2016 Cost vs. Value Report Shows Higher Value in Remodeling Projects

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2016 Cost vs. Value Report

Shows Higher Value in Remodeling Projects


In a recent article by Craig Webb appearing in Remodeling magazine, he reports that gains in the

new-home market are helping lift the value of remodeling projects even as costs rise.


Bigger and more expensive projects, rising new-home prices, curb appeal, and energy efficiency

all contributed to a slight gain in remodeling projects’ payback at resale, according to the 2016

Cost vs. Value report.

Because costs change independently from real estate pros’ assessment of value, each year the resulting cost-value ratio has a different reason for why it changed. This ratio expresses resale value as a percentage of construction cost: when cost is higher than value, the ratio is less than 100%; when value is higher than cost, the ratio exceeds 100%. It’s the “bang-for-the-buck” meter, according to Webb. 

Four of the top five gains in cost recouped were for upscale projects. Topping the list was a fiberglass entry door, up 21.2%, followed by a two-story addition at 8.1% higher recoupment than in the 2015 report. A master suite, was up 6.5%, while a major kitchen remodel was 4.2% higher.

“We’ve seen a steady ramping up on both the sales and construction side,” said Jonathan Diehart, director of custom services and published research at Metrostudy, the data unit that’s a sister company to Remodeling. “I think over time that really starts to loosen up prices a bit and allows some of these [remodeling] factors to become more significant as part of the price. When times become more difficult, the price becomes competitive. When times are better, the price bands get bigger [on homes of equal size]. It’s no longer ‘It’s a 2,500-square-foot house so it should cost this,’ but rather ‘It’s a 2,500-square-foot house that has this and this.’”

Those trends matter, because Metrostudy also cites NAHB research that found roughly 60% of homeowners launch a remodeling project within six months of moving in.

For more information about the Cost vs Value Report and the ability to view different years and different regions of the country for specific details, visit www.remodeling.hw.net/cost-vs-value/2016/

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