Saturday, January 9, 2010

Remodeling Investments for 2010: Kitchens Still Have Sizzle!

Home in need of an update but the current real estate market has you questioning what to spend on the investment? If this sounds like you, you are in very good company! Many people are itching for a change in environment but are opting to remodel rather than move. But what the “what ifs” start creeping in too…Will I ever get the money back out of the remodel? Will the investment outweigh the value added to the home? If you are considering a kitchen remodel, it still could be good choice.

The statement “Kitchens and Baths sell homes” is second only to “Location, Location, Location” in the real estate playbook. Okay we don’t really have a playbook but the annual Cost VS Value Report for home remodels consistently shows that a higher percentage of funds used for a kitchen, bath or basement remodel will be recouped on a sale than most other remodeling projects. In late December, the NAR released the 2009-2010 Cost VS Value Report for home remodels. This study completed by Remodeling Magazine, looked at cost data, resale value and percentage recouped for 33 different projects in 80 housing markets across the United States. Minnesotans have to be a bit more cautious about remodels than in other areas of the country as our value of specific remodels are trending downward. If a homeowner does a major, mid-range kitchen remodel, he can expect to recoup about 64.3% of their expenses which is lower than the national average of 72.1% percent return on investment. A minor kitchen remodel, spending roughly $21,400 in Minnesota will be recouped at a rate of 69.4% again this is less than the national average of 78.3% but a reasonable return. (View all the statistics from the Cost vs. Value Report 2009-2010 for the Mpls/St Paul area.)

Before undertaking a kitchen remodel it is best to understand the “Why” of the project. Is it because your home-sweet-home is perfect except for a kitchen so small that people trip over each other on the way from the refrigerator to the table? Or is it because you want to move and the 1980’s country blue counter and white department store brand appliances have seen better days and should be put out to pasture? The approach to the perfect remodel will be different if you are planning to stay in the home for the long term.
Take a Family Lifestyle Inventory
If you are designing the perfect kitchen for your family, take a lifestyle inventory. This is a process where you answer questions to understand what will be the most important needs specific to your family for the new space. It will help you and your designer to incorporate important details into your plan.
Consider cooking habits:
  • One cook or two?

  • Baker?

  • Left-handed?

  • Do you do dishes as you cook?

  • Lots of Gadgets?

  • Buy in Bulk?

  • One oven or two?
Consider eating habits:
  • Family gatherings?

  • Everyone for themselves?

  • Eat outdoors?

  • Need morning sunshine?

  • Entertaining?
Other Considerations:
  • Flat screen TV in kitchen?

  • Computer or home office needs?

  • Homework?

  • Laundry?

  • Recycling?

  • Will the family grow?

  • Older relatives?

  • Handicap Accessibility requirements?
All of these are things to consider when making a decision on whether and how to remodel your kitchen. Work with a designer or use a remodeling design software that will take into account the important specific needs of your family.
Hot Trends for Today’s Kitchens
For a remodel to add value at resale, you must consider current needs and trends. So what are the hot for trends for kitchens today?
  • Ceramic tile back splashes—One of the cheapest and best ways to update a kitchen!

  • Open to Family Room or Great Room

  • Custom cabinetry in a variety of heights with lots of moldings and unique woods…Maple and Cherry are preferred to Oak.

  • Appliances with Energy Star ratings.

  • Energy saving induction cook tops separate from ovens.

  • Green flooring choices like bamboo, cork and eucalyptus.

  • Sinks with instant hot water systems.

  • Pantries and abundant, easy access storage

  • Multiple types of lighting (bright to work, indirect for mood). Avoid track lighting.

  • Windows for Natural Light

  • Quartz-based granite-like counters in products like Cambria, Silestone and Zodiac, for counters and islands, as health conscious people trend away from granite. Too expensive to do the whole kitchen in quartz? Consider just the island in the expensive stuff and do the rest of the kitchen counter in a granite tiles or a complimentary colored laminate.
Stick to Your Budget
Take it from someone who just completed a minor-kitchen remodel this past year, can be easy to get caught up in the remodeling process and go over budget. Take time from the start to reflect on your family’s needs and reasons for the remodel. Consider options that make the most sense for your family, budget and neighborhood. Make certain that the kitchen isn’t designed and constructed at a quality far beyond the value of the rest of the home. Remember remodeling for family use tends to cost more than a remodel for resale.
If remodeling specifically to put your home on the market, go for the minor remodel and take into consideration the quality and condition of the rest of home. Remember you will not recoup 100% of your investment. The changes are being made to make the house more saleable in a down market. A good REALTOR® will give you the best advice as to what is necessary and what is over the top. If you are in an upscale neighborhood where homebuyers will expect high-end quality, don’t make discount-store decisions. Likewise, if your home is in an area of modest or lower value homes, skip the granite and go with an upgraded-laminate to replace dated counters. Understanding the market place you live in will help make the best choices to recoup the most from your investment.
Spending a little extra time in the planning stage can reduce the headaches and heartaches of a construction project that does not meet expectations. Taking your time will allow you to make the wise decisions that add value to your most important financial investment, your home.

Copyright 2010 Teri Eckholm