Have you considered adding an addition to your home, but were not sure if it would add enough value to your house to make it worth doing? Would adding more space improve the quality of life in your home? There are several ways to consider the “value” of a home. This blog is about the financial value that can come from improving your home and adding quality usable space.
After Second Story Addition
In our last blog we talked about some of the ways home additions and remodeling add value to the space by improving your lifestyle in your home. For example, we added a master bedroom suite and remodeled the kitchen/living room in a home for a retiring couple in the Washington DC area. They wanted to stay in the home where they raised their children, but redesign it to accommodate visiting family as it expands. It was also important for them to have their room on the first floor to avoid the need to climb stairs in their later years. The value that this home addition/remodel brought to this family goes well beyond any financial gain they stand to receive. It allowed them to remain in a house they love, though their needs and lifestyle has changed dramatically since they bought it. Though it may not be a priority right now, this couple and their family will likely benefit from these upgrades to their home in terms of its monetary value as well.
In a study published by www.costvsvalue.com, house values in the Washington DC area increased at varying rates based on the type of project completed. The study looked at the cost of the job, increased resale value of the home, and the percentage of the amount spent that was recouped through the increased value. With of all the projects listed, such as two-story addition, deck addition, and major kitchen renovation, all of the projects resulted in an increased resale value. For demonstration purposes, the two story addition project noted in the study cost $156,673 to complete and increased the value of the home by $115,743. The homeowners recouped 73.9% of the money they spent upgrading their house, through the increased value of their home. This value, which now may be in theory, will be realized when they refinance, take a line of credit against it, or sell the house.
We do a lot of deck additions, which has a high rate of cost recouped. For example, a sunroom with the cost of $73,521 may increase the value of the home by $42,870. This means 58.3% of the cost to do the project is added back into the value of the house. Not all of the projects will have such a high rate of return, but nearly all of the possibilities for home improvements will have at least a 50% cost recoup. Another type of renovation we frequently complete, such as the one for the couple who wanted to stay in their home after their children moved out, is the bedroom master suite. A cost of $105,518 may increase the value of the home by $75,774, or 71.8% recoup.
When you consider the value created by having your home just the way you want it, to meet your lifestyle needs, the difference between the cost of the project and the increased value makes doing the project much more attractive. It is easy to dismiss home remodeling based on costs, but when you factor in the added resale value, the actual costs are not as high as the project costs. It takes a bit of a long term approach to see the value that updating, upgrading, and expanding your house can have on your life and the lives of your family members. Project and recoup costs are just one factor; enhanced quality of life and having a comfortable home to suit your lifestyle are also considerations that weigh in on the decision about home improvements.
Take a look at the Cost vs. Value Report and contact us for a consultation. The projects listed in the report are our area of expertise. We can show you how to turn your existing house into your dream home, and recoup a percentage of the costs by increasing the value.