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Homeownership

Which remodeling projects increase a home’s value the most?

(HOMEOWNERSHIP) Knowing which projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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Remodeling projects that boost a home’s value

If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects — these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate, and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95 percent cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000–a homeowner can recover 91 percent of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate, and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69 percent.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $$$uite — this costs about $112,500 with a cost recovery of 53 percent.
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61 percent cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimate $60,000 with a 67 percent cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52 percent cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

#Remodeling

Helen Irias is a Staff Writer at The Real Daily with a degree in English Literature from University of California, Santa Barbara. She works in marketing in Silicon Valley and hopes to one day publish a comically self-deprecating memoir that people bring up at dinner parties to make themselves sound interesting.

Homeownership

American marriage is happening later and it’s not why you think

(HOMEOWNERSHIP) Marriage is happening later and later with Americans and economists believe it’s not just about the changing face of relationships; it’s also about money and wanting to wait for financial stability.

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As we know, homeownership is a cornerstone of American family life. Homes provide long-term financial stability as a major investment for homeowners. Furthermore, they also provide a strong environment in which to raise a family; so many of us have fond memories of running around our backyards, or cozying up in the family room.

So, it stands to reason that homeownership and marriage are tied together; many couples will buy a home soon before or soon after they get hitched.

With all that said, some of the following statistics may be alarming, as it points to a trend that may play into the delay of homeownership.

Lots of data gathered over the past few years shows Americans are marrying later and later, if at all, according to a report from The Guardian. Today, Half of American adults are married, compared to 75 percent in 1960. The disparities are mostly consistent with class divisions.

Per the Guardian article, “26 percent of poor adults are married, compared with 51 percent in 1990.” That same study found 39 percent of the modern working class of adults are married, but that number was 57 percent in the 90s.

Education is closely tied with financial status, so an education disparity is also present. Today, 50 percent of adults with a high school are married; that rate was over 60 percent 25 years ago.

As the Guardian puts it, “Young people are increasingly seeing marriage as a “capstone” rather than a “cornerstone” event, a crowning achievement once other goals have been reached, rather than a launchpad for adulthood.”

That achievement is financial stability, and many more Americans are feeling a financial crunch.

There’s data to back this up, too. For example, a poll found “nearly half of never-married adults with incomes under 30k say being financially insecure is a major reason” behind their lack of marital commitment to a partner.

Part of steady income is a steady job, and past Pew Research found 78 of never-married women wanted a future partner to have a steady job.

A decline in manufacturing jobs is contributing to this as well, per some economic research on the subject, which may help to explain how the steepest drops in marriage rates come from the lower and middle class.

It’s not unreasonable to speculate that major living costs factor into that decision as well. For example, with real estate prices going up around the country, especially in major cities with strong job markets, the capstone that is owning a home is pushed farther away from the average American.

If marriage and homeownership are so closely tied together, the delay of one may also contribute to a delay in the other.

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Homeownership

Why a $1,490 home is a complicated purchase

(HOMEOWNERSHIP) Homeownership is still out of reach for some buyers given the down payments and fees, but what if you could buy a place for less than it costs to rent?

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It’s no secret that the housing market is a roller coaster ride of highs and lows. When you hear that a house is listed for sale at $1,490 (really!), your first thought might be, “that price is missing a few zeros;” I thought the same thing as well. It seems like such a ridiculously low price for a home, there must be an error, right? Wrong. There really is a house listed for $1,490.

The 580 square foot home is located in Washington D. C. It has one bedroom, one bathroom, and does indeed cost a mere $1,490 to own. It does, however, come with a few strings attached, according to Realtor.com®.

One major string is that the home is a limited-equity co-op or LEC. Realtor.com® describes this opportunity in a couple of steps with the help of Eva Seidelman, an attorney with the Neighborhood Legal Services Program in Washington, D.C.

First, the tenant of the building were originally renting. They decided to form a cooperative association in 2010 and purchase the building from the landlord by using a low-interest loan from the District of Columbia Department of Housing and Community Development.

This gave the tenants the ability to transform the building from the existing rental units into more affordable co-ops.

This brings us to our next step. In order to live in the building, the person must fall below the co-op’s maximum income limit of $60,839 for an individual, or $69,530 for a two-person household.

Since the medium income in Washington D.C. is around $75,628, a good portion of residents would qualify for this LEC.

Once you’ve paid your $1,490, plus taxes, transaction and broker fees, it doesn’t matter if you get a raise that’s puts you above the income limit, or lose your job completely, as you own the co-op.

Included in that price, in maintenance and repairs for as long as you live there. If you consider the average price to rent is approximately $1900/month and the average home sells for around $570,000, this LEC is a bargain.

As with anything else, it depends on whom you ask.

If you’re looking to build home equity, LECs are probably not for you. The appreciation on LECs remains fairly low, often because they are so affordable to begin with (less money invested, less to appreciate). However, of you’re looking for an affordable home in a less than affordable area, LECs can be amazing opportunities for homeownership.

LECs are a solid option for recent college graduates, people recovering from foreclosure, senior citizens, anyone re-entering the workforces or relocating for work or personal reasons, or anyone on a budget who would rather own than rent.

While LECs are not the spacious mansions of Hollywood Hills, they are a viable option for people looking to own, and given maintenance and repairs are often included, you cannot find a better option for a tight budget.

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Homeownership

Tiny houses are all the rage, also induce locals’ rage

(REAL ESTATE NEWS) Tiny houses seem to be the solution to a lot of the country’s housing shortage problems but they also seem to be adding problems of their own.

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The tiny house movement is growing – as many people seek to escape the traditional home ownership paradigm.

Kelvin Young is a developer who’s currently working to build a tiny house community in Northwest Charlotte that he hopes will attract first time homebuyers or downsizers – but it seems that he’s run into some stopping blocks.

The development, Keyo Park West, has fallen on the radar of several neighbors, who have taken to the City Council to stop the development – citing a fear of the impact on property values.

Young envisions a 56 tiny house community – with the smallest of 500 square feet selling for 89,000. The average home value falls between 179-225,000. The City Council is in a mixed place: the homes meet the qualifications of a single-family home (with a concrete foundation) rather than a trailer/mobile home park.

However, the plans for the community are not yet clear, so the Council isn’t set on whether or not the plans meet the standards. They plan on reviewing the community plans in November.

“The opposition to this project links several to several challenges nationwide.”

The movement for tiny houses is becoming more and more popular, thanks to HGTV – but communities are not always on board.

Affordable housing (even those without income requirements like Keyo Park West) faces community and government intervention consistently. Stereotypes about the affordable housing customer – who are seen to drive junky cars, have too many children, and diminish otherwise beautiful neighborhoods – consistently reinforce this.

The process is also a challenge – the people building affordable housing (nonprofits) are often bound by complex rules and stakeholders, and risks like zoning costs, construction costs are often insurmountable. Few, if any, professional developers are currently involved in small housing projects.

Young is in the middle of a great challenge.

The affordable housing and tiny house movement are looking to solve the massive shortage of affordable housing in this country. But the processes, communities, and developers aren’t connecting.

What happens next in Charlottesville may be a template of what to do (or even not to do) going forward for those interested in following Young’s lead across the country.

Young has built one house and sold it for $89,000 – with two more lots under contract. The fate of his 19 acre parcel and envisioned community will be up for review in November.

Time to see if these tiny houses become the next big solution.

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