Study says: Remodeling is not an investment!

Zac, you need someone to explain the report to you. Your comment "the data suggests that remodeling does not add value to a home:" is flat out wrong. The data states clearly the return is a percentage of the cost. Every remodel listed adds value to the home and therefore is an investment in the value of the property. "Investment" does not automatically mean you will get 100+% over your cost. Stocks, for example, are an investment but they can go down. An owner, that insists on top end cabinets in a mid-range house will never get their cost back. So, per the table, a $500,000 house that gets a $48,000 attic bedroom increases in resale value to $535,000. That is added value.

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Renovations are risky and time-consuming propositions. However, some DIY projects are risk-free. The Instant Pendant Light is a first of its kind kit that upgrades recessed lighting to hanging pendants without hiring electricians or painters. It installs as easily as changing a light bulb.
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Houses aren't diamonds. If they were there would be no need for renovations or remodels. The truth is, however, that houses deteriorate over time from use and age (just like the rest of us). That is why it is important to consider the age and functionality of a space before making changes. Resale and vanity need not be the only considerations. It should be considered prudent to keep the property maintained at the most efficient level possible, and sometimes that means getting a new kitchen, bathroom or home office.

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Interesting post! I've been watching that cost vs. value report for, well, as long as they've had it. My opinion is that it's used more as a sales tool for contractors. They don't sell reprints of the report for nothing. If you have the report in your hand, you can say to a homeowner "this estimate is $100,000.00 but this report right here says that you'll get 75% of that right now in value." People then feel that they are "spending" 25,000.00 and not $100,000.00
In a sense, if the report is accurate, this is true. But it doesn't really matter unless you sell.
I've recently done a post on the Top Five Money Questions for Remodeling in 2009 over at my new blog. You might be interested. http://www.remodelingguy.net/?p=27
Remodeling Guy

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I spent $35,000 on renovations after paying $80,000 on a house and then appraised for $155,000. Although there is a lot of sweat equity involved, there was definitely a gained value. And if you can't sell it what is it worth?

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On HGTV's hit series My House is Worth What? , real estate experts walk through homes that have undergone extensive renovations, reassuring the owner that that new luxury bathroom was actually a good investment and not just a self-indulgent waste of.

Tom

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