Most profitable renovations

Renovations cost more this year and bring less at resale

By Les Christie, staff writer

NEW YORK ( -- Renovation costs are shooting higher and homeowners are getting a lot less bang for their remodeling bucks, according to a report by the National Association of Realtors (NAR) and Remodeling Magazine.

Last year, for example, adding a master bedroom suite to a house cost an average of $75,959 nationwide and boosted the home's resale value by $64,419 - that's 84.8 percent of the cost recouped. The same job this year cost a lot more - $94,331 - and returned just $68,458, or 72.6 percent.

Biggest pay backs
These projects recoup more of their cost at resale.
Project Cost Resale value % recouped
Upscale siding replacement $13,149 $11,573 88.0%
Midranage siding replacement $9,134 $7,963 87.2%
Window replacement (wood) $11,040 $9,416 85.3%
Midrange bath remodeling $12,918 $10,970 84.9%
Window replacement (vinyl) $10,160 $8,500 84.7%
Source: National Association of Realtors and Remodeling magazine

The Harvard University Joint Center for Housing Studies estimates that Americans will spend nearly $160 billion for home remodeling projects over the next 12 months.

Many costs associated with remodeling have spiked. Last year, the national average for a midrange kitchen renovation was $43,862, according to NAR. But this year, that average cost had leaped to $54,241. Hard to make up that difference when NAR reported that home prices have actually fallen in the past 12 months.

A year ago, many remodeling jobs returned 80 percent of their cost or more when the owner sold the house. Some of the most profitable renovations, such as an upscale residing, actually paid off more - 103.6 percent - than they cost.

Other profitable renovations included midrange kitchen remodelings, which paid off 91.7 percent, and window replacement, which paid off 89.6 percent.

This year, an upscale residing only recoups 88.0 percent of its average cost of $13,499 (up from $10,393 12 months ago). That still made it the most profitable renovation.

A midrange kitchen remodeling returns 80.4 percent of its average $54,421 cost and a window replacement earns 85.3 percent of it $11,040 cost.

The least profitable renovation, again this year, is a home office remodel. It recoups only 63.4 percent of its cost.

There are lots of regional differences in the benefits of remodeling jobs. A midrange bathroom renovation pays off a lot more on the Pacific Coast (103.2 percent) than it does in the Plains states (74.8 percent) or the Great Lakes state (71.8 percent).

Part of the difference stems from the generally depressed home resale prices in the Midwest compared with the elevated home prices on the Pacific Coast.

In the Middle Atlantic states a vinyl siding replacement returns 92.3 percent of its cost, well above the national average of 87.2 percent, while in the Southwest the same job returns just 80.9 percent of the cost.

Generally, projects done in the Pacific states and the Atlantic South return a greater percentage of their costs than the other regions of the country.

Overall though, NAR president, Pat Vredevoogd Combs cautions homeowners to take the data with a grain of salt.

"Many factors affect a home's value," she said, "and, consequently, the resale value of any given remodeling project.

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