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There was a time not so long ago that investing in your home was one of the smartest uses of your hard earned money. After all, with real estate markets hot all across the nation, it wasn't unusual for homeowners to make their home remodeling dollars back, and then some, in the form of improved home values. Unfortunately, it seems that those boom days are over, at least for now, leaving many Americans wondering whether home remodels are still worth the large investment in time and money that they require. The answer to that question comes in two parts. For starters, smart short term investments aren't a thing of the past, though it does make a difference which type of remodel you invest in. Second, a slow home improvement industry can mean big savings for homeowners willing to drive a hard bargain.
A Closer Look at the Numbers
A quick look at Remodeling Magazine's Cost vs. Value Reports over the last 5 years is a testament to how important the right remodel can be from a financial standpoint. While the reports are clear that the overall value of home remodels has dropped over the last 5 years, there do seem to be a few projects that are holding their own. The trick is knowing which projects to stay away from, and which ones are worth your trouble. Here's what we found, based on our analysis of Cost vs. Value reports since 2002 and other industry research.
- The GoodWhen it comes to major remodeling projects, bathrooms, kitchens, and basement remodels continue to serve as the foundation of the remodeling industry, suffering minimal losses in recoup values in most instances, and even maintaining steady values in some cases. Surprisingly, however, the home improvements that have seen the biggest gains over the years are a mixed bag. Commonsense improvements like siding and replacement windows lead the pack when it comes to rising recoup values, while more luxurious deck additions are giving those blue collar upgrades a run for their money when it comes to making your money back on your investment.
- The BadBigger isn't necessarily better, it seems, especially as housing markets slow and pocketbooks get a little thinner. That being the case, the remodels that have seen the largest decline in recoup values over the years tend to be the big ones. Two story home additions, for example, dropped in recoup value by almost 20% between 2002 and 2007. Other projects that have lost value over the last several years include office remodels, family room remodels, and attic bedroom additions.
- The GreenThe home remodeling industry is currently being re-made thanks to a remodeling category that Remodeling Magazine doesn't track yet: that of the green variety. Homebuyers might not be as keen on shelling out thousands of dollars more for a large master bedroom suite or high end kitchen these days, but it's a different story when it comes to remodels that can significantly cut home energy costs. High efficiency replacement windows, additions built with SIPs (structural insulated panels), and alternative heating, cooling, and energy systems like geothermal heat pumps and photovoltaic solar panels, are worth their weight in gold in today's rough economy and energy savvy society.
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Make Tough Times Work for You
While choosing the right remodeling project is a smart move, it's an even smarter homeowner that sees tough times as an opportunity when it comes to negotiating good home remodeling deals. The truth is that the home improvement industry isn't what it used to be, and contractors across the country are fighting for jobs to keep themselves busy. From a homeowner standpoint, that means you can get even better deals on home remodeling projects if you follow a few simple guidelines:
- Get bids from multiple contractors, and let them know you're shopping around. Multiple bids allow you to compare prices, compare contractors, and negotiate the best deal possible for you and yours. And since it's a "buyers market," so to speak, there's the potential to get a great price if you're willing to put in the time and energy necessary to work the competition between contractors in your favor.
- Get references from your potential hires, and be sure to check them. If you're not totally satisfied with what you find, move on. In times like these, you won't have to wait in line if you decide to go with someone else. There are plenty of contractors out there who are willing to do whatever it takes to get your business.
A Final Piece of Advice: Don't Remodel for Money
What's the best remedy for homeowners who are losing sleep over which remodel is the best investment? Simple: Forget the recoup value, and choose the best remodel for you and your home. In times like these when the economy is rough and the housing market is on the rocks, perhaps the best thing you can do is make improvements to your house that improve your quality of life, not it's resale value. By investing in home improvements that you will enjoy and make the most of, your home remodeling investment can't go wrong!
Matt Goering, formerly a carpenter and house painter, is a freelance writer for the home improvement industry who has published over 600 articles.