The Economy is Recovering!

Monday, May 21, 2012

The economy is recovering!  All of our indicators show that the worst is over, and we are returning to normal.  Don’t expect the economy to be as over-heated as it was when we had reckless debt policies from our lending institutions.  That lesson won’t be repeated. But do expect higher than normal inflation as the fed’s low interest-rate-high-liquidity policy has its effect.  It’s interesting to note that many real estate observers in our market area are saying the buyers-market era is ending. I agree

When considering remodeling, remember two points.  First, remodeling is unlikely to deliver a dollar-for-dollar return on your investment. Second, an investment in lifestyle and quality of life returns more than money, so you may cheat yourself if you only look at your project in financial terms.  I know a couple who recently put $125,000 into a new dream kitchen.  The will likely never recoup even a third of the expense, but they think it was a wise investment because they love the rest of their house, they love the location and they do not plan to move for many years.

If you are planning to sell your house soon, then you surely should do the numbers.  Currently the properties that have the best kitchens, bathrooms and best curb appeal, get shown the most and get sold first.  Buyers are not interested in fixer uppers right now. (Those who are, expect to pay 50 cents on the dollar for it).  Most buyers don’t want to have to repair, clean or replace anything.  Hard surface flooring (hardwood or tile) is the most popular flooring today, but still, kitchens and bathrooms sell the house.



Remodeling Costs vs.

% of Cost Recovered

Kitchen Remodel



Add Kitchen Granite



Bath Remodel



Attic Bedroom/Bath Addition



Wood Deck Addition






Entry Door Replacement



Keep in mind that the more expensive the neighborhood, the more likely one is to recover the greatest percentage of dollars spent for remodeling.  In less expensive areas the possibility of over improving becomes greater.  Also note that these are averages, and your specific situation may vary from the above numbers.


Repair Needed

Cost to Repair

Cost to Sell AS IS

Interior Paint



Paint Exterior Trim



Replace Carpet



Refinish Hardwood Floors



Replace Shingle Roof



Repair Existing Deck



Foundation Need Major Repairs




(Above figures for a 3000 sq. ft. brick/stone home)


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