Harvard University

Remodeling Still Makes Sense in This Economy

Leigh Roche, owner Skye General Contracting, inc. Pittsburgh, PA

With the decline in the economy, there have reports recently (one was actually a MSN.com headline article) stating that remodeling one’s home is a consumer extravagance. This is not only inaccurate but irresponsible. Remodeling is often necessary for overall upkeep and maintenance of one’s home; putting off home improvements could result in more costly repairs and improvements in the future. An older roof cannot and should not be ignored. It will not offer the needed protection, will not be energy-efficient and detracts from the aesthetics of one’s home. If it is left to deteriorate, it could leak, resulting in further damage to a home’s interior. Leaky windows can let water seep into walls and cause black mold to grow; deteriorating chimneys can not only fall apart and cause damage but could result in leaking into the home.

The studies and reports in the actual remodeling industry are factual and encouraging. The Research Institute for Cooking & Kitchen Intelligence (RICKI), a Charlotte-based organization of industry professionals in the kitchen remodeling industry, conducts a “Remodelers 360” survey that examines consumers’ kitchen design preferences, kitchen remodeling experiences, and how they use their kitchens. The results reveal what common sense would tell us: more Americans are eating at home as a result of the downturn in the economy, thus the desire to remodel a kitchen is still motivating consumers to remodel. The value homeowners get for a kitchen remodel and the aesthetic and practical benefits to the home still make it a highly worthwhile investment.

According to Remodeling Magazine Cost vs. Value Report 2008-2009, remodeling is still an excellent investment that not only improves your quality of life and the cost of which can be recouped if or when you sell your home. The Cost vs. Value Report gives approximate costs of particular remodeling projects and provides potential resale amounts and percentage of return on investment. The costs of remodeling obviously can vary from place to place across the U.S., based on regional fluctuations in material costs and contractors’ labor costs and overhead.

Bathroom Remodel: Update an existing 5×7-foot bathroom that would include replacing all fixtures, installing a ceramic tile surround; installing a new plumbing in the tub, shower and sink; installing a standard white toilet; solid-surface vanity counter with integral sink; installing a medicine cabinet, light fixture and ceramic tile floor.

Approximate Project Cost:$15,899

Resale value: $11,857

Cost Recouped: 74.6%

Deck Addition (wood): Add a 16×20-foot deck using pressure-treated joists supported by 4×4 posts anchored to concrete piers. Install pressure-treated deck boards in a simple linear pattern; include a built-in bench and planter of the same decking material and stairs

( assuming three steps to grade). Provide a complete railing system using pressure-treated wood posts, railings, and balusters.

Approximate Project Cost: $10,601

Resale Value: $8,676

Cost Recouped: 81.8%

Major Kitchen Remodel: Update an outmoded 200-square-foot kitchen with a layout of approximately 30 linear feet of new semi-custom wood cabinets, installing laminate countertops and a standard double-tub stainless-steel sink with standard single-lever faucet. Install an energy-efficient wall oven, cooktop, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. Add new resilient flooring and finish with painted walls, trim, and ceiling.

Approximate Project Cost: $56,611

Resale value: $43,030

Cost Recouped: 76.0%

Minor Kitchen Remodel: In a functional but dated 200-square-foot kitchen with approximately 30 linear feet of cabinetry and 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 and install mid-priced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring.

Approximate Project Cost: $21,246

Resale Value: $16,881

Cost Recouped: 79.5%

There are also many remodeling projects that increase your home’s energy-efficiency. Updating older bathroom plumbing fixtures with newer, more water-conserving fixtures is an affordable way to improve a home’s efficiency, lower water costs, and improve the appearance of the bathroom as well. Other minor things that can be done include installing new doors, installing Energy Star- rated windows, sealing cracks and crevices with spray foam, and if possible laying thicker insulation in the attic.

Consumer energy tax incentives and credits are being offered through the American Recovery and Reinvestment Act of 2009 and are providing consumers tax incentives to have energy-efficiency improvements done to their existing homes and new construction. The plan includes federal tax credits and includes:

Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only) for:

Windows and Doors

Insulation

Roofs (Metal and Asphalt)

HVAC

Water Heaters (non-solar)

Biomass Stoves

Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for:

Geothermal Heat Pumps

Solar Panels

Solar Water Heaters

Small Wind Energy Systems

Fuel Cells

The Joint Center for Housing Studies is Harvard University’s center for information and research on housing in the United States. The Joint Center for Housing Studies examines emerging housing and community development policies and concerns. Industry leaders and public officials also use the center’s research to learn about trends and issues in the housing field.

According to The Joint Center for Housing Studies 2009 Growth Markets for Remodeling report, remodeling has helped to increase the energy efficiency of existing homes over the past two decades, especially older homes built during or before the 1930s. Most homeowners are currently interested in projects that will improve their homes’ energy efficiency and address other environmental concerns (utilizing “green“ materials for reducing carbon footprint and health concerns for example). In 2007, homeowners spent over $52 billion of their improvement to energy-related projects, up from less than $33 billion (in inflation-adjusted terms) a decade earlier. Homeowners are motivated by environmental concerns, and have a growing interest in products and projects that meet the green goals of quality and durability, environmental performance, and safety (such as lessening the chances or consequences of certain disasters on the home).

As credit conditions start to ease up, owners will find it easier to finance their home improvement projects. As home prices edge back up, owners will again realize the wealth-building benefits of investing in their homes. And as sales pick up, recent buyers will want to make improvements as the economy continues to improve. When the uncertainty of the economy and job-security lessens, people will feel less fear about spending money on remodeling projects.

Remodeling can be done at any time of year- it is not necessary to wait until springtime to tackle home improvements when most contractors and home improvement specialists are backlogged with work. Certain projects are definitely best-suited to fair weather: roofs, exterior painting, decks, and siding. But there are many projects that can be completed at any time: interior painting, kitchen or bathroom remodel, basement reclaiming or remodeling, removing wall(s) to open up interior spaces, flooring, and installing doors and windows, refinishing wood floors or putting in new trim work. A great project is redefining a room by changing a bedroom or poorly-utilized room into a bathroom, office, media room or workout room/ relaxation retreat, or a space that fits your lifestyle.

As more and more homeowners are remaining in their homes, they look to remodeling to help create their dream home from the home they already own. Your home is a major investment- maintain or improve its value, efficiency and appearance to improve your quality of life!

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