2013-14 Cost vs. Value: Remodeling Pays Off Big Time
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.”
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.
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)
2. Deck Addition (wood)
3. Attic Bedroom
4. Garage Door Replacement
5. Minor Kitchen Remodel
6. Window Replacement (wood)
7. Window Replacement (vinyl)
8. Siding Replacement (vinyl)
9. Basement Remodel
10. Deck Addition (composite)
Top 10 Upscale Projects
1. Siding Replacement (fiber-cement)
2. Garage Door Replacement
3. Siding Replacement (foam-backed vinyl)
4. Window Replacement (vinyl)
5. Window Replacement (wood)
6. Grand Entrance (fiberglass)
7. Deck Addition (composite)
8. (tie) Bathroom Remodel
(tie) Major Kitchen Remodel
9. Roofing Replacement
10. Bathroom Addition
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.
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: