Now is not the time to sell your home. According to the Commerce Department's New Home Sales Report, home sale prices went down 33% between September 2007 and September 2008, and the median sales price dropped from $221,900 in August to $218,400 in September this year. However, just because you're not selling your home doesn't mean you should forget potential consumer interests when making changes.
Consider the upgrades you can enjoy now that will also help your home's resale value a few years down the line. "In the long run, it's kitchens and baths," says Dona Crowder, a realtor with Pacific Union in San Francisco. While she acknowledges it's hard to measure the effects a remodeled kitchen can have on the eventual selling price without considering market conditions, location, overall condition and style of renovation, "If someone actually had some taste in remodeling, I would say at least 3 to 1." But she adds the familiar caveat, "Except in a market such as this."
Crowder also says that if you're staying put for a while, you should attend to the roof, floors, electrical and plumbing. "If you're going to be living there, why not enjoy them?" These infrastructural improvements will come in handy when you're trying to sell and an inspector starts investigating all the nooks and crannies, says home inspector Jason Wahlberg. "The reason for home inspections is that we really do see the things behind the scenes that buyers can't see." While electrical and plumbing adjustments might not be as glamorous as that new hot tub, it can make a difference in the final sale. "There are types of things that will reassure people," says Wahlberg.
Here are the five upgrades with the highest national average returns, according to the 2007 Cost vs. Value Remodeling Report from Remodeling Magazine. (The average percent return on initial investments and average job costs are in parentheses.)
5. Bathroom Remodel (78.3%, $15,789)
While adding that big Jacuzzi might sound like a good plan, you don't have to go that far to upgrade your bathroom and bring in a solid return. A new toilet, ceramic tub, shower, tile and wallpaper might not wow your friends, but it could win over prospective buyers who might be put off by your current 1970s mint green tile.
Buy Now, Sell Later Tip: Storage space is limited in bathrooms, so think about vertical shelving which saves on square footage, but doesn't skimp on surface.
4. Window Replacement (79.3-81.2%, $10,448-$11,384 depending on material)
Whether you choose vinyl or wood framed windows, the key is to find a material that holds outside air out. Look for the Energy Star label, which marks windows that can save you between 10-25% on your yearly heating bill.
Buy Now, Sell Later Tip: Contact the NFRC (National Fenestration Rating Council) to check on the energy efficiency and quality of the window brand you choose.
3. Kitchen Remodel (83%, $21,185)
You don't have to gut the kitchen to see some serious improvements. Simply redo the counter tops, install a new sink, replace the flooring and put on new cabinet doors (leave the bones intact). Replace the stove, oven and any other permanent appliances with more energy efficient models. "If you're remodeling the kitchen, you want to update the electrical and the plumbing while everything's torn up," Wahlberg says. "It's easy to change the tile, but hard to rewire the kitchen."
Buy Now, Sell Later Tip:According to Consumer Reports, when it comes to flooring, fake beats real tile. Vinyl linoleum and laminates last twice as long as hard wood floors when subjected to kitchen spills and scrapes.
2. Siding Replacement (83.2-88.1%, $9,910-$13,212 depending on type of siding)
Replacing the old siding on your home not only improves its exterior, but protects against the elements and insects. Also, air tight siding can lower energy costs by buffering insulation from the outside world.
Buy Now, Sell Later Tip: Buy environmental and non-toxic siding, which is a marketing plus when you're selling the home.
1. Wooden Deck Addition (85.4%, $10,347)
Who doesn't love a deck? A deck adds more floor space, which can be an essential selling point. There are a lot of routes to go, but according to Remodeling magazine's report, a wooden deck will bring a higher average return than a composite deck by 7%.
Buy Now, Sell Later Tip: To keep a wooden deck sturdy and bright, refinish it every year or two so when it comes time to sell it's already shining.