Historically, homeowners find consolation in Remodeling Magazine’s Cost vs. Value Report. The money they plowed into their home in repairs and remodeling is not lost after all; a portion of it is recovered in the home’s appreciation. But because home values dropped in the last few years, the cost/value ratio dropped as well. At its peak in 2005, the ratio hit 86.7%. Since then, it dropped 29 points to 57.7% in the latest report (2011-12). The Midwest (West North Central) ranked at the bottom, at 49.5%.
There’s a positive side to this report.
But let’s look at it more positively. Most people buy houses, not to flip, but to create a home. Ownership, pride of place, stability, family~these ideals motivate the homeowner. So, although you’d like your repairs and remodeling to contribute to the home’s value, you also accept them as a necessary part of life. You maintain what you own. And when you do, you help to stabilize and even increase home prices.
If a repair or remodel is necessary, it’s an added benefit when it increases a home’s value. In spite of the decrease in the cost vs. value ratio, you’re still enjoying at least a 50% return on our investment.
Midwest projects with the highest Cost vs. Value Ratio.
Now, let’s take a look at the top projects in the Midwest. The report splits the Midwest into two regions: East North Central and West North Central. Here’s how the top ten projects compare between the two regions in the midrange category:
|East: WI, MI, IL, IN, OH||West: MN, IA, MO, KS, NE, ND, SD|
|68.7%||Entry door replacement||59.9%||Attic bedroom|
|65.7%||Minor kitchen remodel||59.5%||Deck addition, wood|
|65.2%||Garage door replacement||59.0%||Siding replacement, vinyl|
|64.0%||Siding replacement, vinyl||55.2%||Deck addition, composite|
|62.9%||Attic bedroom||55.9%||Window repl., vinyl|
|62.7%||Window repl., wood||55.7%||Two-story addition|
|62.5%||Window repl., vinyl||55.5%||Minor kitchen remodel|
|61.7%||Deck addition, wood||55.0%||Major kitchen remodel|
|59.3%||Major kitchen remodel||53.1%||Window repl., wood|
|56.1%||Deck addition, composite||52.6%||Garage door replacement|
Attic and second story offers opportunity.
The Attic Bedroom project is ranked third, nationally, at 72.5%. The report explains its popularity as “the least expensive way to add a bathroom and bedroom, and it does so within the home’s existing footprint.” More extravagant, but for a similar reason, the Two-Story Addition ranked #6 on the West Central list. Together, they might be a millwork distributor’s and prefinisher’s best opportunities during the recession.
Midwest homeowners, don’t despair! You’re enjoying a 53-69% return on your investment. Plus, you’re living the American dream of home ownership.