Cost V.S Value For Remodeling New England Homes 2009
Every year Remodeling Magazine does a great report on what you can expect to see as a return on your 
investment for various projects around the home. The report does an analysis between a specific projects cost and what you can expect as the resale value or what you would re-coup when selling.
This year was no different as Remodeling Magazine sought out Realtors across 80 Metropolitan areas around the United States.
I was fortunate enough to be one of the Realtors interviewed for the article by Jim Corey. Here is an excerpt from the story which discusses how properties that are in turn-key condition fair much better in the current Real Estate environment.
"What is high up on that list is move-in condition. In a booming real estate market, marginal locations move because buyers are willing to invest the time and money into customizing. They think of the investment as part of the long-term cost of the transaction. In lean times, the opposite psychology holds sway. Marginally maintained houses get house Hunter's short shrift."
Bill Gassett ought to know. The Hopkinton, Massachusetts market where he has sold homes for 25 years hit its pricing peak in 2005 and is down about 25% since that time.
“The houses that get most significantly hurt by the market,” Gassett says, “are the ones that haven’t been cared for.”
You can see the full article at Curb Appeal is King. I would like to thank Jim Corey again for the opportunity to be interviewed as getting quoted in a National magazine is always nice:)
Topping the list in 2009's cost v.s value report were items that were most practical. Given the state of the economy people seemed to be more frugal with their money and invested in more of the necessities. Interestingly enough seven out of the top 10 value-yielding projects of the 33 projects ranked by Realtors in this year’s Cost vs. Value Report were exterior projects!
In the charts below you are going to see cost v.s value data for the New England region for both mid level and upscale projects. Some areas of the country will see a difference is in the value recouped for certain projects.
One of the biggest reasons for the popularity of exterior replacements is energy efficiency and tax credits! Introduced this year was the American Recovery and Reinvestment Act tax credit which is available for energy efficiency upgrades, including qualified roof and window replacements. That has helped boost homeowners including buyers and sellers awareness of such improvements.
You will notice below that none of the upscale projects for 2009 had a positive return v.s 2008.
Looking over the data it is safe to say that other than some of the exterior projects shown, kitchen and baths tend to be very good places to invest your money in a home. Just remember even in these high return places you will not be getting back a 100% or more return!
As a Realtor selling homes all over the Metrowest Massachusetts area for the past twenty four years it is
amazing how often I meet sellers who believe there is a one for one return on every dollar they invest in their homes. Some even believe it is more.
The most common things I hear are "how can my home only be worth X when I just spent $60,000 on my new basement" or "I just added this swimming pool for $50,000 my home has to be worth more."
In these examples people believe you can just tack on the amount you spend to the existing value of your home. Well maybe in Florida if you invest $50,000 in a pool you will get it back completely. Here in Massachusetts you would be lucky to get a small percentage of it back.
One of the best ways to think about home improvements is not so much the exact dollar you will recoup but your own personal enjoyment from these items. When it comes time to sell, there are plenty of buyers that will appreciate the improvements you have made if they are tasteful and fit what the general population is looking for.
Now more than ever if you are going to be selling your home it makes sense to put money in places that are going to improve the general appearance of your property. Buyers are very unforgiving today and the homes that are in less than stellar condition are the ones that get punished the most.
If you are thinking of selling your home be sure to read the top ten mistakes to avoid when selling a Massachusetts home. The article gives pointers on such things as staging, taking care of necessary repairs, along with a host of other issues that you can prepare for.
*** According to the survey home owners recouped an average of 63.8 percent of their investment in 33 different home improvement projects, according to REALTORS® who responded to the survey. The expected cost recoup was generally down from previous years in line with the drop in home prices nationally. The return on home owners investment in remodeling projects has declined an average of 3.5 percentage points between 2008 and 2009. That’s down from the 2.7 point drop between 2007 and 2008 and much less than the 5.5 point drop between 2006 and 2007 and the 10.5 point drop from 2005 to 2006.
Click here to see Best remodeling projects cost v.s value 2008.
______________________________________________________________________________________________________
About the Author: The above Real Estate information on best remodeling projects cost V.S value for New England 2009 was provided by Bill
Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.
Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!
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I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.
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Bill - Excellent post and congratulations on being interviewed for the article Curb Appeal is King in Remodeling Magazine.
Thanks Judy. I always look forward to seeing what pays off and what doesn't when it comes to remodeling our homes. It is interesting to see what changes from year to year on the cost v.s value chart.
Bill, congratulations on being one of the chosen for the article. That speaks volumes as to your expertise!
Your post is true for my area here in CT too. We New Englanders are a tough bunch I have to say, and not always following the rest of the country.
If the house has no curb or inside appeal, if it hasn't been maintained, if there are still avocado and or harvest gold appliances in the house, if the shag rug is hiding only subflooring, yet the owner put a pool outside, well, that lowers the price dramatically. And yes, it is so hard to explain why they won't recoup dollar for dollar even when they did the right things. But now I will show them this article, thank you!
I am glad you used the pool example. I tell my sellers that the pool will attract a certain buyer for sure, but NO $ value is added. Appraisers do NOT add money for a pool, no matter how much you spent to put it in. It is just not a worthwhile investment.
I have a friend who works at a kitchen/bath center in Alexandria, VA. Last year was her busiest year ever, seems people are thinking along the right lines there!
Congrats on the interview and the quotes! What you say is definitely true here as there is just too much inventory. Part of buyers looking for the best deal includes the houses in the best shape.
Congratulations Bill. Excellent article full of of timely advice!
Happy New Year Bill.
Congratulations on being chosen for the interview!
It's a credit to your expertise.
Well done my friend!
Andrea ~ it is amazing to see the suprise on people faces when you show them the study that is done by a well respected organization. It seems there are so many folks who believe their improvements can just be tacked on to their bottom line!
Barb, Monica & Craig - Thanks for your compliments and comments on the cost v.s value report. It was nice to be able to do the interview.
Bill - congratulations on the article. Tis sort of information is so useful for folks who improve their homes. So many assume they get 100% back on every thing they do. It's also interesting to see what the returns are in different parts of the country.
Jeff
Hi Bill...Congratulations for being the go to person for What Works in Metro West.
Nothing changes in Victoria it's about Price and curb appeal..that's it...Wow after 35 years something never change.
Cheers
Jeff - The fact that homeowners think they get a 100% return or more on everything they do should be put at the top of a list of "Real Estate myths".
Fred- Thanks. It was nice to do the interview with Jim Corey.
Bill, We have been in the Custom home business for 35 years, must have items come and go so rapidly these days. Recently we have seen the "media Room" go to the way side, people that wanted a projector or 10 foot screen have been happy to buy the H.D. 55" or larger T.V's and forgo the movie rooms. This is a really good list for people looking to stay in their current homes and make improvements.
Bill...you are tops in your area. Congratulations on the article..enjoyed reading.
Bill-Congrats on an excellent written and informative post. Thanks for all your kind words, and I wish you a Happy & Healthy New Year!
Steve - That is interesting because down in my area the fancy finished basement with the high end home theatre is still in fashion.
Rebecca & Joe - thanks for the compliemnts!
Bill, A huge congratulations on the article!! I have to say I'm surprised at some of this. I first thought indoors but would have always thought a new deck would recoup it's value. This is interesting information to know for renovations when you're not sure how long you'll be in that home.
Congratulations Bill. Big congrats and I enjoyed reading ALL of the information.
Curb appeal and price... oh, and jobs would help!
Happy New Year.
Bill I would not have expected the difference in Cost VS Value to have been that far apart.
Well done Bill. The post is full of great information to use this coming year. Congratulations on your interview.
The biggest problem I've seen with remodeled homes for sale is that the owner/seller attempts to recover not only the cost of the remedel but often even a profit on their upgrades.
Homes in my area will usually sell better if they are discounted for condition if in investment price ranges.
Far too many remodels are home owner completed and not properly done.
I never, never recommend that an owner/seller remodel to sell.
Bill - that is great - congrats on the excellent exposure & here's to selling more homes in 2010
Congratulations on the interview. Thanks for sharing this great post.
Bill,
Congratulations on the interview. Some of the results are surprising to me. Sellers frequently think that they'll recover all, and more, of remodeling projects.
Rich
Congrats for the interivew. As you can plainly see it is not about cost but the value from spending the money
Have a great day
Tony
Congratulations on the interview for the article. The information you provided here holds true for our area also. Have been working with a first time buyer and they thought foreclosures were the direction they wanted to go in. Most of the ones that have come on the market needed so much work. They decided that wasn't for them the cost of the improvements weren't worth it. We found an older well loved home that is turn key ready. You get what you pay for.
Woot! out of the park with this one, Mr. Gassett!
I'm going to reblog in a few days. Enjoyment is so often overlooked in remodeling and I hear that comment about what sellers have upgraded all the time, even closet dividers. Please....
Lenn - You are certainly right about that!! I would have to say that investments people make in their homes are one of the most misunderstood parts of Real Estate.
Richard - some of the projects and how little they return were somewhat surprising to me as well.
Randall, Gita, Tony - Thanks for the compliments on the remodeling article.
Diane - Thanks. There are many times where the cost involved with fixing up a home is grossly under estimated and the buyer would have been better off buying the home in turn-key condition.
Missy - Thanks a bunch. I had fun putting this one together!
Bill thanks for the article and congrats on the interview. I am constantly struggling with home owners that overimprove for their price point and want to recoup the entire cost and then some!!
Congrats Bill - Great in-depth post. I refer my clients to material similar to this when they are preparing their home for sale. Happy New Years!
This is great information. Sellers just don't seem to understand how their home improvement projects correlate to reality. Your article points out some changes from what we've seen in the past few years, which we all need to be aware of as well. I would say your list is applicable in most markets.
Bill,
Congrats on the interview....you are the king of your area...that is for sure. I found some of the projects surprising...
Bill,
Similar articles have been posted by others, however, none quite as straightforward and honest as this.
You are not going to get all your money back. So, that means you would be better off to take $10,000 and put it into a bank account.
The critical point here is the "move-in condition". Once that is achieved, then the % return on dollars invested drops below one for one.
Brian
Awesome post as always and congrats on the interview!
Bill - congrats on the article.. you are clearly the right choice for this interview... Happy New Year My friend..:-)
Bill, congratulations and frankly, I'm not surprised they turned to you for expert advice! You da Man!
Thanks everyone for all your comments on the cost v.s value article. The stastics are quite an eye opener and of course give us all great information to advise people on making good decisions.
Hi Bill !
I have forwarded a similar list recently for my area and people truly value this type of info, so great job with compiling such a thorough post ! ... as always :o)
Cheers and Happy New Year my man !!!!
Sheldon :o)
Bill congrats to you!!
I'm sure you'll do a great job.....
All the very best for the great new year!!
Patricia/Seacoast NH
Congratulations on being interviewed! You are definitely someone to watch and listen to - and you have made a difference in my life as a Realtor. Thanks for your good wishes for 2010 - much appreciated - and continued success for you in 2010 - I look forward to reading all about it :-)
Too many time people call after they have completed a remodel and then ask how much it is going to add to the value. Great info.
Bill congratulations on the interview; well deserved. I was just looking at an article on what remodel projects gives the biggest return. Your blog will be very enlightening to anyone considering a remodel prior to selling.
Bill,
Great post and congrats on the article. As a renovation specialist I support great information like this. I will be reblogging this post to spread the word for you.
Thanks,
mike
Bill:
Great points. I have a problem with the premise which is not based on a comparison of existing condition level to a cumulative level where multiple items are upgraded.
What I mean is, if most all remodel jobs yielded less than cost, than how could any one buy an existing home in poor shape and renovate it and make a profit.
There is a factor for existing conditions and the cumulative effect to be considered.
I know how we make these assumptions but It is too much for a comment, maybe a future blog series.
Congratulations on being contacted by Remodeling Magazine for your knowledge.
Many sellers mistakenly do think they should get back at least what they paid for their upgrades/remodels.
Bill, this is an exceptional blog post. Going to see if the DC area is also covered.
Richard ~ I understand the point you are making and in some respect I agree with you. On the other hand most investors try to buy a "fixer upper" at a price that takes into consideration both the cost of the improvements needed along with what they are going to need to make as a profit.
I have seen a few instances over the years where someone who was new to this game did not completely understand these aspects and ended up over paying for the property and making no money.
Everyone thanks for all your compliments on the cost vs value article.
Bill, Jim Corey chose "the Right Realtor" for the article! Congratulations! I agree that an uncared for home does not garner the price it might have, had it looked good. Curb appeal is very important when selling a home and initial first glance! People have a "gut reaction" either way, especially if they are planning on living there. I suspect Florida has similar problems with getting back the amount of money they invested, especially the way the market is now. A seller cannot do enough to make their home appealing in order to get top dollar in this market. Happy New Year to you, Bill!
Congrats on the interview and quote, Bill!
Question about your first chart (mid-range). The first line item indicates an increase for attic bedrooms versus the previous year, but the numbers appear to indicate a decreaase. Am I missing something here?
Karen - Thanks! The interview with Jim Corey of Remodeling Magazine was great.
Sally - You are correct and of course you were very astute to pick up on that!
Nice summary, Bill. We get asked questions pertaining to remodels/return on investment all the time.
Bill have a terrific 2010 I know you will achieve your goals. I wish you were coming to NYC.
Hi Bill! Congrats on the featured article! After 25 years of serving Hopkinton, you ARE the resident expert! Great list of remodeling cost vs. value. Kithens and baths always bring the most value when done properly.
Hope you have a wonderful 2010! Happy NEW YEAR!
Bill It is not surprising that your article was featured - they are always well written, but most importantly, they are informative. I also stopped by to wish you a Happy, Healthy and Prosperous New Year.
Congrats on the interview. They couldn't have chosen a better expert to ask. Sending you my best wishes for a joyous and successful New Year!
Bill--I love this report and seeing how improvements are different for different markets...Not all consumers realize this...Good application of the data to your market!
Thanks again everyone for all your comments on this years cost v.s value report for home improvements!
Bill - Congrats for being selected as one of the real estate professionals interviewed. I liked your quote about the reasons why a well maintained home is valued more in a buyer's market than in a seller's market. I agree that kitchens and baths provide the biggest return on investment. No one wants to go through the inconvenience involved in those remodels.
Bill - Wowsa ! There is some great data here ! First, congrats on being quoted in that national article ! That is awesome. They certainly choose to right person to interview ! Second, thanks for providing this data. You are right in that most sellers believe that there house is worth more after they invested so much money into it and that they think the return is more than 100 percent when in fact, it rarely is. The biggest benefit for them is the personal enjoyment over the improvement and/or renovation. And when it comes time to sell, in this market, the good news is that if priced right, it will sell before the competition. ~ Chris
Bill - I'm a little late to the dance but congratulations on the feature and on the magazine article. I live in a neighborhood where, fortunately, no one does tear downs, choosiing instead to renovate charming bungalows, Cape Cods and Sears kit homes. And the payoff is terrific.
Michael
Bill...you seem to have the right disposition for remodeling...and congratulations on being interviewed...
Gail, Chris, Michael, and Cherise - Thanks for all your comments about the interview with Remodeling Magazine. Jim Corey was kind enough to allow me the opportunity to be quoted in his article. The information that comes out year to year is always interesting.
Hi Bill, Congratulations on being chosen for the interview. I found this post to be very interesting.
Bill, what a great and informative post and I went to the original too - great opportunity to get interviewed and speaks volumes about your knowlegde and credibility. I even skimmed and saved the study he mentions from Harvard - really interesting stuff. thanks for the info.
Bill, some of those numbers were amazing to see what a lack of return on investment there is/was. Hoping many many consumers in your area come across this info prior to making some costly mistakes! Great info as always.
Bill, congratulations on another well-written, informative Feature. You are so right, sellers imagine that dollor for dollar they will get their money and sometimes more back by upgrading their home. It is a frequent discussion in listing appointments.
In north Florida, people only get about 25-30% of what they put in a pool. In Orlando, they could recoup 50-70%. In South Florida it's probably more. I was so surprised about N FL after living in Orlando for 8 years, but that's what it is.