When it comes to remodeling, Americans are thinking small.
It’s a reflection of the times we live in, according to Sal Alfano, editorial director of Remodeling magazine, a trade journal that each year conducts an extensive study of the typical costs of home-remodeling jobs, compared to ballpark estimates of how much of those expenditures homeowners would recoup at sale time.
The short version: Economic realities have generally snuffed out over-the-top kitchen remodels and room additions in favor of more modest jobs, said Alfano, whose magazine has conducted its "Cost vs. Value" survey of contractors and real estate agents since 1988.
In broadest terms, the average return on investment of a remodeling project this past year at sale time was 60 percent, vs. 63.8 percent last year, Alfano said. (He noted, however, that the magazine introduced a number of small-scale projects into the mix this year in order to reflect what’s happening in the marketplace, and those skewed the returns slightly.)
Still, "small projects are here to stay," he said. Although some have interpreted the magazine’s latest data to mean that chastened homeowners are now remodeling for their families’ own needs and are no longer trying to impress future buyers in order to recoup their remodeling investments, Alfano doesn’t see a sea change in consumer attitudes.
"I think that’s always been the case — people are going to do the projects they want and need," he said. "Mostly people remodel for themselves.
"The fact that houses depreciated shocked a lot of people, but they seem to be getting their confidence back," he said. "I still believe there’s a lot of pent-up demand, and it’s almost working in favor of remodeling — people are saying, ‘I can’t really sell this place for what I’d like to get, so I might as well remodel it.’ "
Five things to know about what seems to have a payback — and what doesn’t — in home remodeling:
1. The magazine studied tightly defined jobs on a national and regional basis, as well as for many cities. It further broke down many of those projects, such as kitchen remodeling, into such categories as "minor remodel" and "high-end."
The study was conducted in collaboration with the National Association of Realtors, whose members offered payback estimates based on resales in their geographic areas.
Full results can be seen at remodeling.hw.net.
The top five "moderate projects" with the strongest payback at resale time, returning 72.2 percent or more of their cost: steel entry-door replacement (at a cost of about $1,200); garage-door replacement ($1,000); wooden deck addition ($11,000); replacing 10 insulated, wooden windows clad in vinyl or aluminum ($12,000); an attic bedroom addition ($51,428).
2. The best bang for the buck was garage-door replacement, Alfano said. It was the first time that project had appeared in the survey, though it made sense because consumers seem to have a strong interest in curb-appeal projects these days, he said.
The top 10 spots in the national ranking are occupied by 13 projects (there were ties), and nine of these are exterior replacements, Alfano said.
3. Two projects with chunky price tags held their own in the ratings, which surprised Alfano somewhat: The full remodels of basement and attic stayed in the top 10, despite their costs.
In the survey, the basement rehab typically cost $64,500 and returned 70 percent at sale time, the study said. (Although the researchers wrote a lengthy and detailed description of the project in order to gain a consistent cost estimation, the basic job, for purposes of the survey, was to finish the lower level of a house in order to create a 20-by-30-foot entertaining area with a wet bar and a 5-by-8-foot bathroom; walls and ceilings were of painted drywall, exterior walls were insulated, and wiring and plumbing were new.)
The attic bedroom carried an average price tag of $51,000 and returned 72.2 percent of the cost, according to the study. (This task was to convert unfinished space to a 15-by-15-foot bedroom and 5-by-7-foot bathroom with shower. The plan would include a dormer, four new windows and closet space, with new insulation, heating and air conditioning, and wiring to code.)
"They’re fairly beefy projects," Alfano said. "But they add living space without breaking ground. People are looking for and need to have more living space, and (those two projects) are the most economical way to do it" — generally cheaper than a room addition, he said.
4. Kitchens are the darlings of home remodeling, and lately the market action is in the magazine’s definition of a minor version, Alfano said.
There’s probably no such thing as a cheap kitchen remodel. But by the magazine’s terms, the minor remodel takes a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and countertops and leaves the cabinet frames in place, replacing their fronts with new, raised-panel wooden doors and drawers. The room also gets an energy-efficient wall oven and cooktop, laminate countertops, mid-priced sink and faucet and resilient flooring.
Again, the key here is not messing with the footprint in order to conserve costs — no walls or plumbing were moved. The average cost for such a job was about $22,000, with a likely return of 72.8 percent of the cost, the magazine estimated.
"It jumped up to fourth place this year, which is nice to see," he said. "People are getting back to traditional projects, but in a smaller way."
5. Although the "don’t bother" category — in terms of payback — may be debatable, the project that had the least return, according to the survey, was installing a backup power generator, at an average cost of nearly $15,000. Its payback was about 48 percent, according to the study.
