July 27,1987
from: The Wall Street Journal, "Your Money Matters"
By Alexandra Peers.

Home renovation is booming.

A rapid expansion in home remodeling is taking place in almost every region of the country, fueled -- at least in part -- by real-estate speculation.

People who find their home is "the best performing item in the portfolio" are buying other houses and making improvements with an eye to reselling at a profit, says Bobbie Pickering Shannon, president of Douglas Elliman-Pickering Associates, a Greenwich, Conn., real-estate firm.

The Census Bureau estimates that $91.3 billion was spent on home remodeling last year, up nearly 14%, or $11 billion, from a year earlier and up 85% from 1983. Remodeling Contractor magazine predicts home-improvement spending will set another record this year.

But while some homeowners seem to believe improvements automatically augment a home's resale value, remodeling costs are not always fully recoverable.

Real-estate appraisers say that the greater the variety of homes in a neighborhood and the wider the range of prices for recently sold houses, the more likely improvements are to boost a home's resale value. Even the most extensive and expensive alterations, however, won't raise a home completely out of the price range for other homes in the neighborhood.

The features that help sell a home, real-estate agents say, are landscaping, ample closet space, modern bathrooms, state of the art kitchens, and neutral colors in paint or wallpaper. Homeowners who want to increase a home's resale value "are better off sticking to bland and quiet," advises Mrs. Shannon.

Adding a bathroom -- at an average price of $8,200 -- is considered to be among the most cost-effective renovations. A recent study by Remodeling Contractor estimates that the second bathroom adds average $10,000 to a home's resale value, 22% more than the cost. A fireplace, which costs an average of $3,350, can add $4,600 to the resale value, a 38% gain.

Kenneth Klein, president of Kleinco Construction of Tulsa, Okla., says the renovations most in demand by homeowners this year include kitchen cabinetry, skylights, expanded closet space and additions that enlarge the kitchen while combining it with a family room. Of these choices, the study rates skylights as the best buy, returning all but 6% of their cost.

Losers, from an investment standpoint, often include refurbishing a basement, reroofing, or adding a tennis court or a swimming pool. Despite the growing popularity of elaborate pools, when it comes time to sell a house, a pool is a "very expensive liability" in all but the warmest climates, says Mr. Jerry Desch, executive vice president of Coldwell Banker Griffiths & Blair of Topeka, Kan.

Dollar for dollar, more money will be spent on new windows and doors than any other remodeling project this year, an estimated $10 billion, according to Remodeling Contractor. But homeowners can be "sold a bill of goods," Mr. Desch warns. He says these features, along with aluminum siding, may fail to boost a home's resale value and trim energy costs as much as homeowners expect. Other real-estate agents say excessive security, such as steel shutters or dual-lock windows can ward off buyers as well as burglars.

Mr. Klein warns against investing in remodeling fads. "Five or 10 years ago, the trend was California contemporary -- everybody wanted houses with weird-shaped roofs going off in different directions." Now, he says, homeowners want houses "with a classical feel."

Costs And Values:
The chart below shows the average cost of remodeling projects and the estimated return on the investment if the house is sold. The last column on the right shows the gain or loss.

Call for more information: 1-800-747-3324
or: 805-647-3324
FAX: 805-293-8712

[Home] [Contact Us] [About] [Products] [Services] [Photo Gallery] [More Info]

Copyright © 1995-2008 By Buena Vista Sunrooms