Compare Cost Vs Value

When thinking about major home improvement projects, the two most common questions are:

1. How much is this going to cost, and

2. How will this project add value to my property? 

To help answer these questions, Remodeling Magazine publishes an in-depth study by Hanley Wood Media with updated estimates by region each year. This Cost vs Value report summarizes the job cost and expected return for twenty-one different home improvement projects - covering a wide range of popular projects both inside and outside a home.

The study provides a wealth of information and is well worth downloading, which you can do HERE. The download is free, but you’ll have to provide them your contact info.  Based on the report, here are three of the top home renovations - and estimates of what they return at resale:

1. Manufactured stone veneer

Replacing a portion of the vinyl siding on your house for stone veneer is a big aesthetic improvement. The vinyl siding is replaced with adhered manufactured stone veneer. This curb-appeal enhancer will get you back almost every dollar you spent on it when you sell your house.

• Average cost: $9,419

• Average resale value: $10,658

• Cost recouped: 113.2%

2. Garage Door Replacement

This project involves removing an existing 16-by-7-foot garage door and replacing it with a new four-section garage door with heavy-duty galvanized steel tracks. This is another major curb-enhancing upgrade that will get you back over 96% percent of your costs.

• Average cost: $3,676

• Average resale value: $4,260

• Cost recouped: 115.9%

3. “Minor” kitchen remodel (mid-range)

Before you take on a complete kitchen overhaul, consider what the report considers a “minor” one. This upgrade is based on a 200-square-foot kitchen with 30 linear feet of cabinetry and countertops. Cabinet boxes are left in place but updated with modernized shaker-style wood panels, drawer fronts and hardware. New natural stone or manufactured stone countertops are installed with a new sink and faucet. Pricing also includes new energy efficient cooktop/oven range and slide-in refrigerator, new resilient flooring, and freshly painted walls, trim, and ceiling.

• Average cost: $22,665

• Average resale value: $22,086

• Cost recouped: 97.4% 

What the Cost vs Value report does well:

1. The report starts with project descriptions.  This way, you know when they’re talking about a “Bath Remodel – Midrange”, you know what size room they’re talking about and what fixtures are included, so you can determine if it’s a reasonable estimate for the project you have in mind.

2. Cost data is collected with a sound methodology that best identifies cost estimates for 149 different markets.  This means a detail scope of work for each project (cost of materials, hours of work, contractor margins, etc.) are specific for your city, not just generic national or regional averages.

What the Cost vs Value report doesn’t do as well:

1.  As those of us who have tackled any major home project know, every project is different.  Prices charged by contractors and for different material grades can vary dramatically – so, again, this is just a starting point.  You will still need to interview contractors, understand labor vs material costs, diligently collect quotes, etc. to make sure you have a firm understanding of all costs before you start any project. 

2. The methodology for the market value added to a property is a little less sound. Remodeling magazine asked real estate agents in each of the 149 markets to estimate the likely increase in value for each project if the house was sold a year after project completion. Agent opinions on value increases will vary widely, meaning the projected value increase is much less objective than the information on project costs.

3. The market value added to a property immediately upon completion is only part of the benefit to most home owners.  In markets that are steadily appreciating, you also need to consider the increase in appreciation you will get to recoup when you (smartly) increase the value of your home through improvements.  Here is an example:

   • You own a single-family home in Littleton which is currently valued at $600,000.

   • You want to do a major kitchen remodel this month with mid-range fixtures and finishes.

   • You spend $66,621 on the remodel, and (per the Cost vs Value report) the remodel adds $48,831 in value to your home.

   • Your home value (after the remodel) is now $648,831

   • Your newly valued $648,831 house is projected to appreciate 5% over the coming year, making it worth $681,272 this time next year.

   • The added value ($48.831) plus the overall price appreciation ($32,441) now offsets the total improvement ($66,621) you made.

Final thoughts . . .

In today’s market, it’s hard to see how you can go wrong with smart home improvements. The improvement itself will add some value (even if the exact number in the Cost vs Value report is not 100% accurate) and market appreciation should cover the rest.

How else can I help?

I’ve seen first hand how updates can drive significant demand for homes in the Denver Metro area where there are very few new homes on the market. I’d be happy to provide you with examples and an analysis of the return specific improvement captured for sellers in your area. I’m also happy to provide contractor or vendor (landscaping, cabinet painting, etc.) recommendations - talented folks committed to providing great customer service and high quality, value-oriented work.

- Chris Hawksley | Realtor, Broker Associate -