Renovate Your Home's Exterior: It Will Maximize Your Return On Investment

Most homeowners expect the value of their homes will increase when they spend money on remodeling. However, this is often not the case. The recent Cost vs. Value Report prepared by Remodeling magazine in conjunction with the National Association of Realtors makes this point abundantly clear.The Cost vs. Value Report was based on a survey of more than 100,000 appraisers, real estate sales agents and brokers in 65 different markets around the country. The survey included information about construction costs and specifications for 29 mid- to high-range projects. Those who participated in the survey were asked to estimate the percent returned on resale for each project.In general, the value of remodeling was down in 2007 compared to 2006. This was attributed to rising renovation costs and a slower rate of home-price appreciation. Also revealed in the report is a trend toward renovation projects that improve the exterior of a home. Nationally, of those projects that paid back more than 80 percent of the cost on resale, only one -- a minor kitchen remodel that returned 83 percent -- was an interior renovation. It's noteworthy that since a minor kitchen remodel was added to the survey in 2004, it has consistently ranked amongst the highest-value projects.Other high-returning exterior upgrades included: upscale siding using fiber-cement material; a wood deck addition; mid-range vinyl siding replacement; and mid-range to upscale window replacement. All of these improvements returned in the 81 to 88 percent range.Nationally, the maximum percent returned on a renovation project was 88 percent. However, the Pacific region (Alaska, California, Hawaii, Oregon and Washington) bucked the trend with six projects paying back more than 100 percent of the amount spent for renovations. These included: a wood deck addition; a minor kitchen remodel; fiber-cement siding replacement; wood window replacement; and upscale wood and vinyl window replacement.According to the Cost vs. Value Report, there is a wide range of payback on renovation projects to be expected from different regions. For example, a bathroom remodel recouped 69 percent nationally. In the Mid-Atlantic region the return was 60.7 percent, but it was 84.1 percent in the Pacific region.

HOUSE HUNTING TIP: Given current real estate market conditions and regional variability in the amount you can expect to recoup on a remodel, it's wise to know your local area well before embarking on a major project. Check costs with a local contractor and talk to a local agent whose opinion you trust before you start, particularly if you have resale in mind.Just as it isn't wise to buy a home if you plan to move again soon, it's also not smart to do a major renovation unless you plan to stay put for awhile. The more you spend, the more money you could lose unless you own the property long enough to benefit from years of appreciation.Homeowners who are planning to fix up their homes for sale in the near future can gain insight from the results of the Cost vs. Value Report. First impressions have always been an important element in selling homes. So, put some effort in improving the exterior appearance of your home and yard. If your home has limited outdoor living, adding a wood deck can overcome this deficiency.It may seem ridiculous to improve the kitchen for someone else when you could never seem to find the time to fix it up for yourself. But, since minor kitchen remodels have such a high rate of return, it's a project well worth considering if your kitchen is dated.THE CLOSING: It could make the difference between selling or not in the current challenging home-sale market.

What $1 Million Buys In Homes Across The United States

Forbes Magazine printed this article about how far your money will go when buying a million dollar property across the country. Shopping for a seven-figure spread? You're in luck.
That's because nationwide, homeowners are slashing asking prices, often by significant margins, making this year's list of million-dollar properties much more palatable than those in years past. These homes are still beyond the means of the average American, but there's some comfort in a million-dollar home looking like a million-dollar home rather than a hastily built McMansion or a shoebox-sized studio apartment.
In Los Angeles, $1 million buys a four-bedroom, Craftsman-style Hollywood home with wood-beamed ceilings typical of turn-of-the-century California architecture. In Texas, seven figures nets a 5,522-square-foot, five-bedroom house in Dallas, or a 5,520-square-foot, six-bedroom home in Houston.
In the Big Apple, $1 million buys much less.
Assuming you meet the approval of the co-op board, "for a million bucks you get a sweet one-bedroom apartment, or a humble two-bedroom apartment," says Harry DiOrio, a broker with Prudential Douglas Elliman in New York.
If "you're forced into the higher-priced world of condos, you can forget about the two-bedroom on a million-dollar budget, unless, of course, you're willing to cross the river into Brooklyn or Queens or head north into Harlem."
Stick to Manhattan, and your bucks will bag you a 611-square-foot one-bedroom apartment, close to the East River with views of the city, the bridges, Brooklyn and Queens, and access to a pool, garden and spa--but almost a mile from the nearest subway stop.
Luxury List
Forbes.com studied the 15 largest U.S. metro areas and developed a list of real estate's most basic luxury unit, the million-dollar home. We included properties from New York to Seattle, and home styles ranging from city townhouses to suburban Victorians.
In places hit hardest by the subprime crisis, buying a million-dollar property might seem a silly notion. But there exists a market for such homes.
Those looking in the Detroit metro might head to Pleasant Ridge, an affluent community with around 2,000 residents just outside the city. Here, one can buy a fetching Tudor-style home of ivy-covered brick, with 4,000 square feet of space, for $1 million.
In spots largely unaffected by problematic lending or other economic conditions, such as California's Bay Area, a million dollars doesn't seem wildly excessive: The median home price in San Francisco is $846,800; it's $852,500 in San Jose.
These prices are the result of concentrated wealth in the local economy, high regulatory and business costs for builders that are passed along to buyers, and a very small, confined geographic space that allows for little new development.
"A million dollars won't get you very much," says Courtney Charney, a broker with Alain Pinel Realtors in Atherton, Calif. If you go for an area with good schools, she says, "You're probably only getting a thousand square feet."
In San Francisco proper, prospects are a bit more grim, as a million bucks won't buy a house without shared walls. That's right--even in cheaper areas, like the Sunset, houses are so tightly packed that they bump up against one another.
Still, there are suburbs, like Burlingame, Calif., between San Francisco and San Jose, where $1 million translates into a modest 1,650-square-foot house with three bedrooms and a good-sized yard.
But if you move into a desirable suburb, a million will only land a "second-tier location," says Charney.
Best Bets
Prime California markets have always been off-kilter, but in cities such as Minneapolis and Boston, $1 million buys a good-sized house in a desirable neighborhood. In the Fremont section of Seattle, residents have views of the city skyline as well as Mount Ranier. Here, seven figures buys a three-bedroom, two-bath home on a terraced ridge, with large windows to take advantage of the sunlight and bird's-eye view.
No plans to settle in Seattle? Take comfort in this: While home sales nationwide are at a historic low, those at or above the $1 million mark can be yours for less.
In Pictures: What $1 Million Buys in the U.S.