CONTINUED FROM 1 RETURNS ON RENOVATIONS Home renovation is a $580 billion industry nationwide. The return on investment for renovations depends on the project.
Adding new bedroom Cost estimate: $172,000 Recovered cost: $100,000 Return on investment: 56% Bathroom renovation Cost estimate: $35,000 Recovered cost: $25,000 Return on investment: 71%
SOURCES: NATIONAL ASSOCIATION OF LANDSCAPE PROFESSIONALS, NATIONAL ASSOCIATION OF REALTORS COMMUNITY IMPACT
Complete kitchen renovation Cost estimate: $80,000 Recovered cost: $60,000 Return on investment: 75%
Overall landscape upgrade Cost estimate: $9,000 Recovered cost: $9,000 Return on investment: 100%
Hardwood ooring resurfacing Cost estimate: $3,400 Recovered cost: $5,000 Return on investment: 147%
In-ground pool addition Cost estimate: $90,000 Recovered cost: $50,000 Return on investment: 56%
New patio Cost estimate: $10,500 Recovered cost: $10,000 Return on investment: 95%
A rise in renovations Homebuyers have much higher expectations for the quality of their future home than homebuyers during the housing market peak from summer 2021 to March 2022, said Jim Mayo, a real estate agent in William- son County. “In 2021, you just put a sign in the yard, and the house is going to have double-digit showings,” Mayo said. “Now you have to market the home; you have to have good curb appeal, touch up paint.” Homebuyers are looking for the most-updated move-in-ready homes, Mayo said. While they might not expect a 20-year-old home to be remodeled, they are expecting to pay less to com- pensate for needed improvements and updates. Mayo estimated typical ren- ovations can increase the value of a
Contractor demand While interest rates are high, so is the demand for contractors and home ren- ovations. Charlie Solis works as an esti- mator, seller and project manager for Austin Jones Company, a remodeling contractor based in Austin that serves the Greater Austin area. With over 35 years in the industry, he’s seen rst- hand the shift in the market with peo- ple opting to make their homes work rather than seeking to move. In ation in general has a ected contractors as the cost of materials has gone up over the last few years. However, rising interest rates have also caught up to contractors. Solis said calls have slowed over the past six months or so—something that is not normal going into the summertime— and homeowners are sitting on their estimates longer than they used to as
they decide if the costs are feasible and if the renovations are necessary. Located o Anderson Mill Road, Cabinetto is a full-service cabinet retailer and remodeling business pro- viding services to the Greater Austin area. Owner Adnan Cokadar said con- tractor demand is still present despite interest rates and in ation slowing the market down across the board. “The building is continuing because you have to produce more new homes,” Cokadar said. “The internal immigra- tion—people are still moving to Austin. It’s still attractive.” Financing renovations responsibly Financial experts said they’ve seen an increase in individuals using their home equity, speci cally home equity lines of credit, to nancing projects. Home equity is calculated based on
seller’s home by 20%. Small improvements, such as new landscaping, paint touch-ups and detail cleaning on tile, can bring the biggest returns on investment. While major renovations, such as new win- dows or countertops, may not yield the same returns, they will make a house sell faster, Mayo said. A rise in renovations also re ects an uncertainty homeowners feel about selling in the current market, Mayo said. Cedar Park and Northwest Aus- tin homeowners who are locked into a low interest rate and a high homestead exemption are choosing to invest in their homes instead of starting over in a costlier market. “They are using their money in their equity to x their house, to add a pool,” Mayo said. “They’re choosing to stay put instead of moving.”
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