When it comes to remodeling projects, those that boost the curb appeal of a home provide the highest returns, according to the 2019 Cost vs. Value Report released last month by Remodeling Magazine.
Nine out of the top 10 high-return projects were exterior replacement projects, including, in order, garage door replacement (97.5 percent), manufactured stone veneer installation (94.9 percent), and a wood deck addition (75.6 percent).
Siding replacement and window projects also provided high returns.
The highest recouping interior project was a minor kitchen remodel (80.5 percent).
Overall, rising materials costs are impacting return on investment on all projects.
The 32nd annual report surveyed more than 3,200 real estate professionals about returns for 22 projects in 136 U.S. markets, up from 100 markets last year.
For all projects, the overall cost-to-value ratio stands at 66.1 percent, only slightly ahead of last year, and well below the decade-high of 71.2 percent in 2014.
As in prior years, there are significant variations in return in different regions. The average payback nationwide for the 22 projects in the report ranged from as high as 123.8 percent for a garage door replacement in the Pacific region to as low as 45.0 percent for an upscale master suite addition in the mid-Atlantic region.
Three other highlights from the 2019 report are:
1. Increases in materials costs are likely due to the tariffs that have roiled commodity markets. This has led to a slight downturn in the percentage of costs recouped for some projects, but overall, returns are up slightly compared to last year.
2. Two new projects were added to the 2019 Cost vs. Value Report. The first is a roofing replacement job that adds standing-seam metal roofing. Compared with asphalt shingles, metal roofing costs significantly more but brings with it much greater durability.
The second project is a revamp of the universal design bathroom, which was first introduced to Cost vs. Value in 2017.
3. Think like a broker: The reason for high returns on exterior projects, and especially façade facelifts, stems from the valuations set by the real estate community.
“Curb appeal” and “first impressions” are central to a real estate professional’s estimation of resale value. Granted, a home’s exterior will only persuade potential buyers to see more, and first impressions can vary from one individual to the next.
But the impact these impressions make is critical in setting the stage for what a buyer is willing to pay for a home.