High cost kitchen renovations don’t offer the re-sale return they used to
Sunday, September 30th, 2007According to the National Kitchen and Bath Association, approximately 7.6 million kitchens were renovated in 2007 - that’s about 200,000 more than in 2006. But kitchen renovation budgets are down. For year ending Aug ‘07, renovations costing more than $20K were down 40% from the same period a year ealier… from $89B to $54B.
Remodeling Magazines’ 19th annual Cost Versus Value Survey offers some interesting stats and reasons why. Beyond the more obvious reasons - tighter budgets and difficulty securing home equity loans for many, lies another significant change. In 2005, a major remodel averaged $43.8K and returned 91% of the amount spent at time of re-sale. In 2006, a major remodel averaged $54K and returned 80.4%. Even the less costly renovations are returning less. In 2006, a minor kitchen remodel averaged $14.9 and returned 98.5%. In 2007, a minor kitchen remodel averaged $17.9K and returend 85.2%.
According to the The Wall Street Journal (Sept 14/07 The Kitchen Goes on a Diet), at least some Americans are losing their appetite for kitchen renovations of the most costly kind. Or at they’re becoming more aware that a high kitchen renovation budget offers no guarantees of a high re-sale return.