The herky-jerky real estate market — recovering here, lagging there and nearly reaching a bubble in some cities – has buyers, sellers and homeowners all scratching their heads. Uncertainty is the word.
It’s risky to delve into lavish home improvement projects that are unlikely to earn back what you put into them. Even if you’re in one of the markets where CNN Money expects the greatest increases this year – Oakland, Calif.; Tampa, Fla.; Fort Worth, Texas; New Orleans; Richmond, Va.; Hartford, Conn.; Baltimore; Birmingham, Ala.; New York; and Memphis, Tenn. – don’t go hog wild.
The payback on remodeling is up, says Remodeling magazine, which each year publishes a report on the resale value of 35 home improvement projects. But that’s “up” from years of decline. “This trend signals an end to the long slide in the cost-value ratio, which began to fall in 2006 and didn’t begin to rebound until last year,” the magazine says.
Some improvements can raise your home’s value quite a bit, but getting your entire investment back is rare.
The best city for return on your remodeling dollar is Honolulu, Remodeling says. The top 10 cities, in order, are:
- San Francisco
- San Jose, Calif.
- San Diego
- Bridgeport, Conn.
- Fort Myers, Fla.
- Charleston, S.C.
- Oklahoma City
- Washington, D.C.
- Austin, Texas
You can easily end up pouring money down the drain by launching into a home remodeling job without learning what the payback might be. Ask several local real estate agents what a particular project might do to your home’s value. You might go ahead anyway. But you’ll do it with your eyes open.