It’s true that “all real estate transactions are local,” but common themes emerge in interviews with Realtors and remodelers in various cities.
Any addition should be a necessary addition. Remedying a home’s shortcomings — a small dining room, too few bathrooms, lack of common space — is what’s important to buyers, says Realtor Alex Coon, Boston–area marketing manager for Redfin, an online real estate brokerage. “Adding a backyard emu farm is not what people are looking for,” he says. “Repairing a shortcoming adds value by improving livability. As the luxury of the addition increases, the return diminishes.”
Additions must also be done well. Dave Billings, Redfin’s West Coast regional director, says that in feedback from staff he heard “fewer comments on additions adding value, but rather that bad remodels were blowing up the field. They are seen as a detriment.”
During the boom, Billings says, people with little remodeling skill were able to renovate and flip homes. He believes that poor construction is a big reason for the decrease in recouped value of most remodeling projects, including additions, over the past few years (as evidenced in the survey).
And yet, “the cost of a quality remodel is still going to be a challenge [to recoup],” Billings says. “It’s like paying full retail; people don’t want to pay full retail right now for anything.”
Brent Mackey, owner of Capstone Remodeling, in Rochester, N.Y., would agree. He talks to price-conscious clientele about “overimproving” their homes, and addresses spending issues head on. Though he is still doing large additions, his job scope is smaller and more conservative and he value-engineers more. “Instead of a 400-square-foot master suite addition, I’ll encourage [clients] to turn the existing master bedroom into a master suite.”
In Charlotte, N.C., the home prices didn’t rise so much that there was a big fall, says Scott Whitlock, president of Hubert Whitlock Builders. His mostly high-end clients still want to add space to remain in their neighborhoods and “because tear-downs in older neighborhoods are frowned upon.” Although his phone isn’t ringing as much, Whitlock says he is getting more qualified leads.