It’s nice to know that all the back-cracking work we’ve been doing on the house provides manifold benefits.
The housing market slump this year really slowed down new construction. As an owner of an old home in the midst of vicious suburban sprawl, I was actually happy to see the new construction slow down. Something similar happened in the late 70s (the economic downturn) after a period of profligate sprawl (in the 50s and 60s), which led to an increased awareness of restoring and renovating existing homes (in the 80s). TV shows like This Old House and Home Again sprouted up from the ashes of a recession. So recessions and slumps are not always bad news. I think it is better to work with what you have rather than create immense waste in building new. Why knock down a perfectly healthy old home, fill up landfills, clogging up rural spaces, and spend millions building new?? The lost art of renovation may be making a comeback.
#1 A New Addition
According to Dave Ramsey (here daveramsey.com/newsletters/online/edition/real-estate-newsletter-september2010?ectid=elprenl_0910_final_online), one of the best returns on your renovation investment is a new addition, such as a bedroom or family room. Such a renovation could give you an 83% return on your cost! I was stunned to read this. For one, I had thought that most homeowners were going “smaller” with their homes, not necessarily adding more square footage (and more maintenance and expenses) to the house.
#2 A New Kitchen
Additionally, the kitchen has always been the prime return investment winner in renovations. I was surprised to see it fall to #2 in Dave’s list (he said that a kitchen re-do can give you about 72% back). I suppose one of the reasons for the lower grade is because kitchens are one of the most expensive areas of the home to renovate. Yes, I would agree. Although, because we did our own work 100% of the time, our return will be much more than 72%. We spent approximately $13,000 to gut and restore the kitchen, dining room, and laundry room… we also insulated these rooms, which make them more energy efficient, and we also redid the entire electrical system and water supply system for the house. Not a bad deal.
#3 The Bathroom
I am not one to splurge on a bathroom. I like it to be a “get in, do your business, get out” kind of room. Dave says that renovators can easily allow the bathroom remodel to “get out of hand.” Appliances and fixtures ARE very expensive, and I guess people are tempted to install things like saunas, whirlpools, towel warmers, etc. I don’t like such luxury, so when we remodel our bathrooms, I don’t expect these to be a problem. But renovating the bathroom came in at #3, which homeowners recouping about 70% of their investment. That’s really still a terrific percentage!
One very important thing to remember when renovating is KNOW YOUR COMMUNITY. If you live in a wealthy area of McMansions, go ahead and build that vaulted wine cellar. But if you live in “middle America” or a small town, you will never recoup your investments in the luxurious hot tubs, custom-made concrete countertops, and silk draperies. I tried to stay as basic as I could with our home. It is so easy to go overboard, especially when the “experts” and magazines are all enticing you to spendspendspend on their expensive products. I tried to keep a balance of getting products I really liked, products we really needed, and staying within the middle-income class of my region. Even so, I do think I splurged a little too much. :-p
And I am gratified to see that all our blood, sweat, and tears actually has value in the community and economy. I knew that our renovations would not only bring us more comforts and energy savings, but that it would boost our home’s value and possible return investment should we ever sell. It’s nice to see this confirmed.