The Value of your Remodeled Space
For most homeowners, the purchase of their home is by far the largest monetary purchase they have ever made. Spending money on buying a home is often viewed in a different light than spending money on other physical things (such as clothing, furniture or even a car), because a home typically rises in value over time, whereas the value of clothing, furniture and cars typically decreases over time. A house is considered an investment instead of an expenditure because a house has the potential to offer a return (profit) when you sell it. It makes sense then that remodeling your home would also be seen as an investment, because there is an opportunity to make a return on the money that you spend on the remodeling project when you sell your home. Resale values cannot be guaranteed because there are many market variables that affect the value of a home at any given time. But, historically, home remodeling projects such as kitchen and bathroom remodels have a very positive affect on resale value. Remodeled spaces can also make your home much more desirable to prospective buyers than homes that have not been remodeled, which can lead to the added advantage of selling your home faster than other homes on the market.
Of course, most people remodel because they are interested in living in the house and enjoying the benefits of that remodeled space. So there is a value that is not quantifiable that also must be considered when thinking about investing in a remodeling project or home renovation – the pleasure and benefit you will receive while living in the new space. If you are remodeling your home for your own use, benefit and pleasure, the home’s increase in value is just a great perk added to the enjoyment you receive. Most people think about both aspects – how the remodeled space will add to their quality of life/enjoyment, as well as the practicality of the investment based on the prospective return/profit when they someday sell their home. But even in an unfortunate market where they are unable to fully recoup the money spent on the remodel, there is still value that comes from the other side of the equation – the benefit of living in the remodeled space. Let’s say you are considering a complete new kitchen design and remodel at the cost of $50,000.00, and you are able to recoup only 80% of that investment ($40,000.00) when you decide to sell your home five years later. This means you in fact spent a total of $10,000.00 for your remodeled kitchen. Since you lived in your house for five years, it breaks down to a cost of $2,000.00 per year over five years to enjoy all the benefits of a brand new kitchen. Looking at it this way can help you decide upon a budget for your project, keeping in mind both the return on the investment as well the value that the remodel will add to your everyday life.