A strong housing market isn’t necessarily a good thing when it comes to selling a home. According to a recent report published by Remodeling magazine, Cost vs. Value Report, homeowners are seeing a lower return on their investment for home improvement projects. The more upscale the project, the lower the ROI.
What can North Carolina homeowners expect with their home improvement projects? Let’s take a look at the numbers in the top metro areas of the state.
Return on investment by the numbers
Asheville, North Carolina, Home Improvement
Top projects for best ROI:
- Deck addition (wood) (average job cost: $12,218; resale value: $8,125; cost recouped: 66.5%)
- Window replacement (vinyl) (average job cost: $16,341; resale value: $10,786; cost recouped: 66%)
- Deck addition (composite) (average job cost: $18,240; resale value: $11,813; cost recouped: 64.8%)
Worst projects for ROI:
- Backyard patio (average job cost: $54,566; resale value: $24,571; cost recouped: 45%)
- Grand entrance (fiberglass) (average job cost: $8,901; resale value: $4,114; cost recouped: 46.2%)
- Master suite addition (upscale) (average job cost: $253,607; resale value: $122,143; cost recouped: 48.2%)
Charlotte, North Carolina, Home Improvement
Top projects for best ROI:
- Manufactured stone veneer (average job cost: $8,368; resale value: $9,220; cost recouped: 110.2 %)
- Garage door replacement (average job cost: $3,517; resale value: $3,199; cost recouped: 91%)
- Deck addition (wood) (average job cost: $11,981; resale value: $10,744; cost recouped: 89.7%)
Worst projects for ROI:
- Roof replacement (metal) (average job cost: $35,577; resale value: $21,824; cost recouped: 61.3%)
- Master suite addition (upscale) (average job cost: $249,449; resale value: $156,921; cost recouped: 62.9%)
- Entry door replacement (steel) (average job cost: $1,747; resale value: $1,149; cost recouped: 65.8%)
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Greensboro, North Carolina, Home Improvement
Top projects for best ROI:
- Garage door replacement (average job cost: $3,546; resale value: $3,175; cost recouped: 89.5%)
- Minor kitchen remodel (midrange) (average job cost: $20,387; resale value: $15,750; cost recouped: 77.3%)
- Manufactured stone veneer (average job cost: $8,512; resale value: $6,500; cost recouped: 76.4%)
Worst projects for ROI:
- Master suite addition (upscale) (average job cost: $244,555; resale value: $85,280; cost recouped: 34.9%)
- Bathroom remodel (universal design) (average job cost: $29,868; resale value: $11,000; cost recouped: 36.8%)
- Roof replacement (asphalt shingles) (average job cost: $20,009; resale value: $7,500; cost recouped: 37.5%)
Durham, North Carolina, Home Improvement
Top projects for best ROI:
- Minor kitchen remodel (midrange) (average job cost: $21,371; resale value: $17,564; cost recouped: 82.2%)
- Siding replacement (average job cost: $14,893; resale value: $10,364; cost recouped: 69.6%)
- Major kitchen remodel (midrange) (average job cost: $62,969; resale value: $42,763; cost recouped: 67.9%)
Worst projects for ROI:
- Backyard patio (average job cost: $53,979; resale value: $25,083; cost recouped: 46.5%)
- Deck addition (composite) (average job cost: $17,850; resale value: $9,250; cost recouped: 51.8%)
- Bathroom remodel (universal design) (average job cost: $31,340; resale value: $16,692; cost recouped: 53.3%)
Return on investment might be less than most people anticipate, including kitchen and bathroom remodels, which are usually the most popular projects. It pays to check out the statistics in your area before investing in major home improvements.
A possible silver lining
According to Remodeling’s editor-in-chief (and manager of the report) Craig Webb, he believes that the strong housing market is probably to blame for the lower returns. “It’s not clear if…nationwide affordability concerns are leading (real estate) pros to question the value of renovations that would make a house even more expensive at resale,” says Webb.
In addition, the report was compiled before the country was struck with several natural disasters, including forest fires and hurricanes, spiking an increase in the cost of building supplies and skilled labor.
But the outlook is positive, with the ROI of most projects expected to level out over the next year as these costs level out.
Remodeling is still more cost-effective than replacement, although real estate pros will advise that replacement is the best option. This year, there’s a 20-point difference in the return on investment for replacement versus remodeling: 76.1 percent to 56 percent, in favor of replacement.
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