Thursday, May 6, 2010

The New Rules of Remodeling

Remodeling is one of my favorite subjects to blog about: I love the creativity and problem solving involved in a remodeling project, and think that it's the ultimate way to build green. Talk of remodeling has been going mainstream, like in this Wall Street Journal Article, "The New Rules of Remodeling."

From MP McQueen's article:

"According to an April 15 report from the Joint Center for Housing Studies at Harvard University, annual spending on remodeling is expected to accelerate this year, with nearly 5% growth over 2009. "This year could produce the first annual spending increase for the industry since 2006," the peak of the housing boom, says center director Nicolas P. Retsinas. 

But the forces driving today's action couldn't be more different from those during the boom. Back then, people wanted to renovate their places so that they could trade up to bigger homes, or because their home equity was soaring and they wanted to reinvest some of the spoils. 

Now, the opposite is happening: Many people who bought during the boom years are accepting the reality that they won't soon be swapping up for a sybaritic spread. Their mortgages may remain above water, but after years of falling home prices, their equity is so low that the transaction costs of buying a new house would leave little for a down payment."

I appreciate this quote from the article:

"So these people are making their homes more comfortable for a longer-than-expected stay. Setting aside old calculations of how much a particular improvement will add to resale value, they are making smaller tweaks that can make a big difference in livability. You might call it "psychological return on investment." "

We have made a few changes to our condo, which we purchased in 2007, like replacing the carpet with wood floors and replacing the sheet vinyl in the bathroom and kitchen with tile (see previous blog entry, "Under $500 remodel/makeover"  

Yes, I hope to see a return on these investments someday when we sell our condo, but I like doing them gradually, so we can enjoy them while we live here. I still hope to replace the laminate counter tops, and I have big dreams for removing our coat closet and expanding our flex space, but I would like to do these mostly because they will add to our quality of life while we are here, and will probably be good for resale some day also. 

Check out this great chart from the Wall Street Journal Article: 

The New Remodeling Rules

During the bubble, homeowners sought the biggest, splashiest home improvements to boost resale value. Now they're doing smaller projects that deliver a similar result for far less money.

Major home office remodel
Cost: $27,000
Basic remodel, converting a bedroom by adding low-priced cabinets. Can cost as little as $2,000 plus rewiring and adding receptacles, according to Washington-area contractor David Merrick.Provides a new, dedicated work area at a fraction of the price.
Bathroom addition
Cost: $37,200
Typical 5' x 7' upgrade within existing home dimensions, including low-flow toilets, new fixtures, mirrored walls and new architectural lighting. Cost: $16,000Mirrors, better lighting increase the feeling of space; low-flow toilets save money on water bills; bath fixtures including body sprays give "spa" feel to the home without the expense of whirlpool baths.
Major kitchen remodel/expansion
Cost: $55,500
Remodel within existing dimensions, including removal of a wall for improved flow between kitchen and dining room, new energy-efficient appliances and water-saving fixtures, new cabinets and flooring, and bigger windows. Cost: $21,000Less wall space and bigger windows give a small home the appearance of more space and light; energy-efficient appliances save money on heat and hot water.
Family room addition
Cost : $79,000
Screened-in porch. Starts at a few thousand dollars, assuming there is a roof and foundation in place; $15,000 to $20,000 to convert a small deck; or more than $50,000 to build new.Screened-in porch increases usable space and brings outdoors indoors; accentuates landscaping and gardens.
Master suite addition
Cost: $98,863
Attic bedroom. Convert unfinished space into 15' x 15' bedroom and a 5' x 7' bathroom with shower. Cost: $49,346.Provides more living space for a returning family member.

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