Cost VS Value Report

 

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2013-14 Cost vs. Value: Remodeling Pays Off Big Time

2013-14 Cost vs. Value: Remodeling Pays Off Big Time

Home improvement projects across the board are giving home owners a greater return on their investment when it comes time to sell. Find out which projects “open the door” to buyers and where remodeling dollars stretch the furthest.

As existing-home sales and home prices make remarkable strides upward nationwide, remodeling projects are also continuing to make a comeback in a big way.

This is the second year in a row that all 35 projects inRemodelingmagazine’s Cost vs. Value Report saw more home improvement dollars recouped upon resale of a home than the previous year.

Existing-home sales reached 5.02 million in 2013, a 9.1 percent increase from 2012, according to the National Association of REALTORS®. Home prices also rose in 2013: Existing homes commanded a median price of $197,100, up 11.5 percent from the 2012 median price of $176,800. This is the largest price gain since 2005.

Also for 2013, the cost-value ratio of remodeling projects nationwide averaged 66.1 percent, up 5.5 points over the previous year — which is, like median price, the largest increase since 2005.

Remodels That Payoff

The fan favorite in the 16th annual Cost vs. Value Report, which was released this month, was again the steel door entryway. Topping the list last year as well, this project is ideal for clients considering a quick update to the curb appeal of a home. The survey shows that a new steel door, with an average cost of $1,162, will recoup 96.6 percent of the remodeling cost at resale.

Making the biggest gain in percentage of recouped costs was the addition of a backup power generator. This project, averaging $11,742, jumped 28 percent in estimated resale value, recouping 67.5 percent of its cost in 2013. Usually at the bottom of the list, this project now ranks 25th out of the 35 projects. The increase is attributed in the report to 2013’s “unpredictable weather and multiple large storms.”

Regional Trends

The report also shows where remodeling dollars go the furthest.

Topping the list for remodeling costs recouped upon resale were Honolulu and San Francisco, at 110.8 percent and 109.4 percent, respectively. San Jose, Calif., came in third, with just shy of 100 percent of remodeling costs recouped on average. San Diego came in fourth, with 89.8 percent of costs recouped at resale; and fifth was Bridgeport, Conn., bringing in 85.9 percent of remodel costs at resale.

Also signifying distinct improvements over last year, seven of the country’s nine regions outperformed the nationwide cost-value average of 66.1 percent.

Holding onto their positions as the top two regions for recouping remodeling costs were the Pacific (Alaska, California, Hawaii, Oregon, and Washington), with an 88 percent cost-value ratio, and West South Central (Arkansas, Louisiana, Oklahoma, and Texas), with a 76.4 percent cost-value ratio.

The award for most improved region could go to New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), which moved from sixth to third this year with an overall cost-value ratio of 74.6 percent.

The two regions that held lower cost-value ratios than the national average were the Middle Atlantic (New Jersey, New York, and Pennsylvania) and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), with cost-value ratios of 63.2 percent and 57.3 percent, respectively.

Top Projects

If your clients are considering a home improvement project to boost the quality and appeal of their home, pass on this list of top 10 midrange and upscale projects from the 2013-14 Cost vs. Value Report:

Top 10 Midrange Projects

1. Entry Door Replacement (steel)
Job Cost: $1,162
Resale Value: $1,122
Cost Recouped: 96.6%

2. Deck Addition (wood)
Job Cost: $9,539
Resale Value: $8,334
Cost Recouped: 87.4%

3. Attic Bedroom
Job Cost: $49,438
Resale Value: $41,656
Cost Recouped: 84.3%

4. Garage Door Replacement
Job Cost: $1,534
Resale Value: $1,283
Cost Recouped: 83.7%

5. Minor Kitchen Remodel
Job Cost: $18,856
Resale Value: $15,585
Cost Recouped: 82.7%

6. Window Replacement (wood)
Job Cost: $10,926
Resale Value: $8,662
Cost Recouped: 79.3%

7. Window Replacement (vinyl)
Job Cost: $9,978
Resale Value: $7,857
Cost Recouped: 78.7%

8. Siding Replacement (vinyl)
Job Cost: $11,475
Resale Value: $8,975
Cost Recouped: 78.2%

9. Basement Remodel
Job Cost: $62,834
Resale Value: $48,777
Cost Recouped: 77.6%

10. Deck Addition (composite)
Job Cost: $15,437
Resale Value: $11,476
Cost Recouped: 74.3%

Top 10 Upscale Projects

1. Siding Replacement (fiber-cement)
Job Cost: $13,378
Resale Value: $11,645
Cost Recouped: 87.0%

2. Garage Door Replacement
Job Cost: $2,791
Resale Value: $2,315
Cost Recouped: 82.9%

3. Siding Replacement (foam-backed vinyl)
Job Cost: $14,236
Resale Value: $11,124
Cost Recouped: 78.1%

4. Window Replacement (vinyl)
Job Cost: $13,385
Resale Value: $10,252
Cost Recouped: 76.6%

5. Window Replacement (wood)
Job Cost: $16,798
Resale Value: $12,438
Cost Recouped: 74.0%

6. Grand Entrance (fiberglass)
Job Cost: $7,305
Resale Value: $5,163
Cost Recouped: 70.7%

7. Deck Addition (composite)
Job Cost: $35,158
Resale Value: $22,881
Cost Recouped: 65.1%

8. (tie) Bathroom Remodel
Job Cost: $51,374
Resale Value: $32,660
Cost Recouped: 63.6%

(tie) Major Kitchen Remodel
Job Cost: $109,935
Resale Value: $69,973
Cost Recouped: 63.6%

9. Roofing Replacement
Job Cost: $34,495
Resale Value: $21,731
Cost Recouped: 63.0%

10. Bathroom Addition
Job Cost: $72,538
Resale Value: $43,936
Cost Recouped: 60.6%

The data used in the Cost vs. Value Report was collected with the help of REALTOR® Magazine in an online survey between August and October 2013. More than 4,500 NAR members participated from 101 U.S. cities, up from 81 cities included in last year’s survey.

Visit www.costvsvalue.com to find information from the 101 cities included in the survey and download free PDFs that include specific metro-area market data. (Site registration is required.) Also visit HouseLogic.com for a slide show of the report’s results.

Construction cost estimates were generated by RemodelMAX. Cost vs. Value is a registered trademark of Hanley Wood, LLC.

2013-14 Cost vs. Value: Remodeling Pays Off Big Time.

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Where Prices are Headed over the Next 5 Years?

Where Prices are Headed over the Next 5 Years?

Posted: 10 Mar 2014 04:00 AM PDT

Home-Price-Expectation-275Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter,Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey

The latest survey was released last week. Here are the results:

  • Home values will appreciate by 4.5% in 2014.
  • The average annual appreciation will be 3.94% over the next 5 years
  • The cumulative appreciation will be 19.7% by 2018.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of almost 11% by 2018.

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

 

 

Where Prices are Headed over the Next 5 Years?.

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Rent Or Buy?

Population Distribution

Buying a Home is 38% Cheaper Than Renting

Homeownership remains cheaper than renting in all 100 metro areas.
Read Trulia Trends

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Moving-Up? Do it NOW not Later

The lack of inventory has caused many houses to sell for more than they should , ulimatley causing home prices to rise.  Interest rates are bound to go up as well.  For those home sellers looking to purchase a larger home waiting until next year may result in a either a smaller home or a larger payment

 

Moving-Up? Do it NOW not Later

urgency

A recent study revealed that the number of existing home ownersplanning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.

There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.

Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down they would get a mortgage of $360,000). By waiting, their house appreciated by 13.8% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $341,400. But, the $400,000 home would now be worth $455,200 (requiring a mortgage of $409,680).

Here is a table showing what additional monthly cost would be incurred by waiting:

Move Up Cost of Waiting (2)

Prices are projected to appreciate by over 4% and interest rates are also expected torise by as much as another full percentage point. If your family plans to move-up to a nicer or bigger home this year, it may make sense to move now rather than later.

____________________________________________________________________

Moving-Up? Do it NOW not Later.

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Mortgage Rates Projected to Rise as Tapering Continues

Mortgage Rates Projected to Rise as Tapering Continues


Mortgage Rates Projected to Rise as Tapering Continues

Posted: 18 Feb 2014 04:00 AM PST

It is projected that if the Fed continues to cut back on bond purchases that long term mortgage rates would start to climb. Many experts felt that Janet Yellen, who replaced Ben Bernanke as Fed Chair, was going to be less inclined to continue tapering bond purchases at the level established.

However, in her testimony in front of the Financial Services Committee last week, Yellen made it quite clear that she will in fact continue the current pace of tapering:

“In December, the Committee judged that the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions warranted a modest reduction in the pace of purchases, from $45 billion to $40 billion per month of longer-term Treasury securities and from $40 billion to $35 billion per month of agency mortgage-backed securities. At its January meeting, the Committee decided to make additional reductions of the same magnitude. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings.”

What does that mean to a prospective purchaser? Currently, Freddie Mac’s 30 year rate is at 4.28%. Here are the projected interest rates for this time next year:

2.18 Visual.2

 

 

Mortgage Rates Projected to Rise as Tapering Continues.

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What it Cost if You Waited to Buy

These are based on national numbers.  In our market, homes are closer to the $500,000 range.  The difference can equate to thousands per year.

 

What it Cost if You Waited to BuyCost-of-Waiting.jpg

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The Impact of Increasing Mortgage Rates on Prices

Many people are predicting we should see a rise in interest rates this year.  If so, this will have an effect on a buyers purchasing power. Many experts are saying this can have a negative effect on prices, however there maybe more to it.  It looks like in recent history, higher interest rates are associated  with a better economy, leading to stronger real estate market.

For first time homebuyers or  “move up” buyers, it may be worth buying soon to avoid the increase in cost  on both ends.

 

The Impact of Increasing Mortgage Rates on Prices.

The Impact of Increasing Mortgage Rates on Prices

Posted: 14 Jan 2014 04:00 AM PST

blue interest ratesMany pundits are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past.

Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:

Dates

Mortgage Rate

Home Values

May ‘83 – July ‘84

12.63 – 14.67

+ 6.6%

March – Oct ‘87

9.04 – 11.26

+ 5.2%

Oct ’93 – Dec ‘94

6.83 – 9.2

+ 1.2%

April ’99 -May 2000

6.92 – 8.52

+ 10.9%

Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.

 

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Annual Market Report for Houses Sold in Reading 2013

ReadingAnnual

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Predictions for 2014: Supply Will Struggle to Keep Up with Demand

With a dramatic increase in demand for housing expected this year, it will be up to real estate professionals and builders to make sure there is the necessary inventory to satisfy this demand. This will be a challenge for much of 2014.

For a balanced real estate market, there should be approximately 5-6 months of inventory for sale (example: if 100 homes sold last month, we would need 500-600 homes available for sale). Nationally, we are just now hitting the five month level. As the spring selling season begins to heat up, a new wave of housing inventory would have to come to market to keep up with the increasing demand of buyers.

If we couple this seasonal increase with the other dynamics that will increase demand for housing in 2014, we believe that housing inventory could drop substantially. This, in our opinion, is the biggest threat to a full blown surge in sales this year.

Some experts have looked at the recent monthly decline in existing home sales nationally as evidence that a lack of consumer confidence or the increase in interest rates has buyers back up on the fence. However, a closer look at existing home sales reveals that sales remained unchanged in one of the four regions of the country (the Midwest) and actually increased in two other regions (the Northeast and the South). The only region that had a decrease in sales was the Western region (down over 10%).

If it was a matter of consumer confidence or mortgage rates, there would have been a similar decrease in sales throughout all four regions. The fall-off in sales in the West is directly attributable to a lack of salable inventory in the hottest markets in the region.

It is up to the builders and real estate agents in each community to make sure this doesn’t happen.

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