The 2010-11 Hanley Wood report of Cost vs Value for remodeling projects has has been released and we would like to highlight some of it for you, and in doing so, generate some food for thought. To view the full report, follow this link. It will provide you with information for regions and cities across the US. For more detailed information regarding specific neighborhoods within the Austin community, contact GreenTex Builders.
Reports issued by Remodeling (remodeling.com), an industry source, have provided some interesting numbers for Central Texas residents to mull over. In their 2010-11 Cost vs. Value report, hypothetical estimates and projects are pieced together by researchers and an assessment of the project cost vs. the value at sale are compared to give a percentage of the total cost recouped. It should be noted that while the report provides us with a pretty accurate picture of the housing market, it is stressed that it should not necessarily be used for interpretation in an individual project, as the numbers vary widely based on your city, your neighborhood, and on your own specific material selections.
The news is not what most what consider favorable, but there is always good in the bad. At a national level, the cost-to-value ratio of projects is at it’s lowest level this decade. Though the report indicates that 2010 saw lower construction costs, sagging home values continued to push the cost/value percentage down, and the real estate market has remained slow despite low mortgage rates because of continuously tight lending practices and uncertain foreclosures. The numbers, however, are not as low for all. The numbers have shown that out of the nine regions the report divides the nation into, the West South Central Region (TX,AR,OK,LA) is figuring out how to keep the Cost vs. Value numbers more favorable than other regions in the country. At the local level, the report is also finding that the numbers for Austin,TX well exceed the national averages and are typically higher in most categories than the West South Central percentages as well.
The report breaks down many different types of home improvements ranging from a steel entry door replacement or deck addition to a master suite addition or a major kitchen remodel. The cost vs. value numbers for 2010 have shown that the highest percentages of cost are being recouped for exterior improvements like door and siding replacements, deck additions, and window improvements. The numbers in the report are highest for a steel entry door replacement. Nationally, the numbers reported show an average job cost of $1,218 and a value at sale of $1,243, resulting in 102.1% of cost recouped. Numbers for the West South Central regions and Austin, TX are better because of slightly higher resale value and significantly lower job costs. Cost recouped for West Central South region is reported as being 116.6% and a whopping 138.8% for Austin.
The lower percentages recouped in the report across the board are represented in the more costly and less common major improvements such as the additions of sunrooms and master suites, and the remodel of rooms like the home office. Improvements such as these recouped only about half of their value at sale at costs to the homeowner well into five or six figures.
There are a number of ways one could interpret these numbers, but overall, we would like for you to take into consideration the idea that resale value should not be the decision guider when investing in your home. While the stars of Flip This House may strongly oppose the idea, there are other factors in home investment that should not be driven by monetary gain. From a sustainably-minded, and simply logical perspective, your home should be built to function for your long-term lifestyle and needs. Consider this intentionally over-blown scenario. Imagine a place where everybody purchased houses and renovated them in the interest of fattening their pocketbook and moving on to the next project. Everybody supported the trend in many minds that bigger is better, and that to have real value a home should come with exotic wood offices, a swimming pool, a sunroom, and a shower for every person. On top of generating higher levels of construction debris into the waste stream than we already have, excessive energy use heating and cooling massive houses with infrequently used spaces, what would happen to our lifestyle and sense of community?
Wood-clad steel doors represented the highest return and can boost home efficiency.
One of the things that we really like about the report is that improvements that contribute to the base level function of a home are still seeing significant recouped percentages. Doors, siding, windows. Just as the human skin is your largest organ, and one of the most vital, a healthy and well built home must have a well-functioning exterior shell to ensure longevity and quality of life. This report shows that you will see the highest return for installing a steel entry door. For an Austin resident to see 138% return on a steel door is fantastic, because replacing an old door with a high-quality steel door will also generate dollars on top of the ROI in the form of energy savings generated by the tighter seal wood-clad steel doors offer and the higher insulating values they achieve when compared to wooden doors. Small exterior improvements like these can save you big. If you have further questions, or if you would like more information on how you might be able to improve the function, and possibly the value, of your home, contact us today.
More on this topic to come.