The statistics show that the homeowners recovered about 80% of the cost when the house was later sold. The slowdown in the real estate market and the flood of new properties on the market, has given the buyers more options to choose from therefore all these extra upgrades don’t present much value in their eyes anymore.
A recent survery by NAR has shown that most renovations are returning less than 70% of their cost. NAR’s survey revealed that returns on investment for a wide range of high-end interior redecorations dropped in 2007. An upscale bathroom renovation cost an average of $50,590, nationally, but only added $34,588 to house value - a 68.4% return. In 2006, a high-end bath renovation returned 77.4% of its cost.
Adding a brand new bath didn’t pay off as well either, earning just a 69% return in 2007, compared with 72.8% in 2006. High-end kitchen remodels held up better, adding value equal to 74.1% of the cost, compared with 75.9% in 2006.
So, before you go ahead and decide to increase the value of your house, put the numbers on paper and see if it’s actually worth going ahead with your plan.
It may be true that you can only recover about 70% of the cost on some of these improvements, but if you plan on living there for a number of years and not flipping your house that quickly its worth it in my eyes. I just redid my kitchen counter tops and I have to say it makes me smile every time I round the corner.