REMODELING Magazine Releases 2019 Cost vs. Value Report
For all projects, the overall cost-to-value ratio stands at 66.1 percent, only slightly ahead of last year, and well below the decade-high of 71.2 percent in 2014. As in prior years, there are significant variations in return in different regions. The average payback nationwide for the 22 projects in the 2019 Cost vs. Value report ranges from as high as 123.8 percent for a garage door replacement in the Pacific region to as low as 45.0 percent for an upscale master suite addition in the mid-Atlantic region.
With the increasing costs of building materials and labor, we urge remodelers to think like real-estate professionals first, said Clayton DeKorne, Editor-in-Chief of REMODELING Magazine. He added when you adjust your focus to think like a broker first, you can dull clients No. 1 pain point cost with a discussion of the amount that can be recouped, then go on to show them how to think like a remodeler by raising their understanding and appreciation of the total value, not just resale value, of a home.
Due in large part to sharp increases in material costs over the past summer, the percentage of costs recouped is trending downward for all the replacement projects (see National Cost vs. Value Averages graph). Material costs tend to comprise a greater proportion of replacement projects compared with larger indoor remodels, which have a higher percentage of labor costs.
Key Highlights from the 2019 report include:
1. Rising Materials Costs are Impacting Rates of Return: While the overall changes since last year are modest, the latest Cost vs. Value report reflects the robust market that the remodeling industry has enjoyed over the past year. But costs have correspondingly increased, and in some cases, significantly so. These increases are likely due to the tariffs that have roiled commodity markets, which have led to a slight downturn in the percentage of costs recouped for some projects, but overall, returns are up slightly compared to last year.
2. Curb Appeal Projects Continue to Provide the Highest Returns: Nine out of the top ten high return projects are exterior replacement or high curb appeal - projects. The three exterior projects with the highest recoup on investment are garage door replacement (97.5%), manufactured stone veneer installation (94.9%), and a wood deck addition (75.6%). Siding replacement and window projects also provided high returns, with the highest recouping interior project being a minor kitchen remodel (80.5%).
3. New for 2019: Two new projects were added to the 2019 Cost vs. Value Report. The first is a roofing replacement job that adds standing-seam metal roofing. Compared with asphalt shingles, metal roofing costs significantly more but brings with it much greater durability. The second project is a revamp of the universal design bathroom, which was first introduced to Cost vs. Value in 2017. While the overall dimensions and features of the current project are comparable, the finishes and mechanicals including tiled walls and shower, humidity-controlled ventilation and radiant-heat floors are more consistent with an upscale project than the previous specs allowed.
4. Think like a Broker: The reason for high returns on exterior projects, and especially façade facelifts, stems from the valuations set by the real estate community. Curb appeal and first impressions are central to a real estate professionals estimation of resale value. Granted, a homes exterior will only persuade potential buyers to see more, and first impressions can vary from one individual to the next. But the impact these impressions make is critical in setting the stage for what a buyer is willing to pay for a home.
For 2019, the top ten projects by percentage of cost recouped are:
1. Garage Door Replacement (97.5%)
2. Manufactured Stone Veneer (94.9%)
3. Mid-range Minor Kitchen Remodel (80.5%)
4. Wood Deck Addition (75.6%)
5. Siding Replacement (75.6%)
6. Steel Entry Door Replacement (74.9%)
7. Vinyl Window Replacement (73.4%)
8. Fiberglass Grand Entrance (71.9%)
9. Wood Window Replacement (70.8%)
10. Composite Deck Addition (69.1%)
To see the geographic cost vs. value averages and get more information on the survey results, visit http://www.costvsvalue.com
About Hanley Wood
Hanley Wood is the premier company serving the information, media, and marketing needs of the residential, commercial design and construction industry. Utilizing the largest analytics and editorially driven Construction Industry Database - powered by Metrostudy - the company provides business intelligence and data-driven services. The company produces award-winning media, high-profile executive events, and strategic marketing solutions. To learn more, visit hanleywood.com.