The Institute for Resources, Environment and Sustainability at the University of British Columbia just finished compiling the results of a survey conducted to assess how renovations and energy efficiency enhancements affect market value. 610 BC Realtors participated in the survey, and the results are based on their observations and experiences during 2006.
Did the conclusions contain any surprises? Here’s my take on the survey summary of conclusions.
Energy Enhancements: Owners shouldn’t expect to recover the cost of energy saving improvements when they ultimately sell their homes. While in terms of energy savings, improvements to the condition of insulation and weather stripping are most effective, they make virtually no impact on sale price. It seems that if the enhancement isn’t visible, it doesn’t add to value buyers are willing to recognize.
The cost of enhancements to things that affect energy consumption and which are visible – such as heating systems, roofs, windows and doors – fair somewhat better and may be partially recovered in a sale. It’s interesting that the portion recovered tails off quite quickly.
But more interesting is the survey conclusion that ‘there is no evidence from this survey that this [positive effect on market value] is because of energy efficiency‘. More likely it’s simply a result of the overall state of repair of the house.
Amenity Enhancements: No surprises here. Renovations to kitchens and bathrooms are at the top of the enhancement list in terms of popularity, percentage of cost recovered, and a slower rate or depreciation in perceived value. That is followed up by enhancement of visible parts of the building envelope, like windows, roofs and doors. As noted above, the survey concludes cost recovery for this category of enhancements is lower, and tails off more quickly, than that for kitchens and bathrooms.
As an aside, here is CMHS’s estimation of the top four renovation projects in terms of cost recovery:
- Bathroom renovation (75 – 100%)
- Kitchen renovation (75 – 100%)
- Interior painting (50 – 100%)
- Exterior painting (50 – 100%)
CMHC is a great source of information: the following list of cost recovovery figures for ten types of projects is from it’s website.
- Roof shingle replacement (50 – 80%)
- Furnace/heating system (50 – 80%)
- Basement renovation (50 – 75%)
- Recreation room addition (50 – 75%)
- Installing a fireplace (50 – 75%)
- Flooring (50 – 75%)
- Constructing a garage (50 – 75%)
- Window/door replacement (50 – 75%)
- Building a deck (50 – 75%)
- Central air conditioning (25 – 75%)
What’s the overall message you get from this? I suppose that depends on your circumstances. But for me, repairs or replacement of building envelope components should be undertaken as needed simply to preserve the value of your home. Painting comes next. Beyond that, if you’re planning on selling in the near future, save your money. If you don’t anticipate a sale for a few years and you want a gourmet kitchen or some other special amenity, go for it, and enjoy it as long as possible.
Bye for now,
...Victoria's blogging real estate professional.
[...] based on their experience of the market in 2006. I offered my take on the preliminary results in an earlier post. Essentially, the survey seemed to me to [...]