The number of opinions on the value of a particular home remodeling project is at least as large as the number of remodeling projects homeowners might want to tackle. One constant, though, is how the project enhances the value of a home and, ultimately, its resale value.
Remodeling projects can be large (for example, adding a second floor to an existing house) or small (replacing the main entry door). Among 27 projects included in a recent survey by Remodeling magazine, the average residual value one year after the project was completed is 64.4% of the project’s cost.
As a result, all projects are not created equal. According to the “Remodeling 2016 Cost vs. Value Report” from Hanley Wood’s Remodeling, on a national basis only one remodeling project yields an increase in value that is more than the cost of the project. The other 26 projects return anywhere from around 91% of the cost to around 56%.
Depending on the region of the country in which the house is located, there may be other projects that return more than their initial cost. In all, there were 77 U.S. markets where the return on investment exceeded 100%. The single project with the highest number of 100%+ returns was installing fiberglass attic insulation, a relatively inexpensive job but one with lasting value.
We looked at the projects that return the least value nationally because some of them struck us as surprising, given the conventional wisdom. Note, too, that midrange costs are based on typical quality materials and the estimates were generated from identical specifications for the work to be done. The report also included projects calling for upscale work that is more expansive and complicated than the baseline midrange projects.
Here are the five midrange remodeling projects with the lowest return on investment. The list includes original cost, resale value, percentage return and a description of the project.
> Cost: $42,233
> Resale value: $23,727
> Return: 56.2%
This project adds a full six-by-eight-foot bathroom over a crawl space with poured concrete walls and includes the following features: cultured-marble vanity top with molded sink; standard chrome faucets; 30-by-60-inch white fiberglass tub/shower with ceramic tile surround; single-lever temperature and pressure-balanced faucet; white low-profile toilet; general and spot lighting; electrical wiring to code; mirrored medicine cabinet; linen storage closet or cabinet; vinyl wallpaper; painted trim; and ceramic tile floor.
Backup Power Generator
> Cost: $12,712
> Resale value: $7,556
> Return: 59.4%
Install modular electrical backup system with capacity for providing 70 amps of emergency power in two 240-volt circuits and six 120-volt circuits. Assume existing propane gas supply. Include generator mounted on two-by-four-foot concrete or composite pad, automatic transfer switch, load center, exterior disconnect and grounding rod. Include 30 feet of conduit and electrical cable for generator connections, grounded cable for circuits, five feet of flexible fuel line for connection to existing rigid gas supply line, and automotive-type storage battery.