Not all remodeling projects add lasting home value

Posted by Woodrow Aames ~ January 25, 2011

Toward the middle of last year I wrote about the annual report released by Remodeling Magazine that revealed some of the best investments in home improvement projects. At that time I warned against overspending on large, pricey renovations and suggested that you focus instead on small conversions or enhanced features during the economic downturn. It made sense-and still does-until the housing market has at least a palpable rebound.

Now, Yahoo Finance reports that "super deluxe" kitchen and large-scale bath improvements can actually devalue your home when it comes time to sell. Yahoo warns against "a $30,000 kitchen upgrade" to industrial or restaurant grade stoves, fridges and appliances. Because it can bite you in the back later when it elevates your kitchen value over those in your neighborhood. Settle instead for a $1,000 improvement.

The same goes for massive scale bathroom upgrades with built-in Jacuzzis and high-powered shower heads when future homeowners may be more interested in buying homes with water and energy efficiency. If you're looking to sell as soon as things improve, it won't necessarily help if you undertake large room conversions that remove functional space. For example, a huge garage conversion can add a great utility room or man cave, but home shoppers may want a home with an ample, functioning garage.

Finding a solid home improvement ROI

On the other hand, remodeling a basement may be a prudent choice. As I wrote last year, basement remodeling ranked high on return of investment in Remodeling Magazine's cost-value report.

Converting basements into living space in 2009 cost an average of $62,067, increasing resale values by $46,825. That's a satisfying 75.4 percent ROI. Other projects averaging solid returns were attic bedroom conversions (81 percent ROI), installing backup power generators (58.9 percent ROI) and performing a steel entry door replacement (128.9 percent ROI).

Forget about the swim pool addition for now, says Yahoo. Increases in value are not automatic and are governed by region. For example, a new pool in Arizona can add 11 percent in value, while one in Ohio adds ony 6 percent. And these are estimates for an in-ground pool because above ground pools can gravely impact home appeal to new buyers.

Enlightened buyers are looking for "green" features in a resale home to help offset ever-increasing energy costs. Consider putting your money where a positive energy-savings outcome appeals to a competitive market.

I'm looking forward to the 2010 report.

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