What the Numbers Mean
When comparing the data in this report to remodeling costs and resale values in your area, remember that averaging tends to have a leveling effect. On the “cost” side, small differences in the size or scope of your project, or in the quality of finishes and accessories you choose, can dramatically affect the price. A remodeling project that changes how a space is used — converting an existing bedroom into a master bath, for example — may meet an immediate need for the current homeowners, but it may be at odds with the needs of prospective buyers, who may not intend to put the space to the same use or who may perceive the change as a reduction in the number of rooms. Similarly, adding square footage may solve immediate space needs, but it also increases heating and cooling bills, something that may not be welcomed in this era of heightened energy awareness.
As for the “cost recouped” for a given project, it depends on a variety of factors that traditionally affect home values, including the condition of the rest of the house, the value of similar homes nearby, and the rate at which property values are rising — or falling — in the surrounding area. Whether the overall effect of foreclosures on national house prices is as severe as some claim, foreclosures have an immediate negative effect in neighborhoods where they occur. And in many areas, a large inventory of new homes on the market at discounted prices tends to have a constricting effect on resale values of existing homes.
Where resale value is a major factor in a homeowner's decision to remodel, it is prudent to consult with a reputable local remodeler about actual construction costs and to talk with an experienced Realtor about home prices in the neighborhood.