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The Value of Home Improvements
Home improvements can range from getting a new front door to putting on an addition. They can make your home more attractive and more livable, and they also can increase the value of your home when you want to sell.
Unfortunately, the declines in the housing market also have resulted in declines in the payback you might get from home improvements when you put your house on the market. For example, according to an annual survey by Remodeling magazine, the average home-improvement project increased the resale value of the home by 86.7 percent of the cost of the project in 2005, but only 63.6 percent in 2009-2010. During the most recent period, the average project cost $50,908 and added $32,497 to the sale of the house.
However, not all projects are created equal. According to Remodeling, you get the best payback from exterior projects like landscaping and replacing doors and windows; these make your house more appealing to prospective buyers. For example, the average entry door replacement cost $1,172, but it returned 128 percent of that cost.
Adding an attic bedroom also can get you a lot of bang for your buck. Although it is an expensive project, with an average price tag of almost $50,000, it had an 83.1 percent return when it was time to sell, in the 2009-2010 survey.
Other projects with a relatively high return include fiber siding replacement, which returned 83.6 percent of its cost at resale in 2009-2010; a wood deck, which returned 80.6 percent; vinyl siding, which returned 79.9 percent; minor kitchen remodeling, which returned 78.3 percent; and wood window replacements, which returned 77.3 percent.
At the other end of the spectrum, a home office remodel returned only 48.1 percent of its cost in 2009-2010. Other poor returns were from sunroom additions, 50.7 percent; backup power generators, 58.9 percent, bathroom additions, 59.5 percent; and garage additions, 62.2 percent.
The most expensive home-improvement project in the survey was a master-suite addition. With an average cost of $225,995 in the 2009-2010 survey, it returned only 55.7 percent of that cost when the home was sold.
The survey measures work done by contractors. If you are handy enough to do it yourself, you can save a bundle – and increase your payback.
And of course, the survey does not account for the value of a home improvement in making your life easier or more pleasant before you sell your house.