What to Expect from a Remodel
Return on investment varies, depending on where you spend your dollars and the strength of the housing market. A good real-estate agent should be able to provide feedback specific to your home and neighborhood, but the annual Cost vs. Value Report—a joint study done by the National Association of Realtors and Remodeling magazine—provides national and regional averages. The report estimates the cost of an average home improvement project and compares it to the value it would recoup if the home sold a year later. In 2007, more than 2,700 real-estate agents and appraisers in 60 cities provided ROI estimates.
For homeowners looking to update their kitchens, the climate for remodeling is OK as long as you don't plan to sell your home soon after the project. The rapid rise in costs has been curbed, and ROI values haven’t fallen significantly. In 2007, the average cost for a major upscale kitchen remodel increased by just 1.3 percent, compared to a 32.4 percent increase the year before.
Minor Kitchen Remodel, Mid-Range
For example, the 2007 report puts the national average price of a mid-range minor kitchen remodel at $21,185, averaging a return of 83 percent (down from last year’s 85.2 percent) a year later. What is a minor kitchen remodel? According to Remodeling, it’s a 200-square-foot kitchen with 30 linear feet of cabinetry and countertops. The cabinets get refaced with new raised-panel wood doors, drawers and hardware, but the boxes stay. Laminate countertops and vinyl flooring are removed and replaced with the same material, but in updated colors and patterns. You also get a new, energy-efficient wall oven and cooktop, a new mid-priced sink and faucet, wall covering, and a new paint job on your trim.
Major Kitchen Remodel, Mid-Range
A major kitchen remodel at a mid-range price will run an average of $55,503, according to the report. A year later, you can expect to recoup 78.1 percent (down from 80.4 percent) of that. The project includes creating a new layout with a 3-by-5-foot island for a 200-square-foot kitchen. It features 30 linear feet of semi-custom wood cabinets, laminate countertops, and a double-bowl stainless-steel sink with single-lever faucet. Add new energy-efficient appliances: wall oven, cooktop, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. Finish up with new vinyl flooring and paint for the walls, trim and ceiling.
Major Kitchen Remodel, Upscale
Price tag: $109,394, according to the report, with an ROI of 74.1 percent (down from 75.8 percent). It's an easy bill to run up in a 200-square-foot kitchen with 30 linear feet of custom cherry cabinets with interior accessories, natural stone countertops, and an imported ceramic or glass tile backsplash. Appliances include a built-in refrigerator, cooktop, 36-inch commercial-grade range and vent hood, built-in warming drawer, trash compactor and built-in microwave/convection oven. Then add a high-end undermount sink; designer faucets; built-in water filtration system; general, task and under-cabinet lighting; cork flooring; and cherry trim.
The Changing Market
Compared to the 2006 report, the average price of all three types of kitchen remodels rose slightly, from $17,938, $54,241 and $107,973, respectively. That's a cost increase to the consumer of 18.2 percent for a minor kitchen remodel, 2.3 percent for a major mid-range remodel and 1.3 percent for an upscale.
