Justin has talked to more than 50,000 realtors about the program.
Cost estimates: HomeTech Information Systems www.hometechonline.com Resale value estimates: REALTORS® Magazine and Members of the National Association of REALTORS® www.realtor.org Survey instrument: Specpan www.specpan.com Has the cost of remodeling come down with the cost of existing homes?
If we use this slide, the chart needs to be updated. SA: I’ve added updated chart.
If we use this slide, the chart needs to be updated. SA: I’ve updated the chart.
Curb appeal Another appeal for owners: maintenance free
Selective splurging: Less square footage, but selectively splurging, like on moldings, flooring that adds value, and—for those with a sale in mind—curb appeal Entry door : First statement the home owners make about themselves Steel doors: Clean lines, contemporary feel, unexpected
Aging in place. Most adults 45-years and older plan to “age in place,” stay in their homes and communities as long as possible, according to a recent AARP survey. Multi-generation Living . By 2008, 20 percent of 25-to-34-year-olds were living in their parents home, up from 11 percent in 1980. Owners hope it’s temporary, so are customizing the space with furnishings, rather than renovating attics and basements.
Home owners want to be passionate about their kitchens, which they still consider the most important room in the house. Home owners are performing lower-priced kitchen “facelifts,” rather than wholesale renovations. Home owners are selecting mid-range appliances that mimic high-end choices. Granite is still popular, but home owners are choosing thinner and less exotic stone, which adds value to the kitchen but doesn’t bust the budget. Home owners are dressing up cabinets with new hardware and painted fronts.
Lends curb appeal, adds value Three- and four-car garages , less popular than before the recession. Today, home owners want to maintain and improve what they have. New material and production techniques offer more design options at every price point. SA: Upscale version might be the better deal. Only 1% point difference but an all-around better product. H igh-strength steel and heavy duty hardware, foam insulated to R-12, with insulated windows. Wrong values: M = 71.9% U=71.1%
There are 35 projects in this year’s survey, same as last year. Looking at the projects in rank order, based on how much you estimated they’d return at resale, 7 of the top 10 are replacement projects. The only ones that aren’t: attic bedroom, minor kitchen, and deck addition – all midrange projects. This is the first time I recall an upscale project topped the list.
We have not included any green projects in Cost vs. Value, but I wanted to throw this slide in since you (Todd) mentioned that you’ve been doing more geothermal installations. What kind of an outlay can home owners expect to make for such a system and what might they save in energy costs?
I thought it would also be nice to look at the bottom 10 projects on the list – more full-scale remodeling projects here. Most of these are pretty expensive and so not likely to return as much value in today’s market. But for customers with a long timeline – say they want to sell in five year – one of these projects can bring them a lot of enjoyment until they’re ready to sell. Todd, we always say Cost vs. Value isn’t the definitive answer on whether to remodel or not – but it’s a starting point, and there are a lot of factors that need to be taken into account – like the overall condition of the house and the characteristics of comparable properties in the neighborhood. Can you envision scenarios in which some of these larger projects make a bigger difference in the sale?
Here’s something that surprised me in this year’s survey. Realtors always tell us that buyers pay most attention to kitchens and baths. We saw a kitchen project in the Top 5 – but bathroom projects didn’t even make the top 10. Can you speculate why?
So I’ve had many, many REALTOR Magazine readers tell us that they really love Cost vs. Value, but there’s not as much of it covered in the magazine these days. Where can you find Cost vs. Value data online? One place is HouseLogic.com. It’s a web site NAR launched about two years ago – and it’s all about protecting, improving, and maintaining the value of your home. National averages for various remodeling projects are built into the site, so here, on the right, you see an article on how to save money remodeling your kitchen, and at the top, you see Cost vs. Value data for a major kitchen remodel. Incidentally, I threw in another image here because HouseLogic is publishing a fun series right now: “Why You Should Fake It,” looking at some of the alternatives to expensive finishes. Here, they’re showing vinyl siding that looks like beautiful cedar shake. In another piece, Lisa Kaplan Gordon, a luxury home builder and regular contributor, shows how to install a granite film on an old countertop. I don’t know how durable the film is, but at least on video the results look pretty fabulous. Todd, you remodel a lot of homes. How does a home owner decide whether “fake” is an acceptable alternative? And more important, should they tell their neighbors it’s fake or let them believe it’s the real thing?
But if you want to find data specific for your region or your metro area, go to costvsvalue.com. Sal, let’s say I’m from Detroit, Michigan. Walk me through how to find the data.
Take time to study the data and figure out what’s relevant to you. Don’t take the data at face value, but make it the starting point for a conversation with clients and customers. Counsel customers with a long timeline (i.e., plans to move in 3-5 years). Blog about interesting data points with a link to costvsvalue.com Tweet interesting data points. Hashtag: #cvv Don’t copy the PDF (Hanley Wood holds the copyright!), but send clients to CostvsValue.com to download the latest data for themselves
March 2012 Cost vs Value
Tips and Trends March 22, 2012Thank you for joining this REALTOR® Magazine webinar. You should hear music beginningat 2:40 p.m. Eastern Time, and the webinar will start promptly at 3 p.m. Eastern. Theaudio is being streamed, so if you’re having trouble hearing, try adjusting the volume onyour computer. Typically, there are two places to adjust volume: (1) on your monitor or(2) using the Control Panel. Mac users: Use the audio function keys on your keyboard.
Sponsor Justin Smith •Senior specialist, Lowe’s Program for REALTORS® •Lowe’s representative for more than five years
Tips and TrendsSpeakers Sal Alfano Todd Wood Editorial director •REALTOR® for more Hanley Wood Business than 25 years; owner Media of RE/MAX Realty •Remodeling Services, Bethesda, •Replacement Contractor •The Journal of Light Md. Construction •Owner of Castlewood •Coastal Contractor Custom Builders •Professional Deck BuilderHostsStacey Moncrieff and Brian SummerfieldREALTOR® Magazine
What is it?• 35 remodeling projects – midrange (M)and upscale (U)• 80 U.S. cities• National and regional data publishedeach year by Remodeling magazine andcovered in REALTOR® Magazine.• Current and archival city data availableonline at www.costvsvalue.com
Where we get the numbersCost estimatesHomeTech Information Systems,www.hometechonline.comResale value estimatesNational Association of REALTORS®members, www.realtor.orgSurvey instrumentSpecpan, www.specpan.com
Top 51. Fiber-cement siding (U) Replace 1,250 square feet of existing siding with new fiber-cement siding, factory primed and factory painted. Include all 4/4 and 5/4 trim using either fiber-cement boards or cellular PVC. Siding % Cost Job Value Rank Recouped Cost at Sale 1 Siding replacement, fiber cement (U) 78.0% $13,461 $10,493 10 Siding replacement , foam-backed vinyl (U) 69.6% $14,274 $9,937 11 Siding Replacement, vinyl (M) 69.5% $11,729 $8,155
Top 5• Fiber-cement siding (U)• Entry door replacement, steel (M) Remove existing 3-0/6-8 entry door and jambs and replace with new 20-gauge steel unit, including clear dual-pane half- glass panel, jambs, and aluminum threshold with composite stop. Door is factory finished with same color both sides. Exterior brick-mold and 2.5-inch interior colonial or ranch casings in poplar or equal prefinished to match door color. Replace existing lockset with new bored- lock in brass or antique-brass finish. Entry doors % Cost Job Value Rank Recouped Cost at Sale 2 Entry door, 20-gauge steel (M) 72.7% $1,238 $903 21 Grand entrance, fiberglass (U) 60.7% $7,488 $4,554 27 Entry door, fiberglass (M) 56.1% $3,536 $1,990
Top 5• Fiber-cement siding (U)• Entry door replacement – steel (M)• Attic bedroom (M) Convert unfinished attic space to a 15-by-15- foot bedroom and a 5-by-7-foot bathroom with shower. Include a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space; provide electrical wiring and lighting to code. Retain existing stairs, but add rail and baluster. Bedrooms % Cost Job Value Rank Recouped Cost at Sale 3 Attic bedroom (M) 72.5% $50,148 $36,346 21 Master suite addition (M) 59.7% $106,196 $62,874 34 Master suite addition (U) 50.5% $227,178 $114,822
Top 5• Fiber-cement siding (U)• Entry door replacement – steel (M)• Attic bedroom (M) In a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and• Minor kitchen remodel (M) countertops, leave cabinet boxes in place but replace fronts with new raised-panel wood doors and drawers, including new hardware. Replace wall oven and cooktop with new energy-efficient models. Replace laminate countertops; install mid-priced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring. Kitchens % Cost Job Value Rank Recouped Cost at Sale 4 Minor kitchen remodel (M) 72.1% $19,588 $14,120 16 Major kitchen remodel (M) 65.7% $57,494 $37,785 25 Major kitchen remodel (U) 57.4% $110,938 $63,731
Top 5• Fiber-cement siding, upscale• Entry door replacement – steel (M)• Attic bedroom (M)• Minor kitchen remodel (M) Remove and dispose of existing 16x7- foot garage door and tracks. Install new• Garage door replacement (M) 4-section garage door on new galvanized steel tracks; reuse existing motorized opener. New door is uninsulated, single-layer, embossed steel with two coats of baked-on paint, galvanized steel hinges, and nylon rollers. 10-year limited warranty. Garages % Cost Job Value Rank Recouped Cost at Sale 5 Garage door replacement (M) 72.1% $1,512 $1,087 6 Garage door replacement (U) 71.0% $2,994 $2,129 26 Garage addition (M) 57.2% $57,842 $33,089 32 Garage addition (U) 52.1% $86,347 $44,987
EnergyStar.gov (search “tax credits”) •$500 tax credit for energy- efficiency improvements expired 12/31/11. •Credit for geothermal heat pumps; residential wind turbines; and solar energy systems remains in effect through 12/31/16. 30% credit with no upper limit Existing homes and new construction Principal residences and second homes (rentals don’t qualify)
• Home remodeling tips: HouseLogic.com• The data: CostvsValue.com. Study the data and figure out what’s relevant to you. Make it the starting point for a conversation with clients and customers. Counsel customers with a long timeline. Blog about interesting data points with a link to costvsvalue.com Tweet interesting data points. Hashtag: #cvv Copyright warning: Send clients to CostvsValue.com to download the data
Resources2011-12 Cost vs. ValueData for 80 cities + downloadable PDFshttp://costvsvalue.comREALTOR® Content ResourceHouseLogic’s free content resource on improving,maintaining and protecting the value of your homehttp://houselogic.com/membersStyled, Staged & Sold blogIncludes coverage of the International BuildersShow, January 2012http://styledstagedsold.blogs.realtor.org/Lowe’s Program for REALTORS®http://LowesRealtorBenefits.com
Questions?Next Hot Topics Webinar:“Court Side: 6 Recent Cases and What They Mean for Your Business”•April 19, 2012, 3 p.m. Eastern•http://REALTORMag.REALTOR.org/webinars