The 19th annual Cost vs. Value Report shows that prices continue to climb for most remodeling projects at the same time the value of improvements at resale returns to 2002 levels. None of this should come as much of a surprise to industry professionals, who have been riding the crest of the remodeling boom for several years, and this year's data confirm the housing slowdown many parts of the country are experiencing. Should you be worried? That depends on how fast and how far the housing market falls, but remember that both new construction and remodeling activity have been at record levels in recent years. Some adjustment is inevitable, but indications are that the current downturn represents a return to "normal" levels and that the prospects for remodeling remain bright (see "No Cause for Alarm").
A number of improvements designed to make the report more reliable and more useful has also affected both cost and value data. For starters, we took a fresh look at the specs for all 25 projects. The result is cost-to-construct figures (which include labor, material, subtrades, and gross profit) that are not only higher than in previous years but also, we believe, considerably more accurate. Estimates of resale value are also more accurate than ever before, thanks to a record 2,188 members of the National Association of Realtors who completed our e-mail survey. Finally, we have introduced nine regional averages following the divisions established by the U.S. Census Bureau. We believe this data provides more useful points of comparison than the four larger regions used in previous years.
Click on the map to view the regional reports.
