When it came to real estate in 2017, the residential housing market had, in many ways, a banner year: Home prices in Philadelphia and across the nation surged to pre-recession levels, mortgage interest rates remained low, and the number of residential sales picked back up again after years of sluggish growth.
Overall, that meant the 2017 market was largely a boon for sellers, who often were able to sell their properties quickly — and above asking price — as low supply and high demand sent buyers into a frenzy. Going into 2018, the housing market will largely be the same, observers and economists agree, with sellers having the upper hand again for much of the year.
Which likely has homeowners wondering, as they head into the busy spring real estate market, what kind of renovations should be undertaken now to get the home in shape for a potential sale.
Real estate agents, market observers, and appraisal experts who were asked what renovations were most worth homeowners' time and money agreed on this: When undertaking a renovation, less means more.
It's important, they said, to avoid "over-improving" a home — changing a house so much that it might not fit a buyer's taste — or spending money on a major renovation just for the purpose of selling. Rarely, data show, do renovators make back the money they spend on a project.
According to a 2018 study by Remodeling magazine, the average payback on 20 different remodeling projects last year was just 56.8 cents of every dollar spent. Meanwhile, in the Middle Atlantic region — Pennsylvania, New York, New Jersey— homeowners recouped even less: just 51.3 cents of every dollar spent, on average. (Remodeling's 2018 study was provided exclusively to the Inquirer and Daily News. It is expected to be released later this month.)
"Cost does not usually equal value…," said Jim Murrett, the president of the Appraisal Institute, the nation's largest professional association of real estate appraisers. "But that's one of those decisions someone has to make. Do I do a renovation in the short term because I want to sell the house? Is it going to make the house more sellable and attractive?"
For the most part, the Remodeling study found, focusing on less-expensive projects typically can yield a higher return on investment, while bigger, more exciting projects — a major kitchen renovation or a bathroom remodel — tend to cost more and receive far less return. In Philadelphia, for example, a smaller undertaking such as installing manufactured stone veneer on the outside of a home to replace vinyl siding allowed homeowners to recoup almost 99 percent of the average $8,420 spent on the renovation.
In contrast, completing a full-scale kitchen remodel with "upscale products" — such as top-of-the-line custom white cabinets or stone countertops — yielded only 59 cents on every dollar spent in Philadelphia.