Inevitably as construction and land costs bottom out – new home sales have started rising throughout the country.
The term “buyer’s market” has been tossed around plenty in recent months. But most home buyers don’t grasp the full meaning of the term until they get ready to shop.
After a rough second half in 2008 and a devastating spring, the region’s housing market has made some gradual improvements in recent months. But while sales are increasing slightly, the selling price of homes remains as low as most real estate agents can recall.
“They are still really low, which means it’s a good time to buy. I don’t think the prices have really moved upwards yet. I’m not sure when they’re going to,” said Richard Spencer, real estate agent with Ron Spencer Real Estate.
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In a dour housing market, wouldn’t it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine’s “Cost Vs. Value Report for 2008-2009,” let’s look at some of the best projects you can undertake and recoup the majority of your cost.
With the economic slump, home buyers aren’t being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost. Got wood? Dont forget about wood siding and trim applications for the high end applications.
Window Replacement (vinyl or wood)
Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.
Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.
Major Kitchen Remodel
Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it’s also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.
Deck Addition (composite product)
With families cutting their entertainment budgets, they’re spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home’s value by nearly $24,000 if you paid the average job cost of $37,000.
While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:
Deck Addition (wood)
If your bank balance can’t swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.
Siding Replacement (vinyl)
Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home’s value.
Minor Kitchen Remodel
With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.
Anytime you can add bedrooms, you’re going to add to the overall value – and listed purchase price – to your home. If your attic’s dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You’ll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.
If you’re fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.
If you have savings or access to reasonably-priced credit, it’s worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it’s a good idea to check and see if it could significantly increase your property tax bill.
While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don’t get caught off-guard when the tax bill comes.
*From Katie Adams, Investopedia, Nov 4th, 2009
Over the last several years, I have taken every opportunity to attend classes from Charles Shinn when I hear he will be in Northwest lecturing. When Charles talks – people listen. Take a moment to read a recently published article on the next wave of buyers.
Every time we have had a housing cycle, the industry has had to change. I have always said, the buyer coming out of a downturn is different from the buyer going in, and this is definitely the case this time. The housing product that was in demand prior to the collapse of the market is not what the new customer wants during the recovery. The longer and deeper the housing cycle is, the greater the change in customer preferences.
For the last 40 years, we have been following the baby boomers through their life cycle changes with our housing products. Coming out of this cycle, the baby boomers are moving into the downsizing stage of their lives. However, they will not return to the market in any significant number until the housing prices at least stabilize. They are over housed and can postpone the buying decision.
The next population group, the Generation X, now in the prime home buying age of 28 to 44 years old, is only two-thirds the size of the baby boomer generation. The generational gap will contribute to a significant decrease in demand of the most popular housing product that was available prior to the recession.
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“In lieu of a 7,000-square-foot palace that antes up to the neighbors, they’re planning a house less than half that size with energy-efficient features, panelized construction to reduce waste, and a variety of flexible, multipurpose spaces. One of its four bedrooms will double as a guest room…”
It’s the scapegoat of the housing bust, and that’s not all. From accusations of ostentatious overconsumption to environmental indifference, the McMansion has taken some brutal hits in the recession economy. Are those blows lethal enough to send starter castles to their grave? Or will they live to see another boom?
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For homebuyers, green is fast becoming a priority – whether its because they want to reduce their energy costs, minimize their carbon footprint or improve air quality.
From MSN. Real Estate – Here are 10 questions that prospective buyers or renters ought to ask to find out how green a house or apartment is.
There’s at least one major upside to the bursting of the real-estate bubble: The kind of adventure-ready second home you’ve always dreamed about is suddenly within reach. From mountain retreats to lakefront outposts to slopeside condos, here’s your primer on where to invest for the long haul.
No, Big Sky is not the billionaire’s Montana. OK, so Ted Turner has a ranch in the area, and two exclusive communities, the Yellowstone Club and Spanish Peaks, are also here. But Big Sky itself is a tiny (pop. 2,200), old-school skiers’ destination with a base area sporting 1970s condos and nothing remotely resembling a “village.”
Read the full article from Outside Magazine