Study Shows Value of Remodeling Dropping

Washington, DC, Nov. 16, 2010 -- Remodeling may be good for the soul, but it does little to add value to a home, according to a survey by Remodeling magazine in conjunction with the National Association of Realtors.

In general, anyone planning a home remodeling will pay a lot more for the job than they will get back in return when they sell, the report said. Only 60% of remodeling costs in 2010 would be recouped by homeowners.

The report indicated that exterior improvements mostly performed better than interior ones, owing to the necessity of maintaining a home's "curb appeal."

"In today's buyers market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside," according to Lawrence Yun, chief economist for NAR.

On the average remodeling job, homeowners recouped 16% less value than they had in 2009, the steepest slide the survey has recorded in its nine-year history. This happened despite the fact that construction costs declined for the first time since 2004.

For example, adding a new mid-range bath returned nearly 100% of its approximately $15,000 cost back in 2003. Today, the same job costs more than $40,000 and only returns about half its cost.