Friday, December 10, 2010

What Will Our Project Cost 2010-11 Version

Remodeling magazine is out with their new Cost Vs. Value report for 2010-11.
To see the main page of the report go here. Its fun to see what potential home improvements will cost in your area...try it. No shock that AGAIN the SF Bay area has the highest costs....
To see the SF Bay area specific numbers go here.
To see how the SF Bay area numbers have changed over the past 2 yrs go here.

As before I believe that the cost values have a much stronger grounding in reality than do the value added numbers. The cost numbers are generated by Home Tech Information Systems which makes their money providing estimating software to contractors.

The value numbers are generated by asking appraisers, insurance adjusters and real estate agents how the project would effect the value of the house... While I could be convinced that an appraiser and insurance adjuster could have a meaningful opinion on this...Realtors??? Hmmmm....

Below I have reproduced a table comparing costs and values between this year and last for projects that we are contemplating doing on our house. Of course there is not an exact match but these projects are close enough for government work.

Midrange Projects

2009-10

2010-11

Project Name

Job Cost

Resale Value

Cost Recouped

Job Cost

Resale Value

Cost Recouped

Attic Bedroom

$65,829

$67,531

102.6%

$70,938

$74,206

104.6%

Deck Addition (wood)

$13,642

$14,196

104.1%

$15,091

$17,025

112.8%

Major Kitchen Remodel

$67,789

$67,815

100.0%

$71,015

$67,583

95.2%

Master Suite Addition

$132,443

$114,104

86.2%

$143,853

$123,003

85.5%

Roofing Replacement

$26,242

$22,664

86.4%

$28,699

$21,821

76.0%



If you click on the descriptions on the left it should bring you to a cool page with a description and cool 3-d renderings.
First you'll notice that all of our costs went up!!!! Hurray!!!!, Wait, isn't there supposed to be a recession on and rampant unemployment in the construction trades??? Guess not in the SF Bay area....

What Will It Cost
It looks like if we got all the work done at the same time it would cost .......wait for it....

$329,596!!!!!

Woo-Hoo we're rich!!!! Oh wait, no we're not...

What 'Value' Will It Return
If you can believe the numbers all the above improvements will add....
$303638

That's a difference of -$25,958....

Wouldn't it be nice if you could really, really believe the numbers above...
Ass-sue-ming the numbers are semi-believable I still say that this makes a good case for DIY'ing as much of a project as possible.

If by DIY'ing some of the work yourself you can get that total cost down to say $275k then you would of actually increased the value of your house past what it cost and you'd get a nice net return when you sell it....ya right.

Wow, actually those numbers are kinda depressing...who has that kind of money to spend now a days?

If we could get the entire house redone for that $329k we'd have a nice-legal 2000sq ft 3-3 on the top two floors and a legal 1000sq ft 2-1 rental unit on the bottom floor....wonder what the house would be worth then?

Let's see... 1831 San Jose just sold for a cool $1M and our house is bigger (legally) but on a smaller lot....so that means our house would be worth $1M right??? Right???? Ya right...that's the kind of thinking that makes houses sit on the market for 80 gazillion months with no price drops...

Anywho, use the cost vs value numbers at your own risk...but when looking at a house that's going to 'need some work' I think looking at the costs and considering them to be good base numbers is a good way to go.... So, if some Realtor tells you, you can do a master suite addition in the attic for $40k you'll know that they are FOS.

2 comments:

evan said...

Interesting... the truth is only a licenced contractor can tell you the cost to do something legally and a local real estate expert can give you a good estimate of the effect on the value of the house. DIY projects can be fun but often are not actually cheaper because you end up paying yourself $5/hr versus an expert who is fast, efficient, and skilled

The MadScientist said...

Evan,
Sure, the numbers are not going to be exact. They claim that they are averages. If you are a pro and buy their software and plug in your specific numbers I bet you'd come pretty close to the actual cost....well, at least that's what the companies advertising says....

I still say that those numbers are probably useful to use as baseline numbers when figuring out what a remodeling project is going to cost and heck if there's even any chance of affording it.