Increasing the Value of Your Home Through Remodeling
By: Roger Gallagher
Article reprinted courtesy of HomeWorks Sourcebook
"Home is where the heart is." This timeless cross-stitched sentiment describes your home as your family's emotional and physical center. For most families, the home also represents one of their largest and most stable assets. Many homeowners want to make changes to their home both to improve their quality of life and to increase or preserve the value of this important place.
There is a high demand for remodeling projects in the Greater Boston area. This area has older housing stock which is in need of updating. High real estate values may make remodeling sensible for homeowners who want to augment the stable, growing investment in their home. The high values combined with recent low interest rates also give homeowners access to home equity loans, which can be substantially invested in home improvements. The relative affluence of metropolitan households with dual professional incomes also allows homeowners the flexibility to perform projects solely for the purpose of improving the quality of family life at home.
Before you undertake a remodeling project, assess your financial position. To start, know the value of your property, both as it is and as it will be with the proposed improvements. You should also look at the home's relative value within the neighborhood. It is be better to put a lot of work into the worst, smallest house on the block, than to make the street's biggest and best house better. Finally, it is necessary to get a sense of the size of the investment needed to accomplish the improvements, and what type of return can be expected if the home needs to be sold fairly soon after the remodel is completed.
There are other important considerations for owners considering remodeling. Some of these are: why you want or need to do the project(s), what a prioritized list of projects would look like for the house, how long you plan to stay in the home, what level of appointments and finishes is appropriate for your lifestyle and the property, and what type of company you want or need to do the work. These issues will affect how the project is planned and executed, and how much it will ultimately cost.
Experts generally agree that certain types of projects give homeowners a better return on their investment. Among the projects with the highest returns are kitchens, bathrooms, and two-story additions. Some of the projects with lower returns are basement remodels, siding replacement, window replacement and roofing. Upgrading the basic systems or components of the house is often the highest priority, but the least glamorous type of project, and gives the lowest return. According to Remodeling magazine (November 2002), the national average return for these projects is 65% to 75%, as opposed to an 80% to 94% return for kitchens, baths, and some additions. The same source indicates that return on investment also varies with locale. A similar upscale kitchen project in the Boston area can return 116%, while returning only 50% in Salt Lake City. A homeowner performing siding replacement in Boston can expect to recoup only 43%, while the Salt Lake owner can expect an 80% return.
Projects with similar descriptions can be performed in vastly different ways at widely divergent prices. Some factors affecting the cost, as well as the return, are the quality of design and construction, the type of company you choose to work with, and the cost of labor in your local market. Good design is critical in integrating a new project with the existing home, and for proposing sensible solutions within a budget. Quality construction includes the use of good materials, skilled installation, and a high level of customer service, since the customer literally lives through the project with their remodeler. Client-focused companies will typically be more expensive to work with because they invest in the people and resources to allow a project to progress smoothly. The issue of value tends to focus on the finished product, but it is important to remember that remodeling is a service business, and there is value in the peace of mind that comes from trust, communication and efficiency in a well-managed project.
Remodeling can be an exciting and fun way to preserve or increase the value of your home, and to increase you and your family's enjoyment of the space for many years. By determining what is appropriate for the property and for your lifestyle, you can invest wisely in your own remodeling project.
Roger Gallagher is President of Gallagher Remodeling, Inc., a residential design and remodeling firm located in Belmont, Massachusetts.
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