Were the Remodel Projects Taken on During the Pandemic Worth the Money?

According to a recently published report by the National Association of Realtors and the National Association of the Remodeling Industry, homeowners remodel for a variety of reasons and some projects produce a better cost recovery than others.

The report focused on the following items:

• The typical cost of 19 remodeling and replacement projects, as estimated by members of the National Association of the Remodeling Industry (NARI).
• How much appeal each project is likely to have for buyers, according to realtors.
• How much realtors estimate that homeowners can recover on the cost of the projects if they sell the home.

Americans spent $420 billion in 2020 on remodeling their homes. Among NARI members, 90% found a greater demand in contracting in remodeling work during the COVID-19 pandemic. Sixty percent of NARI members cited the scale of the projects increased either in a larger project or remodeling more than one room because of the pandemic.

While most consumers (83%) cite they would have remodeled regardless of the pandemic, 86% of consumers report that remodeling one area of their home made them want to then remodel other areas of their home. When consumers remodel, it is to upgrade worn-out surfaces, finishes and materials (30 percent); to add features and improve livability (20%); and because it is time for a change (16%). Most consumers are pleased with the overall result and 57% would tackle the project the same way, while 35% would make a few different choices such as finishes or materials.

After remodeling, 84% of owners have a greater desire to be in their home. Sixty-nine percent have increased enjoyment in their home. Fifty-seven percent feel happy, and 39 percent feel satisfied when they see their completed project, with a typical Joy Score of 9.6.

Sixty-nine percent feel a major sense of accomplishment when they think of their completed project. Thirty-five percent of owners report the single-most important result from remodeling is better functionality and livability, 22% report durable and long-lasting results, materials and appliances, and 14% report beauty and aesthetics. Thirty-five percent of the owners hired a professional for the whole job, 28% hired the labor but purchased the materials, and 22% did the entire project themselves.

Thirteen percent contributed some do-it-yourself (DIY) labor. In some areas of the report, costs are not collected, as these projects are more likely to be done DIY or part of a larger project. The report covers both interior and exterior home improvement projects. This report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling project and cost recovery are influenced by many factors, including project design, quality of materials, location, age and condition of the home, and homeowner preferences. For the purpose of costs collected, NARI members were asked to expect the home was a 2,495-square-foot house — the average size according to U.S. Census data — and that the house is a post-1981-built home with no hidden issues. To ensure the most applicability, projects and materials represent standard or typical quality; a few projects feature “better-quality” materials. But there are no top-of-the-line projects.

There are many ways for homeowners to approach remodeling projects and even more ways to analyze the projects’ successful outcome. NAR calculated a Joy Score for each project based on the happiness homeowners reported with their renovations. There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.

In comparing that dollar value to the estimated cost of each project provided by NARI members, a Recovered Project Cost percentage was calculated. For interior and exterior projects, these graphs show the results of the major cost recovery categories.

Surprisingly, it wasn’t always the most expensive projects that produced the best cost recovery results. Remodeled kitchens and bathrooms are also popular upgrade projects but they are expensive to undertake and don’t always provide for great cost recovery at sale time.

It you are looking to make some upgrades to your own home and you are considering selling any time soon, you may want to pay close attention to the results of this study. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.