements that seem like a great idea up front sometimes do not justify their worth in terms of your home’s overall value. Home value is vital when it comes time to put the home up for sale, and even homes not up for sale need to maintain or increase their value.
That brings up the “cost vs. value” concept.
What is this you ask? Cost vs. value is a general concept seeking to find the right balance between the cost of an item and its overall benefit. It is connected to most everything in life, and this month we are going to talk about home improvement cost vs. value.
Garage conversions are a prime example of projects that typically have a very low cost-to-value rating. Costs are high because many subprojects are involved including electrical, flooring, insulation, lighting and more. Yet from a resale standpoint, garage conversions have a very low resale value and may even have a negative value if the buyer wants to turn the space back into a garage. So, a garage conversion would be deemed to have low overall value.
There is an annual Cost vs. Value Report published at www.costvsvalue.com. This is an annual set of home remodeling estimates that has become an industry classic. Since 2002, Remodeling Magazine and its counterpart Remodeling Online, published by Hanley Wood, has created estimates of home remodeling projects against the background of their value. Here are two representations of the cost vs. value taken from www.costvsvalue.com. To see every project type, please go to the website.
BATH REMODEL — MIDRANGE
- Update existing 5×7-foot bathroom
- Replace all fixtures to include 30×60-inch porcelain-on-steel tub with 4×4-inch ceramic tile surround
- New single-lever temperature and pressure-balanced shower control
- Standard white toilet
- Solid-surface vanity counter with integral sink
- Recessed medicine cabinet with light
- Ceramic tile floor
- Vinyl wallpaper
The average job cost in the Phoenix area for this improvement is $20,142.
The resale value for this improvement is $13,765, with a cost recoup factor of 68.3%.
The national average for this same improvement is $21,377.
The resale value nationally for this improvement is $13,688, with a cost recoup factor of 64%.
BATH REMODEL — UPSCALE
- Expand existing 35sf bathroom to 10 sf within existing house footprint
- Relocate all fixtures
- Include 42×42-inch neo-angle shower with ceramic tile walls with accent strip, recessed shower caddy, body-spray fixtures and frameless glass enclosure
- Include free-standing soaker tub with high-end faucets
- Stone countertop with two sinks
- Two mirrored medicine cabinets with lighting
- Compartmentalized commode area with one-piece toilet
- Humidistat-controlled exhaust fan.
- Use all color fixtures
- Use larger matching ceramic tiles on the floor laid on diagonal with ceramic tile base molding
- Add general and spot lighting including waterproof shower fixture
- Cabinetry has custom drawer base, wall cabinets
- Extend HVAC, electric in floor-heating
The average job cost in the Phoenix area for this improvement is $63,520.
The resale value for this improvement is $40,731, with a cost recoup factor of 64.1%.
The national average for this same improvement is $67,106.
The resale value nationally for this improvement is $37,995, with a cost recoup factor of 56.6%.
Two takeaways for any homeowner intent on remodeling: 1.All remodeling projects depreciate in value and almost no projects return 100% on the investment. 2. Remodeling projects decline in value over time for a number of reasons — trends change, technology improves, items break and items wear down. Projects do not return their cost, and in most cases return far lower than their actual cost.
The biggest bang-for-the-buck improvement return on investment over the past 15 years is installing manufactured stone veneer. Nationally, this improvement came in with a 93% return. If you are building a new home, manufactured stone will certainly add value. And, if wanting to improve the curb appeal, installing it on a manufactured home as an exterior “dressing” will add value. Manufactured stone has continually been followed by a garage door replacement at 92%.
As a general rule, the simpler the project and the lower cost of the project, the larger the cost-value ratio. Simpler projects tend to require less time and skill by a professional remodeler. It stands to reason that it’s far easier to replace a steel entry door than it is to design, source and build a two-story addition.
Replacement jobs — such as door, window and siding projects — will generate a higher return than remodeling projects. That’s been the case since at least 2003. Replacement projects averaged a return of 75% plus.
Remember to tune in to YCCA’s Hammer Time aired twice each weekend Saturday and Sunday morning at 7 a.m. on KQNA 1130 am/99.9 FM and 95.5 FM or the web at kqna.com. Listen to Sandy and Mike talk about the construction industry and meet your local community partners. A wildly fun local show.