Each year the National Association of Realtors, in conjunction with Hanley Wood, LLC, produces the Remodeling 2010-11 Cost vs. Value Report. If you dig a little into the site you can get regional reports and even city reports: Portland’s is here. It’s important to note that this reports uses the same seven county MSA that the Case Shiller Index uses. It’s a big geographic area, more than 140 miles from corner to corner. The punchline in the report: any project undertaken does not return your money. Why would a remodeling-based enterprise publish a glossy report highlighting that? They don’t. You have to read a little deeper to see “what the numbers mean:”
The Cost vs. Value Report provides an accurate snapshot of the national housing market, but it cannot be applied accurately to an individual remodeling project for a particular address. Resale value is one factor among many that a homeowner must take into account when making the decision to remodel. At the local level, the best course of action is to obtain construction cost estimates from reputable local remodelers and to talk with an experienced Realtor about home prices in the neighborhood.
We often talk with our clients about how their home fits into the neighborhood. Are their major detractors to the home that need to be brought up to neighborhood standards and the standards of properties on the market that would be considered competition? Making the hot pink house “Realtor beige” probably has a higher return than turning the slightly faded blue house “Realtor beige.” After a day of showing properties you don’t want your property to be referred to as “the cat piss house” as we had one buyer describe one of the properties we had looked at.
You’ve also got to consider if it is a remodel for yourself that you are going to use for some time or a remodel for a potential buyer now. Buyer’s want fewer projects and aren’t into sweat equity as they were a few years ago (a topic unto itself) but you have to be mainstream enough to appeal to a buyer you don’t yet know. The slot for your custom widget isn’t so cool if you plan on taking the widget with you when you sell.
***The data from the report is copyrighted and cannot be reposted here, I asked through their permission link and was denied. Whatever might need to be cited is Copyright 2010 Hanley Wood LLC Reprinted by permission and their website is www.costvalue.com.