Homeowners Getting Less Bang for Remodeling Buck

As home values decline, so, too, do the value of home improvement projects. According to the recent Cost vs. Value Report from Remodeling magazine, homeowners who complete moderately priced remodeling projects are not earning as much of a return on their investment as they were one year ago. In the Chicago area, for instance, homeowners in 2010 recouped 54.5 percent of the cost of a major basement remodel, compared with 64.5 percent in 2009. Likewise, the resale value of a wood deck addition locally was 59 percent this year, but 76 percent one year ago, according to Remodeling. Those numbers symbolize a shift among homeowners who are returning to the pre-housing bubble mentality, when the purpose of a home improvement project was to add a specific feature to the home and not to net a higher return-on-investment. “A lot of what drove the (remodeling) market in 2003, 2006, 2007 was the notion that you were playing with house money,” said Kermit Baker, director of the Remodeling Futures program at Harvard University’s Joint Center for Housing Studies. “You could get 90, 95 percent of your investment back. It was really a no-risk proposition. The mentality has clearly shifted to, ‘What kinds of features do I want in my home?’ given how long you live there and your lifestyle.” | Read More