Home remodeling is not just about increasing your house’s value in the marketplace. It is about the happiness the remodeling provides to you and your family.
In a recent edition of The Wall Street Journal Sunday, columnist Jonathan Clements wrote an article entitled, How to Throw Away a Lot of Money. He listed seven ways we unwittingly waste money. I read through the first six, agreeing with him on each item. But I was distressed to see his item #7, “Remodel your Home.” I think he has missed the most important reason for remodeling.
Mr. Clements chose to look at home remodeling as a simple financial exercise. He cited an article from Remodeling magazine where they said that a major kitchen remodeling might cost $54,909, yet only increase the house’s resale value by $40,732. They went on to say that other home improvement projects were also money losers.
Now my first reaction when reading this was that there was no explanation given in the survey about what type of neighborhoods these remodeled houses were in. Remember, the three rules of real estate are location, location, and location. Certainly some remodeling projects in neighborhoods of small, modestly appointed houses will bring the investment in a house above what the neighborhood can handle. It’s never good to be the largest and most expensive house on the block. The surrounding houses will put a “ceiling” on your resale value. That is an important consideration and I can accept the fact that it is hard to get your remodeling dollars back in this situation.
But what if you are the smallest house in the neighborhood? What if your house is outdated? What is many of the neighboring houses are being remodeled? An existing, outdated kitchen would dramatically reduce your resale value, as well as make your house harder to sell. In these cases, I would predict that you would get every dollar back if you sold your house soon after remodeling it.
And there’s the rub. Most remodeling is done to make a house more livable for the current residents. They are not done to “flip” the house and make a quick buck. That’s why it is extremely important to consider the emotional and personal comfort value a remodeling will bring and not just the added property value. How much is your happiness worth? That new kitchen or expanded family room can make a gigantic difference in your family’s life. Consider also that remodeling can give you the house you have always wanted in the neighborhood where you are already happy living. There is a good chance your current house is more conveniently located than a new house you might buy. And moving is disruptive. Staying in your current house could mean your children don’t have to change schools, your commuting time is shorter, you burn less gasoline, and you stay near your friends.
Eventually, Jonathan Clements does acknowledge this at the end of his column. He says, “I have nothing against home improvements. But you should undertake them because they will give you a lot of pleasure – and not because you think they’re a good investment.”
I agree with him. But I would add that remodeling your house can be a investment that brings a huge positive return to you and your family’s happiness. Maybe you can buy happiness, after all.