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.
Mid Mod Jobs says
Going over these comments I have to say I am pleased. I see comments that are uplifting in that the readership share the values of past generations. I would say a lot of us are products of baby boomers, who were products of the “Greatest Generation”. Some of us remember how things were a bit tight as children, moreover folks expectations, lifestyles, and needs were not even close to the trends today and far exceed those of the generation before them. A big part of this is this “having it all right now” mentality. Unless you are loaded, there is no reason to think that you need to gut every room before you move in. For some that makes more sense financially. But for most of us we could live like our grandparents. Buy a nice house that fits our needs, grow a vegetable garden, and stay there until assisted living. You have years to plan, save, and make strategic changes that fit your lifestyle. Its part of the whole screwed up mess we have now, this notion that a 1500 sq ft ranch isn’t enough for 2.4 kids and a golden retriever. Instant gratification, and unbridled greed, has gotten us in the big hole.
This notion that we must strive for MTV cribs. What a waste the monstrous manors are. Austerity is the word we should all learn. Ha Conservatism, there is one for you. How many folks claim this moniker and blow 75% of their income on a mortgaged Starter Castle or a hood ornament, like on the vehicle they paid twice as much for than one of equal functionality. Pam your readers share the tenants of reduce, reuse, and recycle. Funny how the “now” term “up-cycle has hit the trendy lexicon!
Bottom line brothers and sisters, we could all take a lesson form our grandparents, or the “Greatest Generation”. They persevered the depression and carried those survival techniques throughout their lives. But moreover, they make sense, and is just smart living. Thank God for them, those that took great care of those houses, and furniture, and pink bathrooms knowing that with care they’d last a lifetime. Those values are responsible for us being able to enjoy these awesome relics of the past.
pam kueber says
I think you are a first time commenter, Mid Mod Jobs, so I am not sure how long you have been reading the blog. Yes, in general, there seem to be a lot of believers here in the idea that a house like gramma and grandpa had was both “good” and even, “good enough.”
TappanTrailerTami says
LOL @ “Starter Castle” !!! I’ll have to remember that one – great description of the “gotta have it now” mindset.
MidModJob says
Hey all,
I don’t think that this applies to everyone as I see a lot of comments that defy the statements in the article. I also think the days of real estate speculation of joe and jane homeowner are long gone. As a DIY-er and small contractor, I tell people to consider a few things:
First, Is your house a museum or do you live in it. An old friend of mine said this to me once, “I never bought a new shotgun” (he liked and used fancy ones)..”I couldn’t bear to be the one to put the first scratch on it” ! The Mrs and I have been slowly rehabbing – “Backdating” our 1959 Burton Duenke in StL. The arrival of our first child, now two, forces the thought process in a different direction. We have had to make updates and improvements that benefit the utility of the house. Speculation on values has long since been a mute point. But many of us here have saved homes form the wrecking ball and the Mac Monsters. Personally, we have plenty of house, almost too much to keep tidy. We bought at the teardown price, and by the way it was well kept and neat as a pin. Sure we did the kitchen, because we cook, serious cooking, another way to live in style for a fraction of gourmet dinning. We have done two out of three baths, one for guests.. endless stream of grandparents, and one for our daughter. We did floors, to cover or remove asbestos tile, and improve the over all appearance. But you go in knowing its going to get used and abused and someday even worn out. Indeed, we re-sided, out of necessity. Boring insects and weathered cedar was impossible to keep up with. Did the resale (bite my tongue) factor in. Yes the thought played a role in certain choices, but the main thing is having a home to be comfortable in that doesn’t consume you. I get frustrated when the dog scrapes his nails on the hardwood, I cringe when the baby runs the scooter into a corner, I fear the day when her art appears on the walls, I spaz out on my stainless, every scratch, fingerprint, and vulcanized stain. But I tell myself we live here, it is a home, and it is well loved.
Next, I think your readers are much more savvy, Pam. I don’t see too many of them running out to Home Improvisation for run of the mill home trends and fixtures, nor many who pay full boat for contractors. Your fine readers are looking for the things the others cast off.
Go find a set of steel St. Charles Cabinets in a tear down, stash em, and have them restored when you are ready to gut that 1980’s laminate kitchen. Let’s see, you just saved $5K. I found whole mid century home being gutted. A friend of mine took down the flagstone on the fireplace stone by stone. I got a 36″x 50″ mirror for 5 bucks. But your readers, know all about that kind of thing.
If you aren’t a DIY-er you should be. If I can do it anyone can. Say your just not that talented, or don’t have the time, then seriously spend some time before you spend any money. If you brought these stats and this current housing market back in time, when folks really DIY’d out of necessity, these numbers wouldn’t hold up. There is a world of thrifts and deals out there. I keep a list of future projects, and stash of bargain finds to make them happen, eventually. Three years ago, I found a $499 one piece Kohler commode on sale on Black Fri. Negotiated with the manager to take the display, and got it for $50. It sat for 14 mo. before we were ready to use it. CL has it all too. Overages from new job sites end up in Habitat for Humanity stores. Tradesmen, barter all the time for anything. I found an electrician that just wanted someone to take him fishing. I could give plenty more examples. Most folks just don’t think that far ahead. Some don’t consider their home as much of a hobby as we do. But I attest first hand, high end living can be had at a bargain discount if your willing to invest the time and energy. So even with bargains and barter, will you get your money back at time of sale? No, but you might break even, and you get to live in comfort and style, without having to make it back on the sale.
Just another Pam says
Sharing skills is a good idea too, you can frame and drywall, your friend can tile or wire….I have an Italian friend who told me that his father and his friends just trade off jobs to the point that material costs are all they ever pay and they usually have friends who sell the materials…..
Louisa says
We were so lucky to see a sale-by-owner sign in our neighborhood in 2009 for a 1954 ranch, only two owners who had done great maintenance but no updates. It was being sold as a tear-down, so we were able to get it below what we sold ours for.
With the extra $ we re-roofed, finished the hardwood, added new laminate counter-tops over the original kitchen cabinets, painted and freshened the landscaping. We’ve got original bathrooms, light fixtures, metal cabinets in the laundry and a Clipper exhaust fan in the kitchen! The original windows are in perfect shape, though not insulated, but we are working on adding low-profile storms as we go.
We love this house, get lots of compliments. There’s a great ranch on the next block that’s for sale as a teardown. Am so hoping someone rescues this house…
pam kueber says
Way to go, Louisa! The house is so lucky to have found you!
Louisa says
Pam , I also want to thank you for the listings you highlight from ebay. We bought two Schlage Riviera escutcheons with the 5″ off-set for $5 each. They were the identical replacements for our front door.
We also bought the Griswold black mailbox with the brass ring that you ebay-featured, and I found a used Rejuvenation Otis light fixture myself on ebay, so our front door is looking pretty spiffy.
The original door was a great three-panel square, one light , but had taken water from the bottom and was warped. We got a blank fiberglass door and used Crestview’s 16″ sq. lights so the door looks very much like the old one.
We did take the old door and its hardware to the Habitat Restore and it sold the first day to someone who must be a much better carpenter than we are, so we’re happy it’s found a new life.
Thanks for the site and all the great resources you and everybody else brings. We had a good time searching for just the right items and then putting them all together.
pam kueber says
You’re welcome! I love hearing how my finds get purchased and put to good use!!!! Send me some pics of your entry, Louisa — sounds fabulous!
Paul says
Pam, this is a great look at this issue. Thank you.
I made my peace with this several years ago, when I remodeled my kitchen to a look contemporary to my 1939 house. I sweated the details; would a future buyer want a kitchen built around a 40 inch range and 5-foot tall, 1947 fridge? Would they want linoleum counters or floors?
Then I realized I didn’t care. It’s MY house. I did the kitchen and my only regret is that it’s too small for a table because it’s my favorite room in the house! I got 110% return on satisfaction.
pam kueber says
As I mentioned in the story, Paul, I fundamentally believe that Retro Renovating — or “dating” — a kitchen or bathroom to the original date of your house is the smartest way to go. Put in a “2011 kitchen”, for example, and in 5-10 years — it will look “dated”… those next owners will think it’s “hideous” LOL not. The “updating” to what is trendy “today” cycle NEVER ENDS. In contrast, 50 years pass… and ORIGINAL architecture and “historic renovations” becomes prized and in demand. Hence: This blog!
pam kueber says
Also, Paul: Good on you!! As time passes, more and more and more folks will want original architecture, features and thoughtful, appropriate restorations. It ALWAYS happens.
Lauryn says
Yay, Paul! We also have a 1939 house and while we originally started our kitchen “remodel” to make it more efficient (we do, after all, really like to cook), I realized that nothing I was being advised to pursue fit the house’s personality. Which is how I found myself in the retro-renovation universe. And then I was advised NOT to do certain things because of “resale” value, but while I know I can’t predict the future, this is OUR HOME, a place we plan on being for a very, very long time, if not for the rest of our lives. And we want the space to reflect the spirit of the house and our tastes. And the closer we get to finishing the kitchen, the more it looks like it was always that way. (Fortunately, while the previous owners played it safe with their “updates”, they left the original cabinets, if not the original counters and appliances.)
TappanTrailerTami says
I actually should have started my prior post with my basic point: Be thankful if you own a house and can afford to remodel / redecorate, even modestly over time, and even at a loss! There are many responsible people who just cannot afford to own a house where I am, so they have nothing to remodel.
TappanTrailerTami says
And then…..you have CALIFORNIA. A state seemingly unto its own with regard to real estate prices.
I commend everyone here who has bought what they could afford, and who has not gotten sucked down the “new and bigger is better” rabbit hole. However, I’d venture to say that few posting here are in the Bay Area, where a shoebox house on a postage stamp lot in a decent neighborhood will run you upwards of $500k to $700k. And when I say shoebox, I really mean 800 to 1200 sq feet, not anything more. Postage stamp lot? 4000 to 7000 square feet.
There is NO such thing as buying what you can afford here, much less having any money left over for basic repairs and/or very modest improvements. Such is the price we pay for great weather and not a lot else. Certainly there are MANY great houses here, but unless you have at least $100k in the bank to meet your 20% down payment, you’re probably just going to stay in renter’s land. This in spite of the real estate downturn. I’d guess that housing costs here would need to take another 30-40% dump before we return to “affordable”.
So many people here bought houses 2-3 hours away just to live the “American Dream” because the houses were 50% cheaper and probably 50% larger than here in the Bay Area. I see them ensnared in horrible commutes of 2-3 hours EACH WAY just to get back to their home after they leave their Bay Area / San Jose jobs. No thanks!
So, I’m going to lose just about every nickel I put into the 30 year old mobile home I bought in San Jose, but then again, I’m only losing $100k maybe (after improvements), rather than sitting on a 1/2 mil mortgage I can ill afford, even though I have a really great job, or losing that same $100k in paying out pure rent every month.
I do dream some days of chucking it all here, but the paycut to go to another state is probably too drastic at this point. So, I am left to Love the House (Trailer) I’m in! And ever thankful for this blog!!!
pam kueber says
I just don’t understand California. Housing prices need to dovetail with wages, as another Commenter previously mentioned.
TappanTrailerTami says
I agree Pam – if I had my salary now in ANY other state just about, I’d be living in a pretty grand house, of the vintage I prefer, and probably on acres!
Had to laugh this morning, right after I posted, I just received the November 2011 Sales Report for Silicon Valley real estate in my email box:
Condo/Townhomes, Average Price: $357k
Median Price: $318K
Single Family Homes, Average Price: $716k
Median Price: $549k
99% of listings sold received their asking price. Ugh. It’s ugly out here, no question.
pam kueber says
Silicon Valley is yet a whole ‘nother animal, I bet!!!
Just another Pam says
Wouldn’t house prices also reflect location as well as supply and demand, like N.Y. City to northern N.Y. ?
On Main St. in my sister’s wee town you could buy an American 4-square with over a quarter on an acre of land for 38,000 asking but where I live something equivalent on a tiny lot would be 600,000 plus and need lots of work.
Mimi says
YES! I live in the NY metro, and until the bust, a crap house in a crap area was in the 400,000’s. We waited and got ours in the low two’s but it is a teeny house, and totally not updated, which is fine with us. We like it the way it is.
I agree, the “low times” of a trend are 10-30 years after the fact, so the chances of the improvement being current and in vogue when you sell is low. I go with getting what you like, whatever that may be.
Barb says
I agree with the thoughts expressed here for the most part. I do wonder how you measure the pleasure you might get from using a tiled shower restoration versus a fiberglass shower stall replacement?!
pam kueber says
Remodeling for “pleasure” is a whole different animal than remodeling for “profit.” Another way to consider whether the money you plan to spend is “worth it,” is to calculate how many hours it will take you to earn that money – but back out taxes, commuting, work expenses, too. Do you want to work that much longer to earn that money? (And do you otherwise, have the wiggle room to spend that money that way?) If so, go for it.
And hey, just to be clear: I am a house-lover and have spent mucho dinero remodeling my house! In retrospect, the only expenditure I would “un do” would be the purchase of two, new oversized slipcovered sofas and matching chair-and-a-half circa 1995. Oh, and that distressed TV armoire, too. See a trend: New, fashionable furniture. Now stored in my basement. Everything else in my house is vintage…
Elaine says
I love the tiled shower we put in our new master bath so much, we are putting in a similar one in our winter retreat. It really does add to my day somehow to shower in such a beautiful place. The first shower replaced a tub with with tile surround and frosted glass doors, the winter retreat one is an addition. These are definitely “for pleaure” more than for investment. ‘Tis true the style will doubtless change before we ever get ready to sell.
Elaine says
Not to worry, the original tile surround was plain white 4″ tiles.
MaryEllen says
I won’t be disappointed in whatever I get for my house when it sells (way in the future!) because I remodeled it to LIVE in, not to meet market trends. I wanted a June Cleaver house and that is what I created with sunny colors and vintage looking tile schemes and what I consider to be classic design elements. I never liked the granite and stainless look anyway–it doesn’t look homey–so I created my home to represent the things that make me feel ‘at home’. Shining hardwood floors with beautiful area rugs, classic traditional furniture, pictures of my family and friends–no one comes into my home and doesn’t mention that they love it because it ‘feels so good in here’. Happy and homey.
Dan says
As a cook myself, I never understood the granite thing: stone counters are horrible on dishes, knives, etc. if you drop a wine glass and it lands on a Formica counter or even a linoleum floor, you have a chance of it surviving, or at least breaking into manageable pieces. If it lands on stone or tile, you’ve got a million shards to deal with.
And tile floors are horrible on your back If you are cooking for a long time. That’s why commercial kitchens have mats in work areas.
With that said, our house has the original tile counters. The only good thing about them is that you can set a hot pan on them and not have to worry (handy for basting the T-Day turkey). When we eventually redo the kitchen we’ll keep the tile backsplash, but the counters will probably go in favor of Formica. There’s nothing more dreary than bleaching the grout 😉
Styles and fads aside, you want to be practical.
tenantproof says
Dan,
You could purchase an after market grout sealing and apply it to the grout it comes with a handy brush attachment on the bottle.
1927 Craftsman says
Recommend you stick with tile. Good suggestion re: sealer Dan. Formica is a 10yr product AND it does Not like Hot pans 😉
Dan says
I’ve been to too many Recycled building supply places where there are complete sets of brand new kitchens that have been ripped out of remuddled homes to fall for that trap. People who want a new kitchen will want ThEIR new kitchen – not something you think they might like.
All the improvements we have done were because they were necessary (new gas furnace after the oil company said they wouldn’t service the old one, breaker panel to replace fuse panel, new plumbing) or because we wanted to do them (opened wall between kitchen and dining room, repaired deck, expanded the basement “toilet room” into a 3/4 bath)
Never try to guess what the next owners will want. That’s a losing bet.
Jane / MulchMaid says
Well said, Dan. We have followed the same philosophy and spending rationales. You should do only what you need and personally want, because the eventual new owners are likely to rip out whatever you changed.
pam kueber says
Yes, this is why we have so few time capsule houses. New owners invariably “don’t get it” and rip old stuff out. The more often a house has changed hands, the more likely you are to see change, after change, after change. Time capsules are almost always owned by original owners, or have changed hands few times…
Zoe says
I have been looking for a time capsule-ish house in the Detroit suburbs for the last 1+ years, and invariably they have all been horribly remuddled. If I read another real estate description of a 1950s or 1960s ranch house with “granite countertops,” I’m going to scream. I’ll wait for a ranch house with an original kitchen — there are a few, but they are often in really poor condition — in a nice neighborhood. Unfortunately, those remaining examples of mid-century modest architecture are few and far between. In the high-end mid-century modern neighborhoods, almost all of the original, beautiful, wonderful ranch houses have been sold for “land value only.” It is a very sad trend, and one more than just the like-minded folks who read this comment board will decry in 20 years (when it’s too late).
Jane / MulchMaid says
Well said, Dan. We have always made home “improvement” and renovation decisions based on what we want, with a limit on spending. And as Gavin said above, “You have to live somewhere,” so don’t remodel for resale – remodel for yourself and don’t go overboard trying to anticipate what future owners would want. They’ll probably rip it out anyway.
Jane / MulchMaid says
Darn interface: my first comment didn’t show until I posted again! Sorry for the virtual duplication!
JP says
Most people do not realize that house is typically a depreciating asset. Historically, home prices track the inflation rate (because inflation is tied to wages and the amount of home people can afford is directly related to what they earn). That said, almost all of the money that you put into the home to maintain it will usually just push it back to the inflation adjusted value (which is where the depreciating part comes in–you need to spend money to keep your homes value rising at the rate of inflation). But at the end of the day there is a cost associated with living and we must pay it in either rent or maintenance. That said, you should buy only the amount of house you truly need and only put into it things that you feel make your quality of life better. Flipping houses, and spending money on remodeling in hopes of achieving never ending increases in value only works in bubbles. I just hope that neutral renovations and McMansions remain in the past as well.
pam kueber says
Agreed. Well said.
Just another Pam says
Because of life complications the house I’m in was bought because I knew I could resell it and not be out of pocket in the year after the purchase. Being in a large government town with a water view I was the winner in a bidding war, something I swore I’d never do. For me it was about location, close to downtown but coming back into town from the country it was still not so big city. Supply and demand applies a lot around here so I know, at this point, I’ll get all my money back should I have to sell but not make scads due to the 80 grand the renos cost….most of them now hidden behind walls and floors….yes, it had been renoed but not exactly in the right way unless holes under the basement flooring, leaking bathrooms, no insulation and tons of mold were the plan.
I agree with Gavin, spa kitchens escape my ken and not only because there only seems to be about a dozen designs. Kept the kitchen the former owner put in even though it isn’t my dream kitchen because it was new and she did it to go with her teak furniture so it works.
Love where you are, certainly, but I’m very grateful as well.