Note: An old story — but this research is updated annually!
How much money will you make on that lovely new kitchen or bathroom when you go to sell your house? Oopsy — likely not one penny. In fact, according to the 2011–12 Remodeling Cost vs. Value Report (www.costvsvalue.com), released last week, you will lose 30-35% — or more — on most home remodeling projects, even “mid-range” ones. This gap is the worst in nine years, since the survey began in 2003. For example, a “minor” $19,588 kitchen remodel? Expect not to recoup — that is, expect to lose — more than $5,000 on that “investment” when you go to re-sell. Debbie Downer reports…
This much-cited Remodeling Cost vs. Value research report is completed annually by Remodeling Magazine, and includes data gathered in collaboration with HomeTechPublishing, the National Association of Realtors and Realtor Magazine. It looks at 35 popular home remodeling projects, year after year, to assess the returns (read: losses) of each project upon resale. The magazine does a really nice job reporting the data and explaining the survey on their website — see it here for info on costs vs value for each project.. and there are regional reports, too. Ugh, I think that I am also reading that the gap between remodeling costs and value recovered on resale (loss) is the worst since the research was started in 2003.
One of the biggest pet peeves in my life, I’m serious,
is the way these findings are soft-pedaled every year
For example, Reuters covered this 2011 Cost. vs Value report, and here is one of their sentences:
Remodeling projects earn back 57 percent, on average.
True enough. So I cannot argue. But, this is definitely a “glass half full” way to state the findings.
Hey, let’s pretend they were talking about the U.S. stock market — say, the Dow Jones Industrial index — instead. Would we see this headline:
The Dow Jones Industrial Average earned back 57% last year.
Or this one:
The Dow Jones Industrial Average plummeted 43% last year (sending the world into another global Great Depression.)
I repeat, hitting thee over the head: ‘Earning back 57%’…means you just lost 43%. Every project, every situation is going to be different, but taking these numbers at face value, chances are, you are not improving your home’s value with remodeling projects if you count the money you put into the update. You are going to come out with le$$, not more $$.
In other parts of the Reuters article, the message was ‘more in your face’ about the gap. But to me, the story did not seem ‘alarmist.’ It was kind of… peppy. Ack! These numbers are dismal, shocking. Even in “bubble days,” the return was only 76%, that is: The loss was 24%. Am I missing something?
One of reasons this blog’s tagline is “Love the house you’re in” is that I *think* I have long understood that unnecessarily “updating” your home to reflect what is trendy today is not a particularly sound financial investment. In fact, what’s trendy today… will likely be ‘hideous’ in about 10 years. In the same vein, I also read somewhere that even getting the 50%-80% return/20%-50% loss indicated by these figures assumes near-immediate resale… that is, today’s updates begin to depreciate, immediately. So, contrary to a lot of what’s in the mainstream: We talk here about keeping your “outdated” vintage bathrooms and kitchens, if they are in good shape. And if renovations are required, I am an advocate in choosing styles that are harmonious with the original architecture of your home — in this way, your interiors will be “dated” to match the date of your house.
Spend money on your house? Of course! Americans love their homes, and are likely to continue to want to improve and update them. Moreover, a home can be one of the greatest life-investments you will ever make — in creating memories for yourself, family and friends… for providing a creative outlet… for building and being part of a community. So, you will want to make it “yours.” But, get back all the money you put into the modern new kitchen and then some? No no no! Read the report, and be thoughtful and realistic about the goals of your remodeling projects … unless money is just not an issue.
Data cited © 2011 Hanley Wood, LLC. Complete data from the Remodeling 2011–12 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.
Debra Belton says
Hi,
I’d like to get your opinion on removing the vinyl siding from my 70’s ranch mid century cedar home. The previous homeowner had it installed to reduce maintenance so its about 18 years or so old. I hate it! Any suggestions, yay or nay?
pam kueber says
Debra, I am not an expert on such things.
Jill says
I’ve been trying to find information that addresses this very subject. I was looking to remodel the kitchen in my 23 year old condo. It’s the original kitchen with plain boring painted cabinets, tile countertop, lowered ceiling. I couldn’t justify spending $28-30,000 on a remodel for a place I will be selling in 6 or 8 years. From what I read, the return on investment on kitchens is 67%-89%, so essentially I’d be losing $3300 to $11000. I keep thinking “why would I do this?” This is not my forever home, why should I essentially give this money away to the next owner? Just to make the place sell faster? I can’t seem to find a reason why I should suck up this financial investment. Why doesn’t anyone talk about this? Seriously, I’m not asking a rhetorical question; why would I do this?
My condo has a lot going for it already: highly desirable location, hardwood floors, and 2 extras: deeded extra parking in garage, 1 of 2 units (out of hundreds in complex) with extra giant private patio. An identical unit without the 2 extras has it’s kitchen redone and is trying to sell for $348,000. I bought for $232,000 14 years ago.
Please give me an opinion on this logic: I’m just going to make sure the current builder’s grade kitchen is in good shape along with the rest of the condo (fix/replace wear & tear), then sell it for what the market will bear.
pam kueber says
Yes, this is why I wrote the story — no one in mainstream media talks about this — but I do! THE NUMBERS DO NOT SUPPORT making these kinds of ‘upgrades’ as a “financial investment.” Quite the opposite. That said, if you want to spend the money as consumption, that is a logical choice, assuming you have the discretionary income left over after having 6 months living expenses in the bank, no credit card debt, at least 20% equity in your home, maxed into your 401K and how about a Roth IRA, too, that sounds like a smart idea, and also saving for your childrens’ college. Hrmph, don’t hate me, but seriously.
In addition (and I think I wrote this in the story) unless you sell right away, the “investment” in a new kitchen or bathroom begins to depreciate right away. So, in six or seven years, the “return” would be even less than the ranges listed in the numbers shown. Oh, and the space will probably already be “dated” and the new owner will want to gut it anyway.
I think your logic is quite sound; focus on the fundamentals. Re selling strategies see: https://retrorenovation.com/2012/07/30/how-to-sell-a-midcentury-house-full-of-original-features-we-hear-from-three-real-estate-agents-who-specialize-in-midcentury-modern/
And this, on remodeling: https://retrorenovation.com/2014/09/15/9-tips-start-remodeling/
Heart says
I whole heartily Agree! IMHO Jill/Pam, you are of sound mind. Your seeing through another ploy of the industry to sell products, move the economy.
“If it ain’t broke, don’t fix it.” You will Not receive that $ back no matter what common census says to ‘upgrade’ your kit/bath. Your right Pam the next person will want to put their ‘personal’ stamp on it & redo it anyway.
Unless… they are buying the charm of a certain ‘style/period’ home. Then remodeling with timeless features is endearing & practical/functional asset that can up to value. EX: adding a dumbwaiter to a 2/3 story 1910-30 house (or a) bead board backed pantry, a period 6ft claw foot tub, raising the ceiling in an old tiled shower & replacing the marble octagon tile floor/walls with white subway tile. Fixtures, furnishings will change with the owners personal style but the ‘bones’ are usually recognized as ‘features’ that add value. Plain & Simple.
Great thread Pam, hope your on the mend 😉 <3
pam kueber says
Yes, restoration of original features, or recreation of features that would have been original may be more likely to a better bet, “investment-wise”, I tend to believe. At least the date of your designs will be dated to the date of the house, harmonious with its original architecture. Even so, I suspect that renovations/restorations could still cost more than you may recoup upon resale. This is all a very tricky business.
See: https://retrorenovation.com/2014/09/15/9-tips-start-remodeling/
Lindel says
I couldn’t agree more! It is interesting to read through the history of the posts on this page. Many of us bought during portions of the bubble and right before the burst. I know we did. We had spent over a year looking for the “right” house…one we could love and hadn’t been updated to death. We had lived in the neighborhood where we purchased our home in for 4 years so we had a reasonable idea of what we wanted and what to spend.
Our home is in a historic neighborhood (the first non grid designed subdivision in the US). We purchased half of a duplex (pre-WWII, townhouse style) on a corner lot that truly had been unmolested since it was built save for the addition of a back room in 1954. The previous owner had done nothing to the house for over 30 years and all the fixturing dated to 1941 when the house was built. This was a double edged sword inasmuch as while it was all original and truly useable for the most part, we had to make the concious decision to accept that we would need to do numerous updates 1.) to bring the house to current code standards 2.) to make the house habitable (it had been vacant for over a year) and 3.) to bring the house back to version of how it appeared when it was built. Challenges no doubt for any of us who restore and renovate our period homes. We developed a plan and a budget and soon discovered that even the best designed budget would need revising. At the time we purchased our home in 2004, we were in a position to completely restore our house prior to moving in.
Yes we did have to “remodel” in several areas and the challenge became trying to get our contractors to take the house back to what it was rather than modernize it. We had more than a few intense discussions with our contractors as they thought we were crazy (we are…but in the nicest possible way) and too, we were reminded that our taste would result in a house that would have difficulty being re-sold (We hadn’t even moved in yet at that point!). We persevered and eventually the contractors started to understand our vision and found they were quite pleased with the results as were we. Yes we spent more than we may realize when we leave…but we “live” here, this represents us and who we are and we had/have no intentions of moving. We do not care to keep up with the Joneses…..less is more in oh so many ways.
We remodelled to be true to the house and to refine what was there, pointing it up in the right places, restoring that which was in sad shape and replacing that which was worn out. I wish we had known about this site all those years ago as we did make a few mistakes along the way…nothing terrible but we would have done differently had we known more. So where do stand today, 10 years later? I would do it again as we did originally. Yes we took a bath during the downturn (who didn’t?), we chose to stick it out and now see the home values beginning to rise again. With the period correct updating and our “questionable” taste, we have been approached repeatedly by neighbors, realtors and friends who want to know more about our home and how we redid it and want us to let them know first whenever that day comes when we plan to sell (heck, we even have loaned out our kitchen renovation plans to 3 other neighbors, all whom have taken the plan and had it executed in their own homes!). We agree with Pam, “love thehome your in”, we’d also like to add, be true to the style and period in which your home was built. Update sensitively, doing that which will please YOU. If you remove features from your home, keep them, when possible and store them so they stay with the house. While you may not care for those features, a future owner may forever be truly indebted to your foresight.
pam kueber says
So nice to hear from you, Lindel. Thank you very much for your thoughtful comments. HEY: I wish I had had this site when I started 10 years ago — I also would have done some things differently!!!!
Heart says
Well done Lindel & thank you for contributing to this post. So glad your integrity won out. Would love to see pictures of before/after. Wise of you to save your remodel parts for future reference. Most houses ‘back in the day’ had a mill worker make a jig for molding that was left with the house for future additions. Most people don’t recognize these & toss them out. Keeping the parts of the house intact is wise. Reduce/Reuse/Recycle seems like a new phrase but as we know it is timeless. Er, Priceless! Again, Thank You!
Heart says
With a career in Restoration/Remodel/Preservation, I always advise keeping with the period. It’s the ‘charm’ that sells. Start with the houses health/safety issues. Install used/functional furnishings/appliances till you can afford Quality energy efficient replacements. Believe it or not the older items were built to last & are cheaper to repair. Newer items are built to fail since the 70’s. so it will cost you Again in 5-10 years. Repair ‘cosmetically’ as needed then move in. It takes awhile to adjust to the mortgage/community/house. Live there for a year, watch the sun rise/set, move through the seasons & watch how the house breaths… Most architects who built older homes were conscious of these nuances when they designed the house for the site. I always look for houses that haven’t been ‘re-muddled’, then I’m not working backwards. (oh some of the work I’ve seen, hidden behind those walls… ) As you live there you will start to see what’s Really important. Hopefully you checked these out prior to purchase & know where you stand. 1) Roof/Foundation/Plumbing/Electrical/HVAC. 2) Find your Load bearing walls/If your going to ‘open it up’ you’ll need to reinforce what you take out & don’t forget about the foundation. 3) If your thinking of adding on, look at the rest of the block, typically you can’t extend past your neighbors footprint. 4) After you’ve addressed these matters, Start Shopping! Look for local salvage/community resources, reduce/reuse! Find great sites online (like this) for ‘rethinking’ what ‘the Jones’ do 😉 Why get yourself in more debt? Love your House! that’s what makes it a Home. Thanks Pam for this Great Resource, get well soon! <3
PS: re: big vs small houses
Unless you have a large family or use part of your house as a business, less IS more! Less taxes, mortgage, cleaning (!) & you can start/end there 😉 (even if you rent it out in the middle) <3
pam kueber says
Thank you for these comments, heart — it’s great to get this affirmation from someone with a career in the industry.
Pat Wieneke says
I think that if you do what needs to be done to keep the house in good repair and then remodle to fit your own tastes ( assuming that you bought the house because your taste tends toward it’s style) you are doing the right thing. We move too much and often not because we have to. Maybe the recent housing crash will keep us in our homes longer and we can see that remodling is for the betterment of our own life in the house, not so we can flip it.
Also, with out the flipper mentality, maybe more high end things like windows and such will be used and we can take better care of our homes.
Pat Wieneke says
I realize this story has been around a while. But it is maybe more true now than when it was written. We bought our MCM house 2 years ago. Nothing had been done to it in 60 years….including a roof and paint outside. But because it was so well built, it survived. The previous owners used and abused the kitchen and we had to gut it and build new. I had a heck of a time trying to explain to the contractor that I wanted birch cabinets with a medium stain, a vinyl floor, and no change to the floor plan ….AND no walls knocked down to open it up to the dining room. The back splash is a bit trendy in that it has glass tiles in with the others, and the lighting fixtures are trendy too. But they can all be changed pretty easily by a future buyer. Its a nice usable kitchen and looks good and I think it will look good in 20 year or the 5 to 7 years that we plan to live here.
The paint in the rest of the house was all sorts of trendy colors from the early 2000’s. Dark and intense. Not me and no longer in style. Not in style a few years before, either.
My only issue now is the family bath. It is original and in bad shape and so profoundly ugly with some tile, some pine, some this and some that and worn out. It looks like they used the odds and ends of every other project the builder had. THAT I am going to have to fix. I don’t want to go fully retro, because the retro look is, frankly, a trend, too. Like Victorian. So I am going to go with a simple, clean and ageless style, even though I would love to go ‘pink’ in feeling and color, I think we will go with white or beige. Maybe some ‘pink’ touches, like lights, and hardware….easily changed in the future.
pam kueber says
I disagree: Retro is not a trend IF it matches the year of your house.
No matter what you do it will be “dated”. So you might as well “date” your house to the “date” it was built. This is the entire foundation of this blog.
That said, yes, you can be retro without being pink. See my story on Timeless Design. https://retrorenovation.com/2012/01/11/timeless-kitchen-and-bathroom-designn-kitchens-and-bathrooms/
Pat Wieneke says
Well, maybe I didn’t quite state myself clearly. Or we have different ideas of what trend means.
My kitchen, for example has cabinets, floor plan and hardware that match the style and age of the house. They just happen to be new. The back splash and lighting are more the HGTV trendy stuff that can be easily changed.
The bathroom is such a muddle of tile and wood and what not that I am not able to decide exactly what to do. The tile job in the tub/shower is beautifully done, but they bought different die lots of tile. And as the tile goes round the room it stops mid wall to turn into knotty pine. It makes me think of the Donnie and Marie song, “I’m a little bit country. I’m a little bit rock and roll”. I really do not think it was any sort of a style, but just the wacky taste of different family members duking it out in the bathroom decor.
As far as the MCM style being a trend. I am in my 60s and I can remember when Victorian was THE thing to have and prices were very high for Vicotrian things. People were trying to make their 1950’s houses into gingerbread. Then Victorian saturated the market and frankly the prices for that style furniture are much lower than 40 yrs ago, when you take in account inflation. When I was in college, Craftsman style stuff could be easily found in the Junkateria or my uncles garage/man cave. Then it became so hot that you couldn’t afford even an end table. It is still pretty hot on the market. But not quite as much as say a few years ago.
During those years, the great MCM designs were ‘ugly’, the ranch was boring. Now, some people are looking back at their grandparents ( my parents) ranch style homes and seeing how efficient they really were. Someday the 90’s are going to be cool to collect. Dallas Modern McMansions will be the hot thing to bring back . ( My I be in my grave by then).
There are always going to be people, like many on this forum, who will never lose their love of a style. They truly see it’s beauty and place in history. But there are many, more fickle types, who loved it once and later divorced it for something different.
pam kueber says
Yes, I understand your point now: Midcentury is ‘trendy’ now – among those who buy according to trends.
This still harmonizes with my point — which is that midcentury is a bona-fide style that will always be appropriate to midcentury houses. (Same as Victorian to Victorian, A&C to A&C.)
This whole situation also is consistent with the everylasting gobstopper repeating fact: Styles are popular, then they are unpopular, then some 40 or 50 years later they are rediscovered and they are popular again.
Bill says
We bought our house two years ago and spent more what I wanted to spend–But it is located in a great small college town and the cul-de-sac /street takes a lot of pride in being neighborly. It is the street where people will stop their cars in the middle of the street to talk to someone of the sidewalk or the car behind them—that is King Street—we like to talk to each other. There are children playing on the sidewalks or riding their bikes. We celebrate birthdays, housewarming, and baby showers and graduations parties. We have the King Street phone/email listing that goes out whenever there is a change. What does this mean resale? A house for sale on King Street will sell by word of mouth. The last four houses (since 2012) sold that way within a month that way—one of the houses, the couple went to the owner and ask if they could buy it from him. The houses range from 1900 to 1950—no “state of the art kitchens” or “spa-like bathrooms” and hard to believe, but there are no HGTV interiors or Great Rooms either–Just your average American street. The prices for homes ranged from 125,000.00 to 290,000.00. The thing that we forget, it isn’t all the updates or features that make a house great or saleable, but rather the community and the neighbors that make living in the house worthwhile.
pam kueber says
Perfect. Thank you, Bill.
Scott says
I agree with remodeling equals losing big money if you have been brainwashed into thinking you need all new cabinets, granite counterops, marble floors, professional grade appliances, and whirlpools in the bath. Us thirfty retro folk who are smart enough to treasure the original cabinets and basic bones of our houses can pull off a room redo for peanuts in comparison.
I think Kate’s kitchen remodel is a perfect example of what a keen eye, hard work, and alot of creativity can accomplish. How great that room looks for such a modest price has even inspired me to get the ball rolling on my own kitchen after years of feet-dragging because I thought I couldn’t afford it.
I guess I’m just lucky I grew up in the laminate and vinyl era. 🙂
Lanay says
Hi – what a find to come across this blog! We have property we own with another couple–we own the l.2 acres of land (which costs too much to develop) and they own the house they remodeled about 10 years ago (on about 1 acre). We need to sell & they want to back out every dime they’ve spent on improvements/remodeling (into their pockets) before we take care of existing loans/realtor fees & splitting any remaining (?) cash. How can we determine what percent, if any, of these improvements are able to be recouped? Specifically: if I spent $250k ten years ago to remodel, how much of that can I expect to recover when I sell now? (what a mess!)
pam kueber says
You need to consult with a properly licensed professional on this one, Lanay.
Just another Pam says
I wonder how gentrification of neighbourhoods would factor in.
If I look at the house we had before we moved to the country we bought it for around 150,000 but it’s worth, or, more correctly, would sell for around 550,000 or more now as it’s become a very hot area of town.
pam kueber says
Yes, clearly there are exceptions. Averages are averages…there are homes that will do much better, homes that do much worse…Hence the 3 most important features of real estate: location, location, and location.