Remodeling
2003 Cost vs. Value Report
Values up from 2002
Kermit Baker, senior research fellow, at Harvard’s Joint Center for Housing Studies, notes three key observations about the 2003 Cost vs. Value Report.
1. Despite the fact that growth in spending on home improvements has been slowing nationally for most of 2003, cost recovery rates accelerated during the year. Across all projects covered in this study, the average cost recouped was 86.4 percent. For virtually every project, that’s higher than 2002’s recouped costs, reflecting improvement in the economy and in people’s feeling that incomes will continue to increase over the next few years.
2. Lower-priced projects show higher cost-recovery rates than higher-priced jobs. During a recession and in the early stages of a recovery, it’s typical that the upper end of the remodeling market suffers more than the lower. Higher-priced projects tend to be discretionary, and households often wait for the economy to improve to undertake these expenditures.
3. Markets with high house-price appreciation report higher-than-average cost recovery. With more equity to undertake improvements and wanting to protect their housing investment, homeowners are more inclined to spend on their home.
In metropolitan areas that were in the top 50 nationally in terms of house price appreciation between mid-2002 and mid-2003, according to the Joint Center, the cost recouped on improvement projects was much higher than the report average of 86.4 percent. In these areas (including Los Angeles, Miami, New York, Philadelphia, Providence, Sacramento, San Diego, and Washington, D.C.), the average cost recouped was 109 percent.
In metropolitan areas that were in the bottom 50 nationally in terms of house appreciation (including Cincinnati, Cleveland, Dallas, Denver, Detroit, Indianapolis, Salt Lake City, and Seattle), cost recovery across all projects in the report averaged 65 percent or less for every market except Seattle.
Percent of cost recovered
(national averages)
Values up from 2002
| | 2003 | 2002 | Variance |
| Bathroom Remodel |
| Midrange | 89.3% | 87.5% | 1.8% |
| Upscale | 92.6 | 91.0 | 1.6 |
| Bathroom Addition |
| Midrange | 95.0 | 94.2 | 0.08 |
| Upscale | 84.3 | 81.4 | 2.9 |
| Major Kitchen Remodel |
| Midrange | 74.9 | 66.6 | 8.3 |
| Upscale | 79.6 | 79.8 | -0.2 |
| Master Suite |
| Midrange | 76.4 | 75.1 | 1.3 |
| Upscale | 76.9 | 76.8 | 0.1 |
| Family Room |
| Midrange | 80.6 | 79.5 | 1.1 |
| Deck |
| Midrange | 104.2 | N/A* | N/A* |
| Basement Remodel |
| Midrange | 79.3 | 78.7 | 0.6 |
| Siding Replacement |
| Midrange | 98.1 | 79.1 | 19.0 |
| Window Replacement |
| Midrange | 84.8 | 73.8 | 11 |
| Upscale | 87.0 | 77.0 | 10 |
| Attic Bedroom |
| Midrange | 92.8 | N/A* | N/A* |
*Not included in the 2002 report
EDITOR'S NOTE: Remodeling magazine, published by Hanley-Wood LLC, has been publishing this report annually for more than 15 years. We’d like to thank the editors and designers at Remodeling, as well as the REALTORS® who contributed to bringing you this report.
REGIONAL STATISTICS: Regional statistics were published in the print version, and were available for limited time at REALTOR® Magazine Online. Due to contractual obligations with Remodeling Magazine, the report's publisher, REALTOR® Magazine Online has removed the regional statistics. However, regional statistics are included in reprints.
REPRINTS: Order reprints of the 2003 Cost vs. Value Report for just $5 each plus shipping. Contact Reprint Management Services at 717/399-1900, ext. 118 or at dwarfel@reprintbuyer.com.
Remodeling magazine’s “Cost vs. Value Report” ©2003 by Hanley-Wood LLC. Republication or redissemination of the report is expressly prohibited without written permission of Hanley-Wood LLC.
