By Dan Krell
Moving up has been a right of passage for families for years. Families have been moving up for one reason or another, usually because of the need for space or just to move to a new neighborhood. However, spiraling home prices made many to re-think the usual move up, and instead make improvements on their homes. Rather than buying the four bedroom colonial they need due to a growing family, homeowners are adding rooms or enlarging the spaces they already inhabit.
If you are unsure of making improvements or selling your home, there are some factors to consider. RemodelorMove.com (www.remodelormove.com) lists the top reasons for remodeling and not moving as: 1) you like remodeling; 2) you like your home floor plan; 3) you like your neighbors; 4) you like your yard; 5) you have a great location; 6) you will get exactly what you want; and 7) you feel that it can enhance the value of your home. As you are trying to decide whether or not you remodel or move, you may find these reasons in line with your decision. This web site has lots of resources and information to help you make your decision.
If you decide to remodel rather than move, there are some considerations. According to RemodelorMove.com you should consider how long you are going to be in your home, the costs involved, and the timing of the remodeling before you move.
If you are planning to stay in your home less than a year, you have to weigh the actual cost of the improvements against the return you may get on your upcoming sale. However, if you plan to be in your home for a few more years or longer, the return on your investment should not be as much of a factor as personal pleasure and comfort.
If you are concerned with cost vs. value, a great resource that every turns to for their annual report is Remodeling Magazine, which can be found at Remodeling Online (http://www.remodeling.hw.net). According to Remodeling Magazine, return on investment depends on the value of the house itself, the value of similar homes in the immediate area, and the rate property values are changing in the surrounding neighborhoods. Some projects will recoup more than 100% of the original investment, however overall in 2004 the return of investment was 80.3%. The nationwide data they collect for their annual reports from Home-Tech Information Systems, a remodeling estimating software company in Bethesda, Md. HomeTech collects current cost information quarterly from a nationwide network of remodeling contractors, and its cost figures include a 40% margin. Costs are adjusted to account for city-to-city pricing variations.
The following are the top improvements listed in the Remodeling Magazine’s annual report in order of return on investment: minor kitchen remodeling -92.9%; siding replacement-92.8%; midrange bathroom remodeling- 90.1%; deck addition- 86.7%; upscale bathroom remodeling- 85.6%; and window replacement- 84.5%. You can view the rest of the 2004 report on the website.
Both selling and remodeling can be large propositions that can bring a lot of joy and regret. There are many resources at the library and the internet to help make your decision. Additionally, you should consult a local contractor and a Realtor to assist with costs of improvements and neighborhood home values.
This column is not intended to provide nor should it be relied upon for legal and financial advice.
This column was originally published in the Montgomery County Sentinel 8/2/2005. Copyright Dan Krell 2005.