Remodeling rewards

For owners who want to stay put or can't afford to move up, a home makeover offers the perfect solution. But recouping those costs depends on what gets done.

October 28, 2007|By Andrea F. Siegel | Andrea F. Siegel,sun reporter

It came down to this: The Middeltons loved their Ruxton neighborhood but their 86-year-old house didn't suit their lifestyle.

From the kitchen, Courtney Middelton couldn't keep an eye on 5 1/2 -year-old Hadley playing less than 20 feet away. The back door was like a one-lane bridge from the kitchen to the deck, always with somebody waiting to get in or out. And getting around seemed uncomfortable, especially during family gatherings and small parties.

But when Courtney and Dan Middelton looked to move, they found that though prices in the community were no longer at their peak, they remained out of reach.

Last year the couple turned to a remodeling contractor for help and the work was done this past spring.

Remodeling is an option many homeowners turn to when the housing market gets indigestion. Typically, after home sales slide, remodelings climb, but contractors say it's a mixed bag now.

Elite contractors haven't noticed a change, but industrywide, the numbers are down from the rapid growth of the early 2000s. Tightening consumer credit and financial unease have some homeowners holding back.

"It's definitely been a little slower than in the past," said Gary Stokes, whose company, ADR Builders in Timonium, tackled the Middeltons' home.

"The whole year has been down as far as sunrooms go," said Kevin Carmen, vice president of marketing for American Design and Build in Bel Air. "I don't think people have the equity or the credit line that they have had a couple of years ago."

Still, many homeowners are making improvements in anticipation of the next housing boom or to stay put, said John Kelly of Dream It / Build It Inc. in Bowleys Quarters, who said he's getting backed up.

They want conveniences, updates and versatile storage space, contractors said.

For the Middeltons, it was a decision to stay put.

"We don't need a gargantuan home," Courtney Middelton said. Better use of existing space was what they sought. "We reconfigured the first floor."

The wall between the kitchen and dining room is gone, replaced by open space and a granite-topped island.

On the stylish surface, food gets prepared, the family eats, and Hadley does homework under a parent's eye.

The design created more storage space, including a pantry. The dining room now is bathed in natural light that streams in from glass doors that replaced a wall.

"We put in French doors to the deck. It was harder to get there before," Courtney said.

The archway separating the dining and living rooms was widened a couple of feet.

"The flow is better," she said. The design is fairly open, and open floor plans, rather than a compartmentalized style, are popular now.

The couple have decided this: However long they stay - and they want that to be a good long while - they hope they will recoup most, if not all, of their costs.

Much of what the Middeltons did, as it turns out, ranks high on Remodeling magazine's 2007 Annual Cost vs. Value Report, which appears in the November issue.

Kitchens, baths best

The recent survey shows that bathroom and kitchen remodelings and additions remain highly valued by buyers. But the survey also shows returns on recent home improvements at the time of resale have dropped dramatically in the Baltimore area.

Overall, the return in 2005 - when home values skyrocketed without home improvements - averaged 99 percent in Baltimore. That's down to 68.8 percent in the 2007 survey, said Sal Alfano, editorial director of Remodeling magazine.

It's part of a national trend in which the average cost recouped nationally was 70 percent, down 12.5 percent since 2003.

"With the downturn in late 2005 and 2006, it affected the resale value," Alfano said. Remodeling costs went up. House prices went down. "You put those two things together and the resale value drops," he said.

For example, a bathroom remodeling that cost nearly $16,000 returned 78.3 percent of its value when the home was sold, down from 84.9 percent last year. An upscale bathroom remodeling returned 68.4 percent, down from 77.4 percent in the 2006 survey.

"Kitchen and bath are the two most popular rooms in the house," Alfano said. Especially in the kitchen, homeowners and buyers want more space and more light. A major upscale kitchen remodeling returned 74.1 percent this year, down from 75.8 percent a year ago, according to the survey.

"Updated kitchens always provide a certain `wow factor,' " said Amy Sadacca, a Realtor with Re/Max 100 in Columbia, who said upgrades such as stainless-steel appliances and granite countertops impress even buyers who don't cook much.

Also holding more than two-thirds of their value for resale are two of the least disruptive improvements: siding and windows, according to the survey.

American Design and Build's Carmen said clients clamor for energy-efficient replacement windows, probably because they will see lower heating bills immediately and may receive a tax credit.

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