What home renovations should you do in a recession? | Immovable

With mortgage rates soaring and talk of an economic downturn, homeowners who have been waiting to sell may now find themselves in a dilemma as the scorching real estate market finally begins to cool.

Mischa Fischer, chief economist at home services firm Angi, says record house prices have prompted many homeowners to decide to stay put and renovate instead of buying a new home. But is spending money on home renovations a wise move right now, especially with rising costs due to inflation and an ever-overstretched supply chain?

The simple answer is yes, although the nature of the plans will depend on whether you plan to stay in your home for years or are looking to sell soon, according to Fischer.

“Ultimately, homeowners should strive to make sure their home meets their current needs, but it doesn’t hurt to choose projects that add value,” says Fischer.

While kitchen and bathroom renovations are usually at the top of the list in terms of added value, there are other smaller projects with a big payoff. Remodeling Magazine’s 2022 Cost vs. Value Report, which lists the projects with the highest return on investment, or ROI, once again has garage door replacement at the top of the list. With an average national cost of just over $4,000, homeowners can reap a 93% return on investment. A new steel front door at around $2,200 can result in a 64% return on investment.

“Buyers today have more choice with listings that stay on the market longer,” says Kimberly Jay, real estate broker at Compass in New York. That doesn’t mean the market has changed from a seller’s market to a buyer’s market yet, but it does mean that sellers will need to spruce up their homes if they want to sell as quickly as their neighbors might have done there. a few months old.

Fischer says increasing curb appeal is a way to add value to your home without breaking the bank. He suggests painting the front door a new color, adding new plants, or replacing the porch light as quick ways to refresh your home’s exterior.

Jay also has some suggestions on what sellers can do to entice more potential buyers without spending too much money:

  • Paint the walls white to show buyers a blank canvas.
  • Remove any mirrors on walls that look dated.
  • Paint dark kitchen cabinets white or a lighter color.
  • Remove all carpets and refinish floors.
  • Update door handles and kitchen cabinet handles.
  • Replace bathroom fixtures.
  • Repair or update all lighting.
  • Remove obsolete window treatments and wash all windows.
  • Update bathrooms and update old vanities.

For kitchens that need a makeover, Jay suggests changing kitchen counters to marble or porcelain and installing new appliances if a full renovation isn’t feasible for you right now.

Fischer also touts the benefits of small kitchen upgrades. Replacing cabinet hardware, installing a kitchen island or adding a new backsplash “can instantly add value and give your kitchen a new look,” he says.

Partial upgrades are also a good choice for bathrooms. While the return on investment for a complete bathroom remodel is 72.7% nationally, according to Angi data, smaller fixes like a new vanity or bathroom hardware give buyers the refreshed look they want without putting sellers in a budget crisis.

“If you think you could possibly move, you can usually find a compromise between what you want and what will give you the best return on investment,” says Fischer.

Keith Liston, president of Liston Design Build, has been renovating homes in St. Charles County and St. Louis, Missouri, since 1984. “We’ve certainly seen the ups and downs of the economy, but our experience is that the renovation activity isn’t really slowing down,” Liston says. “People are just making smarter decisions and not going overboard with some of their choices.

In this way, remodeling is a recession-proof industry as the jobs keep coming, although they may be smaller. However, Liston says owners pay more for everything. The normal cost of living increase for materials is around 5% each year, but Liston recently saw an increase of almost 20% each year for cabinets, appliances and flooring. Fuel surcharges have been added to most purchases, he says. He notes that commodity prices like lumber are volatile, but have mostly increased during the pandemic.

It should be noted that while some tasks may seem too laborious if you are about to sell a home, it could be worth it when reselling. For example, according to the National Association of Realtors’ 2022 Renovation Impact Report, homeowners could expect a whopping 147% cost recovery from floor refinishing and 118% from floor installation. new wooden flooring.

“As long as homes hold their value, people are generally safe to invest in the home,” Liston says.

If you’re wondering if now is the time to put into practice all those skills you learned from watching home improvement shows, you’re in good company: According to House’s recent “The State of Remodeling in the US” report. Method, an online resource for home improvement and maintenance, 60% of homeowners have become do-it-yourselfers.

It’s apparently a good move for most, as 57% of homeowners saw their home’s appraised value increase by more than $7,500.

While 93% of homeowners reported having a better quality of life after completing their real estate projects, it turns out that sticking to a budget is the hardest task of all. The report noted that 9% of homeowners exceeded their renovation budget by $1,000 while 38% of owners exceeded it by $5,000. Alarmingly, 19% exceeded it by more than $10,000.

Liston says if you’re concerned about spending money right now, you don’t necessarily have to postpone a project. The good thing about home renovations is that there are usually “good, better, and best” options for finishes, appliances, and other renovation items. Choosing a “best” instead of the “best” option, for example, is one way to cut back, he says.

With homes in some areas still flying off the market in just days, it’s tempting to forego a real estate agent and try to sell your property on your own. But cutting out the middle person cuts you out from insider information about what buyers want.

“Talk to a (real estate) broker who understands the mindset of buyers and get their advice on what to do,” says Jane Katz, realtor at Coldwell Banker Warburg in New York.

While kitchens and bathrooms are generally a hit with buyers nationwide, real estate agents know what works for buyers in your immediate area.

Rich Kwok of Century 21 Real Estate Alliance in Antioch, Calif., says that in his area, home offices or study areas, accessory living units such as garage apartments and master suites, amenities Drought-tolerant landscaping and solar power systems are among the best. home improvements and additions to consider for better resale value.

Above all, Katz recommends that sellers focus on restoring the space to neutral to entice homebuyers with a clean slate.

“Anything weird or out of the ordinary that’s been done for (the space) should be undone,” she says, noting that any outdated or overly personalized design elements will be a turn off for buyers. She says agents and brokers might also be able to recommend a contractor to fix or improve key issues. But maybe it doesn’t even need to be that complicated, she says.

“Sometimes something as simple as decluttering, a fresh coat of white paint, and clean windows can go a long way — and may be all you need,” says Katz.

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