Value for Your Remodeling Investment

Most Popular Remodeling Projects in 2019

December 20, 2019 By Tom Sweeney Leave a Comment

If you think remodeling your old kitchen will make you happier, you probably are right. Complete kitchen remodels achieved a perfect “10” Joy Score in the 2019 Remodeling Impact Report. The most popular remodeling project also is the top-rated improvement to make a home more desirable among future homebuyers. The findings are based on extensive surveys by the National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI) this year.

To be clear, updating your kitchen won’t improve your profit at resale. You’ll only recoup about 59 percent of your investment. But your home will be more appealing and should sell faster and you get to enjoy it until you move.

Seriously, we could have guessed these results without a survey of nearly 2,200 consumers and 4,400 NARI members. Kitchens are the center of both family life and entertaining. It’s no wonder a more functional and attractive kitchen will serve up smiles.

What does remodeling joy mean?

The joy index is based on answers to three questions: First, does the project make you want to spend more time in the space? Second, do the improvements actually enhance your enjoyment of the space? Third, do you feel a sense of accomplishment after completing the improvements? I think the first two questions overlap and skew the scores. But because the same rules apply to all 20 projects, the study is a useful tool to compare alternatives for one’s remodeling dollars.

The good news is that you don’t have to overhaul your home’s social and functional hub to find happiness. The survey said renovating a closet also carries a 10-point joy grade and for a fraction of the cost. What’s more, repainting your home’s interior finishes a close second at 9.8. Just be sure the results look professional and you choose the right colors.

Remodeling ROI in 2019

The survey also estimates how much of your remodeling investment you are likely to recoup if you sell your house in the next few years. For example, if your home would sell for $400,000 with your old kitchen and you spend $68,000 on a new kitchen, the survey predicts you will get $440,000 at resale. So, you are at least partially remodeling the space for yourself, which should be anyone’s prime motivation.

Once again, the only projects that Realtors say homebuyers will value more than they actually cost the sellers are replacing an old roof or installing new wood flooring. The Realtors valued the payback on a new roof at 107 percent and wood flooring at 106 percent.

Homebuyers probably appreciate new roofs because lenders won’t underwrite mortgages unless deteriorated roofs are replaced. Meanwhile, wood floors are seen as a healthier alternative to wall to wall carpeting, which collects bacteria, allergens and cleaning chemicals residue over time that can compromise indoor air quality. Installing wood flooring after purchasing a home also would delay the move in date.

Visit the National Association of Realtors HouseLogic link to view the entire Remodeling Impact Report with Joy Scores, costs and paybacks for all 20 projects.

How the remodeling report was done

In June and July of 2019, HouseLogic surveyed consumers on the last remodeling project they undertook. A total of 2,193 respondents participated. The Joy Score was calculated by combining the share who were happy and those who were satisfied when seeing their completed project and dividing the share by 10 to create a ranking between 1 and 10. Higher Joy Scores indicate greater joy from the project. In March and June 2019, NARI emailed a cost survey to its 4,400 members. A total of 378 responses were received. The survey had an adjusted response rate of 11.6 percent. In July 2019, NAR emailed an interior remodeling project survey to a random sample of 52,491 Realtors. A total of 2,485 responses were received. The survey had an adjusted response rate of 4.7 percent.

2019 Remodeling Cost Benchmarks

January 18, 2019 By John Biancini Leave a Comment

“What will my remodeling cost?” is one of the first questions many homeowners ask APEX when considering a project. That’s fair. It’s not like they can go on Amazon and compare prices and features for a new kitchen or room addition. And how could they possibly know remodeling labor, materials and project management expenses.

Fortunately, Hanley Wood LLC, the nation’s biggest construction industry publisher, issues a report each year that estimates costs and resale payback (value) for dozens of common remodeling and replacement projects. The Remodeling 2019 Cost Vs Value Report draws on a leading construction estimating tool to price the jobs. Then it asks experienced Realtors from different regions to score how each project would impact the home’s resale value so it can calculate payback.

Kitchen and Bath Remodeling Costs

Here are a couple of examples. The report prices a mid-level quality major kitchen remodeling for our West North Central region at about $64,400 (62.1 percent payback) and an upscale kitchen at about $128,700 (59.7 percent payback). It pegs a mid-level bathroom remodel at about $19,600 (67.2 percent payback) and an upscale bath at $62,500 (60.2 percent payback).

I think this independent cost/value benchmarking provides APEX Construction Management clients with a valuable frame of reference. We share the link to the annual study because well-informed homeowners are our best clients.

Basis for Remodeling Costs

Like the study’s publishers, APEX doesn’t pull a big number out of the air based on what a similar project cost last year. Rather, we tally all of the tasks and materials that must be completed and add overhead and a reasonable profit. We build each estimate from the ground up, just like our award-winning additions.

As expected, the latest report shows that both project costs and values increased last year. Steel tariffs, skilled labor shortages and strong demand will do that. For instance, the authors noted that the cost of replacing a steel door increased 24 percent from the previous year. That’s also why our design estimates come with expiration dates.

You Come First

The value or payback part of the annual remodeling study reflects its source: Realtors. Once again, exterior facelift projects such as garage doors and stone veneer accents retain the most value because their costs are relatively low and they help to make a good first impression among prospective homebuyers. Realtors say this enhanced curb appeal raises price expectations.

Payback should be considered if you are improving your home to sell. In that case a minor kitchen remodel at $21,900 may be worthwhile. Realtors in our region say it should retain 80.5 percent of its value. But, in reality, most APEX clients tell us they plan to stay in their homes and are remodeling for themselves to improve their quality of life. As the study suggests, the composite deck will cost more than wood, but what is it worth to avoid sanding and re-staining every couple of years?

Download Complete Report

To learn more, download the complete Remodeling 2019 Cost Vs Value Report free here. Be sure to review the scope for each project so you understand how it compares to what you plan. If you have any questions, please contact me.

Curb Appeal Projects Top Payback Report

January 13, 2018 By John Biancini Leave a Comment

Each year at this time, Remodeling Magazine publishes its annual “Remodeling 2018 Cost vs. Value Report” on the average cost of 21 popular remodeling and replacement projects and the value each would retained at resale. Not surprisingly, lower-cost curb appeal projects dominated the top 5 list.

The survey said installing an upscale garage door would actually be worth 12.6 prcent more than its $3,591 Minneapolis market cost. A $1602 midrange-quality steel entry door would hold onto 93 percent of its value. Replacing 300 square feet of vinyl siding with manufactured stone veneer around the entry would retain 91% of its $7,996 cost for third place. Number four was adding a $12,735 16×20 pressure treated wood deck at 79.7 percent. The only interior project was fifth-ranked mid-range quality Minor Kitchen Remodel. The report said it would retain 72.7 percent of its $24,351 cost.

According to research by RemodelMAX, 2017 labor and materials costs for a bathroom addition increased the most (6.5 percent) of the 21 projects from 2016. The price of a minor kitchen remodel rose the least at 2.7 percent.

Cost vs. Value Report Data Considerations

The Remodeling Cost vs. Value Report findings are useful for homeowners to get general idea of what projects might cost in the Minneapolis market. And the payback estimates could help them avoid over-improving their homes if they plan to sell in the coming year. However, the authors warn that the data was assembled last summer and fails to take into account significant lumber price increases our market experienced this past fall.

It’s also important to remember that most homeowners remodel to improve their own quality of life at home, not to make a profit off the investment. More importantly, the survey didn’t even try to put a price on the value of a happy spouse, creating an environment that’s a hangout magnet for your children and their friends, or the peace of mind and safety that comes from an accessible bath in retirement. We’d say it’s “priceless.”

Complete data from the Remodeling 2018 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.

Trust top consideration when choosing remodeler

July 27, 2017 By Tom Sweeney Leave a Comment

Many homeowners think the most important thing they can do to obtain a fair remodeling price from a good contractor is to get three bids. In reality, competitive bidding is a small part of the process of finding the right remodeler. Establishing trust should be your top priority.

APEX Construction Management’s JB Biancini suggests you start by checking project photos and friends’ projects. Do you like what you see? Next consider online reviews and personal referrals. Do you like what you hear? Finally, meet with a couple of contractors who clear those two hurdles. Do you like what you feel? That’s when you decide if you can trust the contractors and if they listen. Although intangible, mutual trust is the most important building material in any successful remodeling project.

We caught up with JB at a St. Paul job site. Here’s how he explained it. If you have questions, contact JB.

Remodel Now for Best Value

April 28, 2017 By Tom Sweeney Leave a Comment

It seems we talk about remodeling projects forever and torment ourselves bingeing HGTV and browsing Houzz. We tell our spouses we aren’t quite ready to spend (or borrow) the money. Besides, we deserve that big vacation this year.

During the Great Recession, that strategy may have made sense. According to an analysis by Metrostudy, remodeling costs actually declined for several years during the housing slump. But the opposite has been true for the past few years. The latest annual Remodeling Cost vs. Value Report showed that projects costs have been increasing steadily, and the trend is only expected to accelerate. Fortunately, home values are going up too.

JB reviews addition plans with St. Paul clients

JB and Carmin review preliminary plans for kitchen-bathroom-mudroom addition with St. Paul homeowners.

Study Suggests Rising Remodeling Costs

The Report noted, “Nationally, the average payback for the 24 projects that we’ve tracked throughout this decade has ranged between 58% and 66%. Costs have risen each of the past four years, following a time in which the Great Recession caused prices to fall. Values have seen bigger shifts, rising the past two years after having declined in three of the previous four.”

Building materials prices have been rising steadily during the economic recovery driven by higher demand and now import tariffs. For example, more than a third of the lumber used in US construction comes from Canada. Since the grace period for the US-Canada Softwood Lumber Agreement expired last October, prices have risen each month. A US Commerce Department decision on anti-dumping penalties due April 25 was just pushed back to June. With some fearing the combined penalties and tariffs on Canadian lumber could reach 45 percent, the Canadians are said to be evaluating shifting exports away from the United States and to China. At this point, the just announced tariff is up over 20%.

Remodeling activity in the greater Twin Cities is robust. Reputable contractors who survived the downturn are busy. Skilled construction labor is in short supply and pushing labor costs higher. Meanwhile, interest rates for home equity loans also can be expected to rise in the years ahead.

“I don’t believe in high-pressure sales tactics. Never have. But the facts cannot be dismissed,” APEX President John “JB” Biancini observed. “Remodeling will cost more next year than it does this year and this year costs more than last year. The better value is now, not two years down the road.”

Use It or Lose It

While rising costs argue for remodeling sooner rather than later, the most important incentive is the ability to enjoy the upgrades sooner. How do you put a value on your kids and their friends wanting to hang out at your house because you remodeled the basement. Or wanting to entertain friends and family more because you have a wonderful open floor plan kitchen. Or the pride that comes from an exterior facelift and sheltered entry addition that neighbors adore (and envy)?

“With the exception of house flippers who are only in it for the money, most people remodel their homes to improve their quality of life. The investment potential is important but secondary,” JB said. “The main factor that would lead to an over improvement is if you don’t remain in the home long enough to enjoy it.”

Boomers Driving Discretionary Remodeling

Interestingly, a recent Harvard Joint Center for Housing Studies’ Demographic Change and the Remodeling Outlook report predicts record remodeling spending, largely by baby boomers and much more on discretionary rather than repair projects. It suggests nearly 33 percent grow in remodeling spending among homeowners age 55 and over, some 56 percent of the overall remodeling market, by 2025. Discretionary projects, which dipped to one-third of spending during the recession, are expected to drive the remodeling market going forward.

Remodeling Value – ROI vs. Your Own Quality of Life

February 8, 2017 By John Biancini Leave a Comment

Study Rates ROI, APEX favors Quality of Life Impact

Each year, Remodeling magazine publishes its annual Remodeling Cost vs. Value Report. The study estimates the cost of 29 typical remodeling and replacement projects in various markets and asks Realtors to assess the resale value based on comparable homes (comps). For example, if two houses were identical but one had a recently remodeled kitchen, how would it impact the home’s sale price?

The 2017 report provides you with three pieces of information to help you make a more informed financial decision regarding your remodeling project:

On average, how much is remodeling expected to cost this year compared to last year and what will you get for your money?
On average, how much more are the improvements likely to be worth?
Which remodeling and replacement projects will recoup the greatest percentage of cost upon resale?

According to the report, remodeling costs are up 3 percent this year and the average value of projects is up 4.2 percent. Resale value might mean more if you are a fan of HGTV’s Flip or Flop show or are concerned about over-improving your home. But items 1 and 2 send a clear message to Twin Cities area homeowners: You will save money by remodeling sooner rather than later, and our healthy real estate market means your return on investment (ROI) will be slightly higher this year.

Curb appeal projects continue to please

Not surprisingly, the report shows that Realtors still love exterior facelifts and curb appeal projects. It’s all about making a good first impression. For instance, consider two side-by-side homes. One has a modest stoop and an exposed main entry. The other has entry portico or, better yet, a street-facing porch. Guess which one is going to be more appealing to homeowners and homebuyers alike?

Popular trends not driven by financial payback

The popularity of three remodeling trends is beyond debate: integrating interior/exterior living areas, universal design features that support aging in place, and adapting homes for multi-generational/multi-family living. But the report suggests financial ROI for these projects would not be as compelling as for some other projects. These are improvements with significant labor costs so it can be more difficult to recover those expenses.

Report’s top three remodeling, replacement projects

Remodeling divides projects into mid-level and upscale categories. In 2017, the top three mid-range projects include a steel entry door, attic sealing and insulation, and a minor kitchen remodel in that order. For upscale projects, the winners are garage door replacement, wood replacement windows and vinyl replacement windows. But none of the upscale projects came close to the mid-priced project’s ROI.

APEX view of true remodeling value

Industry studies such as the annual Cost vs. Value Report provide interesting benchmarks, but it is important to remember what motivates most of us to remodel our homes — quality of life. Ever since I founded APEX, our core purpose has been to help our clients enhance their quality of life at home. It still is what gets me out of bed each morning. My point is that prospective homebuyers may value a new entry door or garage door, but it’s doubtful those are the projects that would truly elevate your quality of life.

At APEX, we don’t need a national magazine study to tell us what delivers value. We simply listen to our clients. It’s the beautiful, high-function kitchen where they are proud to entertain. Or the finished basement that’s a magnet for their kids and friends. Or the sunny addition that quickly became their favorite lounging area. Or the enlarged garage and mudroom that made Minnesota winters tolerable. Or the new master bath with enhanced accessibility, lighting and storage.

Rising prices and mortgage rates impact remodeling

Perhaps the most important prediction, made by Remodeling’s sister company MetroStudy, is that with rising mortgage rates and home prices this year, people will be more likely to improve their current homes rather than invest their equity into buying new homes. Which takes us back to the beginning.

The smart money says the sooner you remodel the better. And I would add – invest in what you love. Homes are way more than investments. They literally shape our quality of life. — JB

Value of joy in APEX Construction projects

March 29, 2016 By John Biancini Leave a Comment

Each year, Remodeling Magazine publishes its Cost vs. Value Report that benchmarks the cost of typical home remodeling projects and how they might impact the home’s resale value. It’s a handy reference if you are wondering how much more a project will cost you this year compared to if you had completed it last year. Hint: it seldom costs less. It also is useful to avoid over-improving if you plan to sell your home in the next couple of years.

This time, the National Association of the Remodeling Industry (NARI) also teamed with the National Association of Realtors (NAR) to produce the Remodeling Impact Study, which may be even more valuable. While Cost vs. Value measures financial payback, the Remodeling Impact Study assesses appeal and enjoyment. In other words, how much will the project enhance enjoyment of your home, and how will the improvements influence your home’s desirability in the real estate market?

Not surprisingly, the projects that are best at holding dollar value seldom are the ones we truly love. Exception: Replacing a worn or damaged roof is worth more than it costs and is highly recommended by Realtors. Apparently, we all appreciate the value of staying dry. And both home inspectors and insurance carriers are quick to flag faulty roofs.

The Remodeling Impact Study found that 3 out of 4 of those surveyed wanted to spend more time in their homes after remodeling and more than 9 in 10 were happy or satisfied with how their projects turned out.

Although our homes often are among our most valuable investments, they are much more. With the rise of Millennials, a recent report found that life is more about experiences than things. Homes form the backdrops of many life experiences. How does someone who enjoys cooking or entertaining put a value on an updated, open floor plan kitchen that’s integrated with an outdoor living environment? When a family loves its neighborhood but need more space, what’s the real worth of refinishing the basement or tastefully adding on? And don’t forget the Kodak moments (make that iPhone snapshots) that will be preserved in digital photos for generations.

Please contact JB at APEX Design Build (aka APEX Construction Management) to discuss your remodeling needs.

Top Value Remodeling Projects

The Remodeling Impact survey found that a new bathroom, complete kitchen remodeling and master suites are the top three “Joy Index” interior projects. Meanwhile, Realtors are most likely to recommend a kitchen facelift, bathroom remodel and hardwood floor refinishing to prepare an older home for resale.

Here are links to the complete reports:

Remodeling Impact Study

Cost vs. Value Report

Cost – Value Ratio: How to Get the Most Return on Your Remodeling Investment

September 18, 2014 By Apex Construction Management Leave a Comment

When considering a remodeling project, home owners carry two perspectives to the table in deciding what projects make the most sense for their families: improved function/style and value.

The cost – value ratio of a project addresses resale more than anything else. Remodeling Magazine’s 2014 Project Trend – Cost vs Value report is good news for anyone considering updates to their home. The report indicates 2014 showing the largest gain in return on investment in cost vs value since 2005 at 5.5% and at 9% over 2013 thus making remodeling, once again, a good investment for homeowners.

Among the top gainers you will find basement remodels and attic bedroom conversions. The biggest reason for the gain is the homeowner’s ability to add space without adding an addition. Mid-level kitchen and bath remodels are also trending upwards in 2014. Click here to read Remodeling’s full story http://www.remodeling.hw.net/cost-vs-value/2014/trends.

APEX Construction Management is an award winning design/build firm specializing in residential remodeling. Our experience shows us every successful project starts with good design and finishes on-time and on-budget because of a fastidious commitment to quality, craftsmanship and project management. We deliver “Great Client Experiences… One Project at a Time”. Call us today to learn more or schedule your free, in-home consultation.