Replacement contractors searching for another way to market their goods and services need look no further than the 2018 Cost vs. Value Report, which showed replacement work handily besting other types of remodeling. And as home values hit their peak, that trend is likely to continue.
Once again, replacement remodels dominated the top 10 most valuable remodeling jobs, according to real estate pros surveyed across 149 markets nationwide (up from the 100 markets that were surveyed in the past). But this year, the value gap between remodeling and replacement became a gulf. In fact, replacement jobs recouped 76% of their value compared to just 56% for remodeling jobs — a 20-point difference. That’s a full 10 points higher than last year’s report.
That pronounced difference could point to a larger trend across the remodeling industry. “Everyone is thinking that remodeling is going off the hook and I don’t think it is except for people improving their home with replacement work,” said Bill O’Donnell, president of RemodelMAX, a publisher of estimating tools for remodelers, which generated the reports construction cost estimates using Clear Estimates remodeling software.
O’Donnell added that even now, many people are just beginning to do replacement work that’s been put on hold since the recession. And whether homeowners are planning to stay in the home or sell it, real estate agents see more value in replacement work for two key reasons.
First is curb appeal. New windows, doors and siding make homes much more desirable from the street and therefore move valuable. Second is the utility of replacement work vs. the subjectivity of other remodeling projects.
“Other kinds of remodeling are the personal tastes of the consumer,” O’Donnell explained. “They may think they’re going to their $6,000 back on their soaker tub, but the next customer may not see any value in it at all. People may replace cabinets that are just three years old, but they’re not gong to replace windows that are three years old.”
Home prices may be the other trend affecting the marked value differential between replacement and remodeling. “…Real estate pros appear to be a little less bullish on big-ticket projects than they were in the 2017 report,” said Craig Webb, editor-in-chief of Remodeling and ProSales magazines. “We take this as a sign that Realtors, on average nationally, believe we might be hitting a peak on home prices. …When real estate pros get more conservative about prospects for sales of existing homes, it makes sense that they’ll put relatively more weight on replacement work than on remodeling jobs.”
Here’s a look at the top 10 projects and the value recouped from each:
1. Upscale Garage Door Replacement 98.3%
2. Midrange Manufactured Stone Veneer 97.1%
3. Midrange Entry Door Replacement (steel) 1.3%
4. Midrange Deck Addition (wood) 82.8%
5. Midrange Minor Kitchen Remodel 81.1%
6. Midrange Siding Replacement 76.7%
7. Upscale Window Replacement (vinyl) 74.3%
8. Midrange Universal Design Bathroom 70.6%
9. Midrange Bathroom Remodel 70.1%
10. Upscale Window Replacement (wood) 69.5%
You can check out the complete report online including key trends, methodology and confidence levels. The report allows remodelers to compare different markets.
