At these payback rates, how could you not remodel?

Dollarhouse_copyAccording to the annual Cost vs. Value report from Remodeling magazine, three projects will actually bring more money when you sell the house than the projects cost. They are:

Wood deck addition
Cost: $12,812, Resale value: $13,836, Cost recouped: 108%

Minor kitchen remodel
Cost: $22,698, Resale value: $23,494, Cost recouped: $103.5%

Window replacement — wood
Cost: $13,120, Resale value: $13.497, Cost recouped: $102.9%

So how could not do these projects? Wouldn’t you be losing money if you didn’t remodel? Of course, there is no guarantee you will get these costs back when you sell. And with prices falling all around, these 2007 numbers could be off.

And these numbers are for the Los Angeles area, which has a higher payback on remodeling work than other parts of the country. The deck addition, for instance, recoups 85.4% nationally, the minor kitchen remodel reoups 83%, and the window replacement recoups 81.2%.

On the down side, the projects that pay back the least in the L.A. area are a backup power generator (one of my personal favorites) at 63.6%, home office remodel (68.9%) and sunroom addition (69.4%).

But here’s what I think: Why all the obsession with payback anyway? Unless you buy and sell every couple of years, you have to factor in the days, weeks, months and years that you and your family will enjoy an improved house.

One sweet morning in a sunroom: priceless.

See the report here.

3 Comments on At these payback rates, how could you not remodel?

  1. Inland Empire

    While resale is a consideration, living in a house with a new kitchen that looks great trumps living in a house with a termite-infestion in the kitchen cabinets and a harvest gold sink.

  2. lil_gaucha

    We’ve been putting off the window replacement because of the cost. We’re wanting to do the kitchen refab first. THis makes the decision even harder!
    But I love your comments RE liveability vs resale. We’ve often debated this during our remodeling planning. After all, we could live in this house for 30 years or 5. Jobs will tell. But we both have the philosophy that an owned home (OK mortgaged home) is for living, not for investing. And while our Realtor has hammered into our heads not to do anything stupid and over-the-the top with this house so we can eventually re-sell it. There are certain things we just can’t help but personalize in a bad-for-the market kind of way (like turning the breakfast nook into a bar).
    I’d love to see some experts debate this issue of liveability vs. sellability. Especially in these difficult times.
    Either way, another great column. Insomnia has never been this much fun!

  3. sheila

    i love these, kathy, so thanks for including them.
    i don’t have a citation/link, but have read many times that solar PV pays at least as much as the cost of the system, if not more than 100% and greatly reduces listing time. have you heard this?