Safety upgrades and modest remodeling are good investments
By James and Morris Carey
For The Associated Press
The annual ďCost vs. ValueĒ article published annually by Remodeling Magazine gives consumers a look at the average price — and the return on investment — of all the most popular types of remodels.
In 2005, the word was that the average return on a remodeling project was in the high 90 percentile. At the same time the average cost of a kitchen remodel nationwide was $108,000.
In 2006, the 19th annual cost vs. value report shows, housing sales slowed and remodeling did, too. The survey, published last November, said that returns on remodeling investment in 2006 had plummeted from the 90s to the 70s.
Remodeling is still going strong, but with the slowdown in new home sales, most consumers have become reluctant to invest in higher-end products — expensive finishes such as fancy faucets and flooring, for example.
The word among those in the industry is: Donít expect customers to pay $700 to $900 for a faucet, because the ones most desired now are closer to the middle in price, $200 to $300.
We have trouble believing that anyone would spend more than $200 on a faucet anyway.
Nonetheless, now you know the industry buzz.
Keep in mind that our faucet example also applies to finish choices folks are making as they remodel.
Other features and finishes offered at the upper end of the price scale included expensive tile and custom hardwood floors, and bathrooms with fireplaces.
But is remodeling still a good investment?
You bet, as good as ever. However, you may want to think out exactly what you want to spend on your remodel before making the final decision. Currently, more modest investments in finish items are getting the best return.
Before tackling any major remodeling project, first invest in safety upgrades. Make sure that your electrical and gas systems are in premium condition and that they comply with the most current electrical and plumbing codes. Ask your local building department to inspect your home and advise you on what repairs will make your home safest for you and your family. You may have to pay a small fee, but nothing like the cost of losing your home to a fire or an explosion.
Donít forget smoke alarms and CO2 detectors. If you donít have them, add them. If you do have them, bring them up to date — smoke detectors stop detecting after 10 years.
Next comes energy efficiency: Invest in compact fluorescent light bulbs, furnace cleaning and maintenance, and appliance replacement — new ones are a great deal less expensive to operate.
Finally, donít forget general home maintenance. A roof leak may cost $450 to have repaired, but if left unchecked it could end up doing thousands of dollars in damage.
Safety, energy and maintenance repairs are not considered remodels. A remodel is not tax-deductible against a homeís capital gain.
A repair is deductible. Thatís because a remodel is considered (by the government) as an improvement to conditions where a repair, even if it is an upgrade, brings the home back to its normal condition.
Once your home is safe, energy-efficient and properly maintained, remodel the master bath and kitchen. Of all possible remodels, they have always been top of the list.
Youíll never want to leave once those two areas of your home are up to snuff.
The cost vs. value report covered 25 popular remodeling projects performed in 60 U.S. cities. The report itself can be found at www.realtor.org/rmomag.NSF/files/Cost_vs_Value06.pdf.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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