Americans are moving less, staying put longer and investing in more home renovations.
First-time home buyers used to stay in their home about seven years. That moved up to 11 years in 2016. Those who have owned a home before typically stayed for about 11-and-a-half years. Nowadays, those same folks are staying 15 years or longer, according to the latest data from the National Association of Home Builders.
Spending on new single-family home construction remains 40 percent below the levels of a decade ago, according to the Wall Street Journal. At the same time, new forecasts project the investment in remodeling and home repairs will surpass records set during the housing boom.
In 2013, Americans spent $150 billion dollars in home renovations. Home improvement spending is expected to reach its highest level in a decade, with spending expected to top $325 billion for 2017, according to Harvard University’s Joint Center for Housing Studies.
Because homeowners are staying longer, they are doing more discretionary projects — upgraded kitchens and baths, for example, with higher-end finishes. “They’re not afraid to pick the nicer tile,” said Geoff Horen, chief executive of the Lifestyle Group, a residential remodeling company.
Remodeling magazine just released its much-read annual “Cost vs. Value” report (http://www.remodeling.hw.net/cost-vs-value/2017/). The report, now celebrating its 30th year, analyzes 29 popular home improvements in 99 markets nationwide. Each project’s cost is divided by the home’s resale value, resulting in a percentage calculation, or return on investment.
There wasn’t a lot of change between the 2017 and 2016 reports. “What is noteworthy is that the value of pricier projects rose significantly over last year,” said Craig Webb, editor of Remodeling magazine.
So what home renovation projects will generate the highest return on investment in 2017? The perennial chart-topper (No. 1 ranking) is installing attic insulation. New attic insulation returns an average of 107.7 percent of your investment. Next up (No. 2 ranking) is replacing your front door, which returns 90.7 percent of your investment.
According to the Cost vs. Value report, on average you should expect to get back 64 percent of every dollar you spend on renovations. Unless you live in Seattle. As in previous years, some renovation projects have a higher rate of return in Seattle. For example, adding a new wood deck will return 71 percent on your investment in most U.S. cities. In Seattle, a new wood deck has an 88 percent return on investment.
Thinking of replacing your garage door? Opt for the high-end garage door. In Seattle a high end garage door replacement returns 115 percent on your investment dollar, while an average quality garage door returns just 84 percent on your money spent.
If you’re planning a kitchen renovation, the data suggests you will receive a 94 percent return on your investment for a midrange remodel. By comparison, an upscale kitchen renovation offers a 70 percent return on investment.
In Seattle, a two-story addition will return more than 84 percent on your money spent. Nationwide, a two-story remodel has a 71 percent return on investment.
A new category was added to the Cost vs Value report for 2017; “universal design.”
“This is the first year we’ve included universal design, and it’s truly a rising category,” said Webb. “It’s based on a growing desire to age in place and a greater awareness of people with disabilities.”
Universal design enhances a home’s features, making it more livable for the elderly and disabled. That includes adding features like grip bars in showers, lever-style doorknobs, and wider hallways and doors. Nationwide, a universal design bathroom returns just over 68 percent on the cost of the project. In Seattle, a universal design bathroom has a 74 percent return on investment.
Are you curious which upgrades you should make? Start by asking yourself; How long do you plan to live in your home? “If you see yourself keeping the house for at least five years, you shouldn’t worry about value at all,” Webb says. the reason: Housing trends and fads can change dramatically in this amount of time, so what’s hot today could be passé all too soon. So if you plan to stay put, renovate however will make you happy, period.”
RAY AKERS is a licensed Realtor for Akers & Cargill Properties in Seattle. Send your questions to firstname.lastname@example.org or call 206-722-4444.