Home RemodelingSARASOTA, Fla. – Dec. 12, 2017 – Home renovations as an investment for a future sale with hopes of recovering the improvement costs are a dicey prospect at best. Real estate agents and remodeling construction specialists caution against that assumption.
“Hardly anything will offer a net profit,” says Barry Grooms, Realtor, broker and co-owner of SaraBay Real Estate with his wife, Sherry. But some improvements “will help sell the property faster and will fetch a higher sales price.”
On the flip side, renovations for personal and lifestyle inclinations or remodeling an older residence after a purchase are commonplace and prudent. The popularity of HGTV’s portfolio of “reno” shows reflects public interest, but solid evidence comes from BuildFax. The data analytics firm has a new report showing residential remodeling outpacing new construction spending.
“Residential remodeling activity has increased by 30 percent since 2010,” BuildFax reported, though that began trending down in the Southeast during the last half of 2016.
Denny Yoder, president of Yoder Homes & Remodeling, is well acquainted with remodeling motivations. “The majority of our clients are improving their homes for personal lifestyle reasons,” he said. “About a third of our clients have just purchased the property or are converting it from a rental to a retirement home.
“While the concern for appropriate investment and not over improving is always important, we advise clients the more years they plan on keeping the property the less important this consideration is.”
While cosmetic and lifestyle enhancements are attractive and advantageous to homeowners, prospective buyers will take a different view should those renovations be unappealing.
The return on investment for an updated kitchen averages about 60 percent, a bathroom remodel around 68 percent and a master suite addition about 53 percent, Grooms said.
Michael Moulton, a broker-associate with Michael Saunders & Company, cites expensive new marble and/or wood floors as iffy. Those are “too much of a gamble that a new owner may want something other than what you install.” Plus, he said, “not all buyers would appreciate” expensive windows such as Pella and Anderson.
Basic infrastructure upgrades could prove valuable, though.
“The best improvements a home seller can make are replacing the roof, HVAC, electrical and plumbing,” Grooms said. “The reason for this is that most home buyers will have a professional inspection and most homes require homeowners insurance, and if the aforementioned items are not in good condition, it may increase carrying costs for the new buyer or an immediate out-of-pocket burden that is too much and break up a deal.”
Moulton emphasizes re-plumbing a house in neighborhoods where that is typically needed and replacing an aging roof.
That falls in line with the “Remodeling 2017 Cost vs. Value Report.” The website – – compares the average cost for 29 popular remodeling projects with the value those upgrades retain at resale in 99 U.S. markets, including the Sarasota-Bradenton-Venice region. Nationally, home maintenance projects, such as siding replacement, paid off best.
Curiously, every one of those projects undertaken in Southwest Florida, for example, paid back a higher return on investment than the national average. The highest differential came in at 27 percentage points – a garage door replacement – 104.1 percent here versus 69.3 percent nationwide.
“In general,” the report stated, “the hotter the market, the bigger the payback.”
This is the 30th anniversary of Remodeling Magazine’s first such survey, undertaken with the goal of providing an unbiased, third-party report on how much it costs for a professional to do a typical remodeling project as well as how much a real estate pro believes that project will increase a home’s value if it’s sold within a year of when the work was completed.
The methodology includes such factors as the cost of materials and labor in each market, subcontractor payments, taxes and additional considerations. The study compares the costs for the same hypothetical project in all 99 markets surveyed. Nationally, the 29 projects in this year’s survey paid an average of 64.3 cents on the dollar in resale value. The study broken down into 19 mid-range and 10 upscale projects.
Overall, the report found that newer and older trends continued. Improvements to the outside of a home produce higher returns on investment than interior projects. Curb appeal upgrades sell, be they to doors, windows or siding. Replacing those features proved better than a remodel, real estate pros said.
On the lifestyle front, Yoder cited bathroom remodels as “very common,” with hand-held and multiple shower heads being very popular. “Other popular requests in bathrooms are replacing bathtubs with walk-in showers and stand-alone tubs,” he said.
“Next in popularity are kitchen remodels followed by closet organization,” he added.
In several areas that Remodeling did not address, Grooms did. “Landscaping on average can return up to 150 percent of a return of investment,” he said. “Fencing may return up to 95 percent.”
The fence issue brings up an important matter. “The other area that I have observed that often helps a home sell faster and for more money is homes that are ‘pet friendly’,” Grooms said – which translates into wood, tile or laminate flooring, fenced yard or large yards. “More than 65 percent of homebuyers have pets, so making a home friendlier or decreasing the maintenance may help a buyer choose your home over one that is not!”
In the Sarasota market, Remodeling Magazine, published by Hanley Wood, reported only four projects with positive resale values. The installation of fiberglass attic insulation scored the best, with 124.4 percent rate of return. That is followed by replacing the entry door with a steel one (106.9 percent), installing a new garage door (104.1 percent), replacing the garage door with an upscale model (104 percent) and replacing the siding (100.9 percent).
Of the 2017 national averages, only attic insulation recouped more than the job cost, at 107.7 percent.
In upscale projects in SW Florida, a bathroom remodel (61.8 percent), a bathroom addition (64.1 percent), a master suite expansion (65.9 percent) and a major kitchen remodel (69.1 percent) scored the worst ROI (return on investment).
“Consumers often are surprised to see that some of the most common remodeling projects recoup the least costs,” the report said. The rate on investment for a mid-range bathroom addition scored the worst payback at only a 53.8 percent average across the country. “Not a single kitchen or bath project ranked higher than 17th out of the 29 projects,” Remodeling found.
The magazine’s research put quantitative figures on the value of curb appeal. Exterior projects had an average payback of 74.9 percent nationally, while interior projects returned 63.5 percent, the study said. Almost an identical percentage differential separated replacement and repair costs from remodeling improvement projects.
Plus, kitchen and bath upgrades require more costly skill and labor. “As a general rule,” the study said, “the simpler the job, the cheaper it is and the more likely it will have a high ROI.”
Here in hurricane country, a backup power generator holds a lot of appeal. The addition of that piece of equipment came in dead last among mid-range projects in Sarasota at 66.4 percent.
But the survey’s information was gathered before Irma knocked out electricity to thousands of households in September, and residents scrambled to purchase those units.
“Timing also figures here,” the study stated. Generator popularity surged after Superstorm Sandy struck, soaring some 20 percentage points. ROI has been slipping since then, but Hurricane Irma served as a reminder of the value of that equipment.
The remodeling and replacement industry continues to reach new heights. One only needs to check the large audiences for HGTV’s numerous programs that highlight home overhauls. “Fixer Upper” – HGTV’s highest-rated show ever – has made media darlings and design icons out of Chip and Joanna Gaines. Their Waco retail business has skyrocketed and their 40-acre farm made the Texas city a destination.
This year, with an average of more than 30,000 visitors a week, their Magnolia Market business, complete with grain silos, should draw about 1.6 million people, according to the Waco Convention and Visitors bureau.
Their “blockbuster” series ranked as one of the top two most-watched cable telecasts in Nielsen data that covered their season four finale this past summer. Two of HGTV’s other home renovation series, “Property Brothers” and “Flip or Flop,” have also fueled the network’s rise even as ratings for other cable television companies fell.
One common denominator of these shows is ripping out walls to unite kitchen, dining and living rooms. Moulton supports the open floor plan as a positive on home values.
Did you know? Duke Energy has an Energy Efficiency Program that allows homeowners to get rebates on improvements. A home assessment must be completed either online, via an in-home appointment or by phone. I completed the assessment online and am now getting new insulation put in my home with a $200 rebate from Duke Energy. The current insulation is only 6″ thick and does not come close to meeting the thickness standards. The total cost to me will be $462 and I will surely save on future electric bills.
After I completed the online assessment, Duke also sent me the pictured box of energy efficient items. The weatherstrip was easy to put around my door, and who can’t use light bulbs? To find out more, please visit Duke Energy’s website.
Here are some new Florida State laws that I find noteworthy:
SB 1400 allows property owners to trim or remove trees on their property without a permit as long as they have a letter from a certified arborist or landscape architect stating the tree is a danger.* This change should save homeowners time and money in the permit process.
Banning vegetable garden restrictions
Floridians, yes we can turn our front yards into vegetable gardens! A new law established in SB82 prevents local governments from prohibiting them. The issue has come up numerous times nationwide when local governments deemed that front yard vegetable gardens are not aesthetically attractive. In one instance, a Miami Shores couple had to uproot their vegetable garden. My review of the City of St. Petersburg’s ordinances leaves me unclear if there is anything that would prohibit them. This new law makes it clear. I know I have seen several front yard vegetable gardens in St. Pete, including my own neighborhood of Central Oak Park.
This article in the Tampa Bay Times elaborates on the subject. Homeowners associations may have their own rules. Also note that ordinances designed to allow access to the right-of-way and to allow clear road views may still apply.
HB 447 allows local governments to close a permit six years after its issuance as long as no apparent safety hazards exist. It also prevents local governments from penalizing property owners for an open permit that was applied for by a previous owner. This change goes into effect Oct. 1, 2019.
SB1552 establishes the Florida Red Tide Mitigation and Technology Development Initiative – a partnership between the state and Mote Marine Laboratory to develop technologies that can control and mitigate red tide and its impact. This state bill sets aside $3 million a year for the next six years to fund the project. In addition, more than $625 million in environmental funding will be used for things like Everglades restoration, completion of the project that will raise Tamiami Trail, springs restoration, beach restoration projects, a red tide/blue green algae task force and a septic-to-sewer cost-share program.
As of now, tests show no signs of red tide in the Gulf. Testing is reported on the Florida Fish & Wildlife’s website “Red Tide Status.” Scientists are forecasting a “dead zone” in the Gulf of Mexico this year due to high levels of rain. Read more about this dead zone here.
*Please consult with an arborist before cutting down trees.
Additional reference: Florida Realtors