RadioBDC Logo
REAL Estate Talk-Boston with Chris Devin | RadioBDC Listen Live
 
 
< Back to front page Text size +

Go for it Julie D

Posted by Scott Van Voorhis November 16, 2010 06:22 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

That is the rough consensus of the blog regulars and not so regulars who weighed in yesterday on Julie D's renovation dilemma.

Julie D bought a Cape in Billerica a year ago for $370,000, but, in a market that appears headed south again, now wonders whether to put any more money into her home, which had been previously expanded and partially updated.

She wants to make some basic updates - a revamp of her home's 1960s bathrooms, new, energy efficient windows, a garden shed and even dormers.

But Julie D wonders whether it would be smarter to sock away any extra money and possibly scoop up an even nicer home at a better price five years from now.

Most of the comments on yesterday's post weighed in, albeit cautiously, on the pro renovation side of the debate.

In fact, Kermit Baker, a senior research fellow at Harvard University's Joint Center for Housing Studies offered a similar take.

Home improvements were an obsession in the bubble years, with homeowners banking on immediate returns as home prices rose at double digits.

"They were doing it on house money," Baker noted when I caught up with him the other day.

Those days are long gone. Instead, Julie D and other homeowners weighing renovations should focus on what they want from their homes rather than any grand hopes of a financial return.

In that vein, kitchen and bathroom revamps and window replacements are the type of relatively safe, bread and butter improvements, he notes.

Even that might be tricky if you are planning to turn around and sell in a year or two, but clearly Julie D has a longer term perspective here, looking ahead five to seven years down the road.

However, when weighing any big renovation or addition to your home, it pays to take a little time to look around the neighborhood, Baker cautions.

If you own a $450,000 house in a neighborhood of $250,000 homes, it doesn't make sense to pump another $150,000 into your house.

The danger is pricing your home out of the neighborhood.

"If you are pricing it beyond the standard package of features in your neighborhood, that can be risky," Baker warns.

Moreover, I would add that even modest renovations can add up, so it pays to look closely at the cost. For her part, Julie D plans to spread the work over the next seven years, so that helps.

But even replacing all the windows in your house is going to cost more than a few thousand dollars to do.

Here are a couple especially thoughtful comments from yesterday's discussion.

I thought Lance's comments were to the point - and helped set the table for a pretty thoughtful discussion.

"In a stable market, improvements like these would probably pay back somewhere around 70-80 cents on the dollar. In a falling market, you'll get less. Looked at purely as an investment, Plan A is clearly a loser... But if the lifestyle benefits outweigh the likely losses, then go for it. There's more to life than money."

And Lisasull79 cut to the heart of the matter - Julie D's wavering between spending money now on renovations or saving up that money for a down payment on a nicer house down the line.

"One thing to consider is how important resale value is to you, Julie. A home with new kitchens and baths, complete with fashionable fixtures, means your house will attract a broader number of people and probably sell faster at a more competitive price when you are ready to put it back on the market.

But as you well know, that doesn't necessarily translate to a bigger down payment on your next house.

Putting money into kitchens/bath now will bring you comfort in the knowledge that someone will definitely want to snap up your stunning remodel when the time is right; or, you can sock that money away knowing that the bigger down payment will be worth a possible longer wait on the resale market down the road.

It's a gamble, either way."

Several others shared their own renovation experiences - if you are struggling with the renovation question, definitely check out yesterday's comments.

Thanks all.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

Latest interest rates

SPONSORED
RE by the Numbers
Tips From a South Boston Mover
Just like in the movies that have made South Boston famous in recent years, there is still a large Irish population in Southie. However, just...
archives