Can retirees successfully remodel their homes, or can they save their money by investing it elsewhere? According to experts, they can remodel, but they should choose those renovations wisely.
According to a survey by Merrill-Lynch and Age Wave, which had more than 3,600 respondents, the most common renovations among retirees and soon-to-be retirees included creating a home office, improving the curb appeal of their home, and performing upgrades to the bathrooms and kitchen. Most respondents were over 50, and more than a third were already retired.
But those renovations can be costly, according to a study from Remodeling magazine, which was taken from data 200,000 Realtors surveyed.
For example, the average price for a major kitchen remodeling project was $56,768, but the return on investment was only $38,485 — or 67.8% of those renovation costs. Despite those figures, kitchen remodeling has been one of the most popular renovations in recent years, accounting for 69% of all home improvement projects, according to the 2012 Remodeling Market Index.
Similar projects also saw less recouped than what was spent, once homeowners went to sell their homes. Adding or remodeling a home office cost around $29,000 in the U.S., but it netted sellers just $14,155, or just 48.7% of the price.
Bathroom remodels cost $16,724 on average, yet they recouped 70% of that cost ($11,707). None of the projects to improve curb appeal on the exterior of the house helped recoup more than 100% in resale, in fact, except for upgrading an entry door with a steel door, which cost just $1,230 and netted $1,252 — a 101.8% return on investment.
Those figures are only for midrange projects, though. For upscale and luxury renovations, none of the remodel jobs listed broke a 100% ROI, despite projects like a kitchen remodel and a master suite addition breaking six figures in cost.
And they didn’t amount to much in returns: A major upscale kitchen remodel cost an average of $113,097, but the ROI was 59% ($66,747); a master suite addition averaged to a staggering $236,363, but the ROI was even less at 53.7%, or $126,860 recouped in a resale.
Where homeowners live also affects how much they spend on remodeling costs, according to a new report from the Joint Center for Housing Studies (JCHS) at Harvard University.
The Northeast is the priciest for remodeling jobs, especially among major coastal metropolitan areas like Boston, New York, Philadelphia, and Providence. Other cities that saw major spending ($3,500 or more) included Denver, Minneapolis, Oklahoma City, Phoenix, San Francisco, San Jose and Washington, D.C.
Craig Webb, editor-in-chief of Remodeling, said that a good contractor should offer home remodeling tips that suit a homeowners needs rather than simply selling them on what’s trendy. Using long-lasting materials and performing energy efficiency upgrades can also help those who plan to age in place in their homes or sell further down the road.
Seniors, especially, should think about upgrading with items that will help them age in place. Open floor plans and wider doors that can accommodate wheelchairs and walkers, for example, might be more useful, according to Eleanor Blayney, consumer advocate for the Certified Financial Planner Board.