Home Improvements as Investment – 2005 vs 2009
Remodeling Projects No Longer Necessarily Have High ROI
For the past 22 years, Remodeling Magazine has looked at the relationship between remodeling costs and resale value. I’ve included a table, below, that compares the national averages for projects across regions for the years 2009, 2007, 2005, and 2003. Find the 2009 Report Here.
In 2005, during the height of the housing boom, you could recoup 90% to 100% of your cost for many home improvement activities. And in hot areas – such as Washington, DC where I practice – you could recoup more than 100% of your cost on kitchen and bath remodeling as well as many outdoor rooms.
Today the picture is quite different; the national averages show few home improvements return more than 80% of their cost and most return between 60-70%.
| 2009 Job Cost |
% of Cost Recouped at Resale | ||||||
| 2009 | 2007 | 2005 | 2003 | ||||
| Mid-Range Projects | |||||||
| Additions | |||||||
| Deck Addition (wood) | $10,634 | 81% | 85% | 90% | 104% | ||
| Deck Addition (composite) | $15,373 | 71% | |||||
| Two-Story Addition | $156,309 | 69% | 74% | 95% | |||
| Family Room Addition | $82,756 | 65% | 69% | 83% | 81% | ||
| Master Suite Addition | $103,696 | 65% | 69% | 82% | 76% | ||
| Garage Addition | $58,432 | 62% | 70% | ||||
| Bathroom Addition | $39,046 | 60% | 66% | 86% | 95% | ||
| Backup Power Generator | $14,304 | 59% | 58% | ||||
| Sunroom Addition | $73,167 | 51% | 59% | 75% | |||
| Remodeling | |||||||
| Attic Bedroom | $49,346 | 83% | 77% | 94% | 93% | ||
| Minor Kitchen Remodel | $21,411 | 78% | 83% | 99% | |||
| Basement Remodel | $62,067 | 75% | 75% | 90% | 79% | ||
| Major Kitchen Remodel | $57,215 | 72% | 78% | 91% | 75% | ||
| Bathroom Remodel | $16,142 | 71% | 78% | 102% | 89% | ||
| Home Office Remodel | $28,375 | 48% | 57% | 73% | |||
| Replacement | |||||||
| Siding Replacement (vinyl) | $10,607 | 80% | 83% | 96% | 98% | ||
| Window Replacement (wood) | $11,700 | 77% | 81% | 90% | 85% | ||
| Window Replacement (vinyl) | $10,728 | 77% | 79% | ||||
| Roofing Replacement | $19,731 | 67% | 67% | 85% | |||
| Upscale Projects | |||||||
| Additions | |||||||
| Master Suite Addition | $225,995 | 56% | 64% | 80% | 77% | ||
| Garage Addition | $87,230 | 56% | 65% | ||||
| Bathroom Addition | $75,812 | 58% | 69% | 86% | 84% | ||
| Deck Addition (composite) | $37,745 | 61% | 78% | ||||
| Remodeling | |||||||
| Major Kitchen Remodel | $111,794 | 63% | 74% | 85% | 80% | ||
| Bathroom Remodel | $52,295 | 62% | 68% | 93% | 93% | ||
| Replacement | |||||||
| Roofing Replacement | $37,359 | 61% | 66% | 86% | |||
| Window Replacement (wood) | $17,816 | 72% | 79% | 89% | 87% | ||
| Window Replacement (vinyl) | $13,862 | 77% | 81% | ||||
| Siding Replacement (fiber-cement) | $13,287 | 84% | 88% | 104% | |||
| Siding Replacement (foam-backed vinyl) | $13,022 | 79% | 80% | ||||
It’s also clear that we’re thinking more modestly about our homes and looking for home improvement projects to return other benefits – so the return on siding and window replacement, while declining, have held more steady than have bath or kitchen remodeling.
Bathroom remodeling – whether mid-range or upscale, mid-range or upscale – have lost between 27% and 30% of the return from just 4 years ago. However, Wood decks, window and siding replacement have retained much more of their resale value since 2005 than have other improvement activities.
When you’re thinking of remodeling it’s important to understand how much value your investment is likely to return – but few of us make our decisions based only on return on investment. Moreover, the numbers here are national averages. It does not speak to your specific circumstance.
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