Exterior Home Projects Yield Highest Return

Which home remodeling projects return the most money, offer the biggest benefit upon resale?

For the second year in a row, a study conducted by Realtors reports that exterior remodeling projects are best.

On a national level, wood deck additions and all types of siding replacements - upscale fiber cement, midrange vinyl, and upscale foam-backed vinyl - returned more than 80 percent of project costs upon resale.

Of these, the most profitable project was upscale fiber cement siding, which recouped 86.7 percent of costs, followed by wood decks at 81.8 percent, midrange vinyl siding at 80.7 percent, and upscale foam-backed vinyl siding at 80.4 percent.

The findings were detailed in the 2008 Remodeling Cost vs. Value Report.

"Because today's buyers have much more to choose from in the way of inventory, any home for sale must make a positive first impression," said National Association of Realtors President Charles McMillan. "As a trusted source for real estate information, Realtors understand what attracts and motivates their buyer clients, which is why the results of this year's report underscore the importance of curb appeal in the buyer's eye."

The report compares construction costs with resale values for 30 midrange and upscale remodeling projects comprising additions, remodels and replacements in 79 markets across the country. The study was expanded from 60 markets last year.

Data are grouped into nine U.S. regions, following the divisions established by the U.S. Census Bureau.

In addition to wood decks and siding, window replacements and kitchen remodels also returned a relatively high percentage of remodeling costs on a national basis.

All types of window replacements - upscale and midrange wood and upscale and midscale vinyl - returned more than 76 percent of costs.

A major midrange kitchen remodel returned 76.0 percent of project costs, while a minor midrange kitchen remodel returned 79.5 percent of costs.

On a national level, bathroom remodels, while still a relatively good investment, do not return as high a percentage as in previous years.

A midrange bathroom remodel was estimated to return 74.4 percent on resale, comparable to a midrange attic-to-bedroom conversion, at 73.6 percent of costs recouped, and a midrange basement remodel, at 72.7 percent of costs recouped.

As in last year's report, the least profitable remodeling projects in terms of resale value were home office remodels, sunroom additions, and back-up power generators, returning only 54.4 percent, 56.6 percent, and 57.1 percent, respectively, of project costs.

Although most regions followed national trends, the regions that consistently were estimated to return a higher percentage of remodeling costs upon resale included the Pacific region of Alaska, California, Hawaii, Oregon and Washington.

McMillan explained that the resale value of any given remodeling project depends on a variety of factors.

"A home's overall condition, availability and condition of surrounding properties, location, and regional economic climate are all factors that will influence the value of any remodeling project," he said. "That's why it's important to consult with professionals like Realtors in your area when you want to enhance the value of your home."

Realtors see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into which projects and improvements will make a difference with buyers in their local area. Results of the report are summarized in the December 2008 issue of Realtor^® Magazine.