As each year draws to an end, pundits like to sermonize on the best returns on investment homeowners receive from remodeling. The latest analysis that caught my eye appeared at the personal finance pages on Yahoo last week where writer Dana Dratch identified the home improvement projects that delivered the worst ROI.
Near the top of the deadliest makeovers was the sunroom addition, wherein homeowners could expect a mere 48 percent return for the average $75,224 outlay. The fact that the project involves an addition - increase in total square footage - makes the Yahoo writer wince. Dratch claims increasing square footage is not a bad idea in and of itself, however a sunroom constitutes a specialized purpose that really doesn't contribute to overall usable space in this tight market. I'd have to agree.
Beware the home-office remodeling craze
A home-office renovation complete with high-tech wiring and storage space is another ROI loser for 2011. Again, with square footage at a premium, buyers are looking for multiple purpose -- rather than dedicated - living space. According to Yahoo, homeowners spent an average of $28,888 on home office remodeling and should see only some 45.8 percent ROI.
Any remodeling project that carries the tag "super deluxe" ought to send you running. A high-end super deluxe master bedroom addition or renovation that cost homeowners $232,062 on average might fetch (read and weep) a paltry 52 percent return. That's flat-out brutal.
Money Magazine says that while completing a $30,000 kitchen appliance renovation might excite you, owning top-shelf, restaurant-grade appliances may not be what home shoppers are looking for. The magazine adds that in this market, buyers may not appreciate pools or hot tubs, especially in the Midwest.
Which home improvements make sense now?
RISMedia recommends you consider small-scale, functional repairs and upgrades for your home. That includes plunking down some $540 on landscaping for a 586 percent ROI. Repair faulty plumbing or electrical work and invest $535 on it to recoup an 181 percent ROI.
Some 600 real estate professionals surveyed by HomeGain agreed that the greatest factor increasing home prices for resale while costing homeowners the least was in de-cluttering and cleaning the house. For an investment of $290, they said you could recoup a $1,990 price increase.
In short, if you plan on staying, improve your home for your own use. But if you plan on selling someday, consider changes that suit most everyone.