Furniture Orders Bode Well For Housing, Economy

The Wall Street Journal

Strong year-to-date orders at furniture companies Ethan Allen Interiors Inc. (ETH) and Haverty Furniture Cos. (HVT) offer the latest evidence of a turnaround in the home sector and suggest consumers are ready to make bigger purchases again.

Furniture companies and their counterparts, home-improvement retailers, had seen sales slump during the recession as customers cut back on purchases of big items. But as the economy begins to recover from its trough, people are making the purchases they had put off for the last couple of years.

The news from Ethan Allen and Haverty this week reinforces everything the sector has seen in the last few months, as furniture sales picked up just after Christmas and big-ticket home projects increased in January when home-improvement retailers started seeing increases in estimates for kitchen and bath projects, Craig Johnson, president of research firm Customer Growth Partners, said in an interview with Dow Jones.

Housing market turnover, which is starting to pick up, is driving increased sales at furniture and home remodeling companies, he said. People generally spruce up their homes either when they're about to put them on the market or when they've just moved into a new house.

General market reaction to last week's January existing home sales data from the National Association of Realtors, which showed sales fell 7.2% from a month earlier, has been negative, with analysts saying the data raises concerns about the strength of the housing market recovery. But Johnson said to get a clear picture, one has to look at the comparison to year-ago numbers, which aren't seasonally adjusted. Total existing home sales were 12% above a year earlier in January.

Ethan Allen Interiors Inc. (ETH) said Wednesday written sales, or orders, for the two months ended Feb. 28 rose 25% from a year earlier, driven by increased store traffic. Chairman and Chief Executive Farooq Kathwari said the company is optimistic about its results for the quarter ending in June--when most of those written sales will be delivered and reported as sales--though it remains cautious.

Ethan Allen's news comes just two days after another furniture company, Haverty Furniture Cos. (HVT) said total written business in the current quarter to date is up about 8% despite harsh weather in some of its key markets. The company also posted much better-than-expected fourth-quarter earnings.

Meanwhile, last week, world's biggest home improvement chain Home Depot Inc. (HD) reported stronger-than-expected sales of some big-ticket items, such as kitchen appliances, water heaters and windows. Lowe's Cos. (LOW), the second-biggest chain, said sales tied to bigger-ticket projects improved from the third quarter, though they remained lower than a year earlier. The companies were able to use promotions to ignite demand for big-ticket items like water heaters and roaster ovens, which had slumped in recent years.

That the spending on home improvement and furnishings is improving despite 10% unemployment shows people with full-time jobs are starting to spend again, and since consumer spending makes up 70% of the economy and retail accounts for 45% of consumer spending, that has implications for the broader economy as well, Johnson, of Customer Growth, said.

Wall Street Strategies analyst Brian Sozzi said the strength in furniture and home improvement segments is definitely a sign of pent-up demand, but companies also have to have the right product. Ethan Allen's name is synonymous with quality, he said, so when the company discounts, customers are interested. La-Z-Boy Inc. (LZB) has focused on its mid-priced niche and has seen good results, but a company like Furniture Brands International Inc. (FBN) has much lower prices but hasn't been doing well no matter what it's done with its prices, he said.

The furniture sector has been in the doldrums for about five years, and for 2009, it was off 20% from its peak in the fourth quarter of 2005, Johnson said. As confidence and the housing market recover, he said, the snap back in the furniture sector will likely be among the strongest because it will be coming off the deepest dip.

Is the Remodeling Slump Over?

The Dallas News

Home remodelers that have been hammered by the recession can look forward to better times in 2010.

Forecasters say the home improvement and fix-up business should pick up this year after a 25 percent slide in activity since 2007.

"The downturn appeared to stabilize in the second half of 2009," Kermit Baker of the Harvard University Joint Center for Housing Studies told builders and remodelers at the National Association of Home Builders' annual meeting last week in Las Vegas.

"We are starting to see some positives in where the market might be headed for handyman services and home remodeling."

The Harvard researchers said nationwide remodeling expenditures are likely to rise about 6 percent in the coming quarters.

Baker said the cutbacks in home improvement and repair activity during the recession were substantial but were less than half what the homebuilding business experienced.

"If you are a remodeler, times have been tough. But it could be worse – you could be a homebuilder," he said. "In this economic environment, households were spending more on home improvements like kitchen remodeling projects last year than they did on the purchase of new homes."

North Texas outlook

The outlook for increased home remodeling is good news for North Texas builders, some of whom have diversified during the downturn.

"Quite a few of our builders have expanded into remodeling," said Bob Morris, executive vice president of the Home Builders Association of Greater Dallas. "Some of our more inventive small custom builders have been doing remodeling.

"There is still work out there. It's a viable market because the economy here wasn't hit nearly as hard."

Even in Dallas-Fort Worth, some homeowners have put sunrooms and other fancy fix-up projects on hold for the last year or so.

"If you think the prices of homes are going down, it makes it hard to argue that outdoor decks or bath remodels will hold their value," said Paul Emrath, a researcher for the builders' association. "People have less equity in their properties to finance remodeling.

"Even if you don't have problems there, sometimes lenders are more reluctant than they have been in the past to finance remodeling or a home addition."

Smaller projects

Homeowners in the market for a redo are taking a more measured approach. The days of over-the-top remodeling and double-size additions are mostly gone, analysts say.

"Of those that are planning to spend money, 52 percent are doing needed repairs or maintenance, as opposed to large-scale home remodeling projects." said Eliot Nusbaum of Better Homes and Gardens, which commissioned a new housing study. "The focus is on smaller projects right now like painting a room or replacing or adding flooring.

"What we are seeing in remodeling as well as new construction is practical considerations."

Energy-conserving or environmentally friendly upgrades are still on many homeowners' must-have lists.

"The focus for future projects really seems to be about saving money," Nusbaum said.

Harvard University research points to the same frugality, Baker said.

"We have seen a pronounced shift over to replacement projects in the last two years," such as energy-efficient windows or heating and cooling systems, he said. "But we are now seeing a little more life in discretionary projects – kitchen and bathroom remodeling."

The majority of fix-it fans are doing the upgrades out of their pockets, Baker said.

"This market is heavily dominated by cash financing," he said. "Households either don't want to take out loans because they are nervous about economic conditions or they can't get loans."

Some Major Real Estate Assets Have Worked Out Of Distress

Houston Chronicle

Houston's commercial real estate market is ranked ninth among 57 U.S. markets in distress, according to Real Capital Analytics.

In its latest report, the New York research firm said this area had 211 properties in default, bankruptcy or foreclosure as of Dec. 1.

The value of the buildings, which spanned all property types, was $4.8 billion.

Las Vegas ranked at the top of the list of markets in distress as a percentage of total property investment volume.

While the number of troubled properties in Houston has been growing, some of the larger assets have worked their way out of distress and have new owners.

Last week, an investment group purchased the 44 units that were put into bankruptcy at the Endeavour condominium tower on Clear Lake.

Last month, the owner of Greenway Plaza gave the keys back to its lender, Barclays Capital. The investment bank formed a joint venture real estate firm to own and operate the project.

And the Mosaic high-rise near the Texas Medical Center recently was acquired out of foreclosure by a group led by Starwood Capital Group.

Real Capital broke down the distress in Houston by property type.

The office sector had the highest amount of capital at risk with $2.4 billion in distress in 19 properties.

The Houston apartments and retail sectors each had more than $1 billion worth of properties on shaky financial ground.

Regionally, Houston had the highest volume of distress among the top Texas markets, but Dallas wasn't far behind with $4.5 billion.

Nationally, the volume of troubled properties totaled $161 billion.

Retail remains the hardest-hit property sector with $37.5 billion in distressed situations, with hotels second at $32 billion.

Small-scale remodeling

Home improvements that pay off don't have to be major investments.

Small-scale exterior home remodeling jobs can be the most profitable when selling a house, according to a survey of real estate agents.

Door and siding replacements, as well as wood outdoor deck additions that cost less than $14,000 were some of the top projects in terms of costs recouped in the 2009 Remodeling Cost vs. Value Report.

A steel entry door replacement returned nearly 130 percent of costs, followed by upscale fiber-cement siding replacements at 84 percent. Wood deck additions returned 81 percent of costs.

The study, produced by Hanley Wood and Realtor Magazine, compares construction costs with resale values for 33 midrange and upscale remodeling projects, including home addition, remodels and replacements in 80 markets.

Attic bedroom additions moved up in terms of profitability in this year's study.

They recouped 83 percent of home remodeling costs compared with 74 percent in 2008, the report says.

The least profitable jobs were home office redos and sunroom additions.
Market Square Park

City boosters hope the renovation of Market Square Park will spur property owners in the northern end of downtown to develop their empty parcels.

“With the renovation of Market Square Park, we will further our goal of helping create a true urban neighborhood in the north end of downtown and encourage property owners in the area to develop their properties, many of which are large tracts of parking lots and Houston apartments,” said Jaime Mize, board chair of the Downtown Houston Redevelopment Authority.

It certainly happened to a few of the lots around Discovery Green, the 12-acre park on the eastern edge of downtown.

A high-end office building and hotel are going up adjacent to the park, and a residential tower was recently completed.

Construction on Market Square Park is expected to begin by year-end, with its completion scheduled for the middle of 2010.

Lauren Griffith Associates, a local landscape architecture firm that was involved in Discovery Green, is designing the park. Ray + Hollington Architects and Tribble & Stephens Constructors are also involved.

A central lawn will anchor the park, which will include a dog run, performance area and a cafe. The Downtown District is in negotiations with Niko Niko's Greek & American Cafe to operate an eatery there.

Older artwork like James Surls' Points of View sculpture will be moved or updated and newer installations will be added.

The park will also include a memorial to honor the victims of 9/11, including Houstonian Lauren Catuzzi Grandcolas.

Consumers More Circumspect On Home Remodeling Projects

Chicago Tribune

'Twas only a few years ago, when the housing boom was in full roar, that homeowners didn't have to fret too much over whether the money they invested in remodeling would be paid back at resale time.

Indeed, it was practically a no-brainer: Home sale prices were going up so high and so fast that remodeling the kitchen or the master bath would nearly pay for itself. Some remodeling companies had so much backlogged work that clients passed the time on waiting lists.

"These days, it's a new ballgame," said Sal Alfano, a former contractor who now is the editorial director for Remodeling magazine, a trade journal. "Now, the jobs are smaller, the scope of work has been cut back, and consumers are doing things in phases."

And, he said, consumers are squinting harder at contractors' estimates, not only to push down costs but also to decide whether the price of that redone kitchen or master bath is going to pay them back anything when it comes time to sell in a market that has become notoriously fickle and with home prices sliding.

Such born-again cost-consciousness makes complete sense in the current economy, Alfano said, but he's concerned that the infatuation with the contractor who offers the lowest bid will come back to haunt consumers.

Each year, Alfano's magazine partners with the National Association of Realtors to produce the Cost vs. Value Report, a massive numbers-crunch that tries to ballpark the return on investment for dozens of home-improvement projects, nationally and regionally, in addition to numerous metro areas, including Chicago.

It's an ongoing slide, he said. Nationwide, the payback at sale on remodeling, in general, peaked in 2005 (the height of the housing boom) at 86.7 percent, according to the magazine survey of the remodeling industry and NAR members.

"That is," he said, "it was costing you 13 cents on the dollar to build just about anything (if you were selling the house in a relatively short period).

"That's pretty cheap," he said. "Then it sank like a rock, ending up at 76 percent, or 10 points lower than the year before."

In the 2009 survey, the average payback, nationally, was about 64 percent, according to magazine data.

That's almost exactly the average for 33 remodeling projects analyzed in the Chicago area in the 2009 survey, including kitchen remodeling, bathroom remodeling, decks and sunrooms. Heading the costs-recouped list here were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

The best returns here, according to the report, were on midrange entry-door replacements (115 percent return at sale) and upscale fiber-cement siding replacements (85.8 percent).

The magazine extensively defines the parameters of each project, citing specific materials and overall price ranges, all gleaned from cost-estimating software used in the remodeling industry. In addition, this year 4,000 members of the Realtors' group weighed in on how the improvements might pay back at resale in their local markets. The full report is at remodeling.hw.net.

A midrange major kitchen remodel in Chicago (average cost: $67,332) recouped about 67 percent at sale time. An upscale bathroom remodel here ($63,402) recouped about 50 percent, according to the study.

Despite the data, not all consumers are reining in and battening down, some remodelers say.

"For the people who have the ability and want to do a kitchen remodel, I'm not seeing them skimping," said Bryan Nooner, chairman of Distinctive Remodelers in Orland Park.

"Pretty typically, we're seeing kitchen remodels in the $40,000 to $70,000 range. They're spending what they want to. They still want the granite (counters), they want upgraded wood-cabinet species such as maple or cherry, and we're doing few standard wood stains -- most everybody wants a hand-rubbed finish."

One of his recent clients, Frank Toland, said resale value wasn't a consideration when he recently remodeled the kitchen of his Mokena home. He said the job cost about $70,000, in addition to upgrades elsewhere in the house that were done at the same time.

"Resale really didn't factor in at all," Toland said. "We're not planning on moving. We're planning on staying there, and that's why we decided to do it the way we wanted.

"We hope that the money we put in, eventually we'll get it out. But we said, let's do it the way we want it done rather than cut costs because of resale value."

Matt Draus, who owns Descon Construction in Oak Park, also said he's hearing from customers who are thinking long term.

"We see people who have a little bit of money and decide they're not going to move for five years because of the real estate market," Draus said. "But we're not seeing the big blowout room additions."

Instead, he said, he's seeing smaller projects and more emphasis on maintaining and updating existing features -- jobs that require handyman services.

But more so than in recent years, he said, money talks.

"Cost is definitely getting much more scrutiny now," he said. "It's all about cost, that's a No. 1 priority."

But Draus said that bottom-lining often seems to be coming at the expense of quality. Driven by the slumping economy, the home remodeling-industry ranks are swollen with newcomers and some tradespeople who are eager to have any income at all, he said.

"I'm [offering estimates] against people who aren't honest and upfront and are low-balling it in order to get the work," he said. "There are a lot of good builders out there, but there are a lot of others who are making times harder for the rest of us."

Alfano agreed, and urged homeowners to be cautious when considering bids that are significantly below competitors'.

"What we couldn't account for [in estimating costs for the magazine study] was the number of  home remodeling jobs where the contractor cut his overhead or his profit just to keep busy, hoping that things would turn around," Alfano said.

"Others are former new-construction builders who don't yet know that they can't really do a job for a large percentage less" than competing bidders, he said.

Draus said he's seeing some companies agree to jobs that unquestionably are money-losers for them, just to keep some cash flowing, sometimes with disastrous results for all.

"[A homeowner] might get a bid of $1,000 from a guy who's about to go bankrupt or a $3,000 bid from a guy who is competent and stable," he said.

"I've been called in to finish jobs for people who took the $1,000 bid," he said.

    64%

    The national average percentage of remodeling costs recouped upon selling a home. That means it costs 36 cents on the dollar to build just about anything for your home.

    In the Chicago area, the best returns were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

    115%

    Return on sale for replacing an entry door with a midrange substitute

    85.8%

    Return on upscale fiber-cement siding replacement

    67%

    The average payback on a midrange major kitchen remodeling project

    50%

    What you'd recoup on the average upscale bathroom remodeling project

The Remodeling Blues

Minneapolis-St. Paul StarTribune

As a kitchen re-do drags on, washing pots and pans in the bathtub is getting very old.

Colleen and Darrell Brandt in the kitchen of their Golden Valley home Friday night. They still await countertops and a sink to complete their kitchen remodel. They opened up the wall between the kitchen and dining room and had new cabinets installed in portion in the foreground. They use the bucket Colleen is leaning on to carry pots and pans to the bathroom for washing.

For lack of a kitchen sink, Darrell and Colleen Brandt wash their pots and pans in the bathtub. Sheets of cardboard and drywall serve as their countertop.

It's exactly the situation the Golden Valley couple were trying to avoid when they chose a contractor for their kitchen remodel. In September, they hired the Home Depot because they thought the home improvement giant would use only the best remodeling professionals.

"You hear all of the horror stories about contractors and you think that by going to Home Depot, you have the backing of a large corporation and the work will be done in a manner that is in keeping with professional standards," Darrell Brandt said.

Instead, they were frustrated by the quality of the carpentry by the company's independent contractors, and how their kitchen is still out of commission, at least five weeks after it should have been finished.

Stephen Holmes, a spokesman for Home Depot, said the company agreed to make the changes Brandt requested, but those complaints delayed the project. He added that Home Depot, which is based in Atlanta, will always work to make sure a customer is completely satisfied.

"The reason customers choose the Home Depot is they know the Home Depot is going to stand behind the quality," he said. "It's complex work. It may seem simple, but anytime you're dealing with cabinets, countertops ... unexpected things can come up."

The Brandts already had to go out of town for Thanksgiving and scaled back their Christmas gathering after being told the job wouldn't be finished until January. After Whistleblower inquired about the situation, the Brandts got a call Thursday saying that the countertop and sink might be ready for Christmas.

This fall, the Brandts wanted to get their 1940s Tudor-style house ready to sell, so they decided to do a minor renovation of their kitchen. Darrell Brandt had mostly done his own remodeling at his house and other properties he owns, but he became ill last year so he couldn't tackle the job himself.

Right away they thought of Home Depot and its many remodeling classes. It seemed like the best place to go for a guarantee of good service, they said.

Holmes said Home Depot advertises its rigorous process for selecting third-party contractors, but he acknowledged that sometimes staff members don't explain to customers what that means. The company has completed 120,000 jobs in Minnesota during the past two years, including sunrooms and outdoor decks and the majority of customers do not have complaints, he said.

In 2007, the state Department of Labor and Industry received six complaints from Home Depot customers, mostly about quality issues and delays. The company resolved the complaints and the state logged only one complaint in 2008 and none in 2009.

The Brandts spent most of September scheduling appointments for measurements and design of the $3,400 project. They were confused about the cabinet delivery date: their contract said the cabinets would be installed by Oct. 30, but a store employee told them that more measurements were needed before they could be ordered.

Holmes said the kitchen remodeling completion date on the contract was incorrect. The cabinet shipments were delayed because of a fire at the factory, and Holmes said the manufacturer was supposed to notify customers.

The cabinets finally arrived and Darrell removed the sink so they could be installed the week before Thanksgiving. The installation didn't go as he'd planned. Nail holes were exposed, the trim on the cabinets wasn't secured properly and there was a gap between a cabinet and the dishwasher, Darrell said. His biggest concern was that the cabinet doors couldn't be opened all the way at the same time.

"It was going to be a problem," he said. "Over a period of time, the finish on that cabinet was going to wear off. I thought, 'This can't be their finished product.'"

Holmes said the cabinet doors aren't designed to be opened at the same time, but the company agreed to make the changes after Brandt complained.

The cabinets were completed last week, and now the Brandts are waiting to find out when they can wash their pots in the kitchen again.

"I'd love to think it would be the day before Christmas," Darrell Brandt said. "That would be a great present."

Annual Remodeling Report Finds 4 Best Improvements For Selling Your Home

MSN

House prices are still dropping, so it pays to know which upgrades will deliver the best return when you sell your home. An annual remodeling report finds 4 basic replacements are likely your smartest choice.

Remodeling is a better investment in some years than others. This year is among the worst if you’re hoping to recoup much money when you sell, says a newly released report. Homeowners are getting back just 64%, on average, of a project’s cost, compared with 87% in 2005, according to Remodeling Magazine’s 2009-2010 Cost vs. Value report.

Some projects pay back better than others. You get more bang for the buck putting money into a basement or attic upgrade than adding a wing to the house. Some of the highest-return projects include a deck addition and quick, conservatively priced replacements of old siding, entry door or windows. (If you want a different perspective, personal-finance guru Liz Pulliam Weston calls remodeling “a waste of money.”)

The report compiles responses from about 4,000 members of the National Association of Realtors in 80 cities to survey questions about 33 hypothetical projects. “I think what the real-estate agents are saying is you’re taking a big risk if you’re buying these high-ticket items, because the market is slow. Buyers are looking for utility,” says Sal Alfano, the magazine’s editorial director. “They’re not so wowed these days as they were three or four years ago.”

A retreat from overbuilding
Some contractors are dropping their rates to get work, so it might seem a good moment, if you have the money, to do a big, blow-out addition. And maybe it is, if you can keep the house long enough. But today, a high-end master suite remodel, for example, returns just 56% of the cost, on average, compared with 80% in 2005. 

“You’re not seeing the big 750-square-foot additions being put on the side of a house like you were a few years ago,” says Martin Conneely, owner of Conneely Contracting, in Arlington, Mass. “Our biggest (jobs) right now are maintenance replacements (of windows, doors, siding and roofing), basement renovations and moderately priced upgrades in the kitchen and bath.”

Despite widespread talk of falling labor prices among remodelers, the cost of construction overall hadn’t changed much.  Return on investment (ROI) is dropping because, in a market flooded with foreclosures, even if labor costs are dropping, the price of existing homes is at such a discount that anything newly built can’t compete.

The 22-year-old Cost vs. Value survey makes clear that return on investment depends greatly on where you live. The highest payback is in the Pacific region (Alaska, California, Hawaii, Oregon and Washington). There, although costs are double the next-most-expensive region (the Mid-Atlantic, including New Jersey, New York and home remodeling Pennsylvania), high resale values more than compensate.

Peter Michelson, CEO of Renewal Design-Build in Decatur, Ga., cautions homeowners to be aware that projects described and priced in this report can — and often do — cost considerably more than the amounts given.

ROI is better in the West South Central (Arkansas, Louisiana, Texas, Oklahoma), South Atlantic (Washington, D.C., Delaware, Florida, Georgia, Maryland, the Carolinas, Virginia, West Virginia) and East South Central (Alabama, Kentucky, Mississippi, Tennessee) regions.

Residents of the Mountain states (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico) and New England (Maine, Massachusetts, Connecticut, New Hampshire, Rhode Island, Vermont) enjoy average returns.

It’s hardest to make a buck back on your project in the Middle Atlantic, West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, the Dakotas) and East North Central (Indiana, Michigan, Ohio and Wisconsin) regions.

The math didn’t always come out so poorly. As recently as 2005, few homeowners bothered to figure out if their plans meant overbuilding for the neighborhood, Alfano says. They just commissioned the work they wanted and assumed prices would rise to cover their costs.

They were largely correct until 2006, when payback began shrinking along with the scale of jobs that homeowners were undertaking. “The projects that were evaluated as having the most return were not kitchens and baths so much anymore. All of a sudden it was these exterior replacements: roofing, siding and windows,” Alfano says.

It was the beginning of the end of the housing boom. “Today, resale value has come to the forefront. People are much more conscious of building for the neighborhood, and they’re worried about their mortgage rates and their jobs.”

Basic replacements rule
As a group, low-cost replacements — new siding, windows, doors and roofing — deliver the best bang for the buck now, a considerably better payback than from a two-story remodel or a kitchen remodel.

Given great improvements in materials, you can replace your inefficient 10- or 15-year-old products with highly efficient ones for a decent return when you sell. In addition, the improvements help you save on heating and cooling bills. Replacing leaky windows with highly efficient newer ones is a good example. The technology behind the glass and frames has so improved that you’re tightening up your home’s weatherproofing in the process. You get more comfort and, from the real-estate agent’s point of view, new windows show off your house from the street.

Replacement projects included in the Cost vs. Value survey all cost less than $20,000 and most cost considerably less. They instantly enhance curb appeal, boosting a home’s marketability, and they require little maintenance once installed - all of which are better prospects than with a home addition. A bonus: Most of these replacements qualify for a federal tax credit for energy efficiency (not included in Remodeling Magazine’s ROI calculations).

1. Replace the front door.

    * The absolute best return on the money of any of the projects surveyed — 129% of cost — is gained by replacing a beat-up front door with a $1,200 steel-shell door filled with foam insulation.
    * A new fiberglass door (more expensive, at $3,490) returns less, about 65%. (Fiberglass is the new chic building material because it’s rugged and durable, can be painted and will mimic almost any wood. Unlike wood, it doesn’t crack, warp or shrink and needs zero maintenance.)
    * Spend about $7,500 on an entire new entrance, including a widened opening, a solid-core wood door and high-end glass, new lighting and better locks, and you’ll recoup 69%, on average.

2. Replace home siding

    * Replacing old siding with a durable fiber-cement product ($13,287) recoups about 84% at resale.
    * Use vinyl siding ($10,607) to get an 80% return.
    * Foam-backed vinyl ($13,022) costs more and earns back less — roughly 79% — but it is much more efficient at insulating a home.

3. Replace windows. Three of the four window-replacement projects considered in the survey pay back about 77%:

    * Wood-trimmed windows ($11,700).
    * Lower-end vinyl windows ($10,728).
    * Windows trimmed in higher-end vinyl ($13,862).
    * The fourth project, higher-end wood-replacement windows ($17,816), has a return of about 72%. Fiberglass windows weren’t included in the study.

Replace the roofing: Spend $19,731 on new fiberglass asphalt shingles and you’re likely to recoup about 67% of the cost.

    * A higher-end roof replacement using standing-seam metal ($37,359) pays back about 61% of the cost, agents told the survey.

Additions aren’t cost-effective
Except for a new deck, which pays back nicely, adding to a home’s footprint brings a poor return these days.

A new deck
    * Wood is high-maintenance, but homebuyers love it: A new wood deck ($10,634) returns 81%.
    * New outdoor decks of midrange composite planks ($15,373) return around 71% of the cost at resale.
    * A higher-grade composite ($37,745) brings an ROI of about 61%.

Other additions
    * Adding a 200-square-foot sunroom ($73,167) recoups 51%. [Find a Sunroom Builder in Grand Rapids Michigan]
    * A high-end ($225,995) master suite project, adding 640 square feet to the house, including a bath with walk-in shower and stone walls, brings a 56% return.
    * A less ambitious, less costly ($103,696), 640-square-foot master suite addition including whirlpool bath and ceramic tile recoups 65%.
    * A garage addition ($87,230) earns back about 56%.
    * A high-end bathroom addition ($75,812) earns about 58% at resale.
    * Adding a midrange, 6-by-8-foot full bath ($39,046) recoups about 60%.
    * Add a midrange two-story wing ($156,309) to the house, including 24-by-16-foot first-floor family room and second-floor bedroom and full bath, for a return of about 69%.
    * A midrange family room addition ($82,756) returns around 65% of the cost.
    * Adding a sunroom or home office were the projects that yielded the least payback, presumably because these special-purpose rooms appeal to fewer buyers and are in less demand.

Best use of the money (besides replacements)
Upgrading existing space, such as a bathroom remodel, is the best bet for recouping cost. It makes sense: Pouring a foundation, framing a structure and bringing in electricity and plumbing are among the most expensive aspects of a building project. When you can largely skip these steps and increase your usable space, the payback is richer:

    * An attic conversion, including a 15-by-15-foot bedroom with dormer and a 5-by-7-foot bath with shower ($49,346) returns comparative gold: 83% return, on average. Agents in several cities said this job would return more than 100%.
    * A basement ($62,067) remodel —a 20-by-30-foot entertainment room and 5-by-8-foot full bath — recoups about 75% of its cost.
    * A midrange 5-by-7-foot bathroom remodel ($16,142) with standard fixtures and trim has a 71% ROI.
    * Expanding that bathroom to 100 square feet ($52,295), including moving plumbing and wiring and adding higher-end cabinets and fixtures, brings a 62% ROI.

Kitchens and baths: Scaled back but ever popular
High-end kitchens and baths are fading in popularity, replaced by “very practical things,” Michelson says. “The $400,000 and $500,000 jobs are few and far between. The jobs between $50,000 and $200,000, we’re doing lots of those.”

Bath and kitchen remodeling hasn’t stopped, since these projects maximize the enjoyment of the most-used spaces in a home. But “people are definitely being smarter with their money,” Conneely says. “For instance, a $75,000 remodel five years ago? That same client would today spend $50,000.” People who blithely bought the best of everything now pursue the same look by choosing materials judiciously.

    * A minor kitchen upgrade ($21,411) installing new cabinet fronts, laminate counters and other cosmetic improvements is a decent investment, at 78% ROI.
    * A major kitchen remodel ($57,215) using midrange materials — semi-custom cabinets and laminate counters — pays back about 72%.
    * A high-end major kitchen remodel ($111,794) with top-of-the-line cherry cabinets, stone counters, glass backsplash and expensive, built-in appliances, pays back just 63%.

Home Remodeling For A Bigger Return

Indy Star

Question: What remodeling projects add the most value to a home?

Answer: Despite the recent slide in home values across the country, remodeling projects still are considered a safe investment during uncertain economic times. While home prices have fallen an average of 7 percent nationally, the value of investing in home remodeling projects has declined only 3.86 percent, according to Remodeling Magazine's 2008-2009 Cost vs. Value Report and the National Association of Realtors.

This annual study reviews all types of remodeling projects and identifies which ones offer the best return on investment. In recent years, the top three projects have remained the same.

At the top of the list is replacing old siding with one of the upscale fiber cement products on the market.

The second-best investment is installing a midrange wood deck [outdoor decks Saugatuck].

The third is a midrange siding replacement project using a vinyl siding product.

Fourth on the list is siding replacement using upscale foam-backed vinyl.

Rounding out the top five is a midrange minor kitchen remodel [kitchen remodeling saugatuck].

What's the common theme among the first four projects? If it improves curb appeal, it will bring higher returns.

Not surprisingly, when it comes to traditional remodeling projects, kitchens and baths are the smartest places to spend your money. These rooms are where homebuyers expect money to be spent. In fact, a kitchen remodel is the only interior project included in the top 10 returns on investment. One improvement lending significant curb appeal is the addition of a sunroom [sunrooms Saugatuck].

Keep the list going, and you'll find that the next category of projects with high returns includes window replacements of various types. Why? Like siding, these usually are projects of necessity. Consumers have an awareness of energy efficiency and understand that new windows are essential to controlling energy costs.

The message to consumers is this: Putting money into your home still is a good investment, but be wise with your selections. To make the most of your investment, take care not to turn off potential buyers, and focus on projects that boost curb appeal.