Although Harvard University’s Joint Center for Housing Studies has predicted a slowdown in home remodeling spending by current homeowners for the first half of 2015, the real estate market is seeing a healthy rebound so far this year. From potential sellers to new buyers, the market for home remodeling could be in better shape than expected.
Craig Webb, editor in chief of Remodeling Magazine, said that the housing marketing and the remodeling sector are closely tied together.
“A rising housing market lifts up remodeling,” Webb said to MarketWatch.
But home sellers and homeowners shouldn’t pick up the phone to call a construction company just yet, Webb explained, because they need to know when a remodeling job is worth it.
Bathroom and kitchen remodeling are two of the top jobs contractors will perform because these rooms of the house tend to see the most use. They are also a big draw for buyers.
But the cost-to-value ratios don’t always add up in terms of return on investment for a remodeling job.
A $25,000 kitchen remodeling job is likely to have a 68% ROI after the house is sold, according to Webb, and a high-end $100,000 remodel is only worth about 59% of a return.
For 2015, Remodeling Magazine predicts that the simpler remodel jobs will give homeowners a healthier ROI.
“The simpler and lower cost the project, the bigger its cost-value ratio,” Webb commented.
“I work with few Realtors in Glen Ellyn IL area and they all suggest their clients to update their home ‘curb appeal’ for a resale purposes,” said Peter Kiwior of Pro-Home Services. “We’ve received a lot of work orders for new roofs, siding, and replacement windows last year. “This year my month of April is already booked with roofing and siding orders, it is a good sign of housing market rebound.”
Webb cited a steel door entry replacement costing under $5,000 as a good example of a decent cost-to-value ratio: this job would be likely to net a 102% recoupment this year.
In most cases, homeowners won’t always see a complete return on their expenses when they go to sell a home. But that doesn’t mean that remodeling isn’t a big draw for buyers.
The part of the home remodeled also matters, and Webb recommended looking at the exterior to give a house more “curb appeal.”
Stone veneer additions, fiber-cement siding and vinyl siding replacement are some of the best values for 2015.
Market also has an effect on cost-to-value ratios for remodeling. In some of the biggest markets in North America, sellers can expect to see greater returns for their upgrades.
San Francisco, CA; Honolulu, HI; San Jose, CA; Riverside, CA; Sarasota, FL; Austin, TX; and New Orleans, LA, were the top markets for home improvement ROI, according to a Remodeling Magazine survey.
Before making any plans, homeowners should make sure that their contractors belong to the National Association of the Remodeling Industry (NARI). A contractor shouldn’t ask a homeowner to pay up front for services, either.