Remodeling Surge Battles Supply Shortage ROI Challenges Heres Why
Remodeling Surge Battles Supply Shortage ROI Challenges Heres Why
If buying isn’t an option, make it yourself. Indeed, in 2020 homeowners across the country found themselves forced into spending more time at home, and they were spending that time in different ways. Telework, distance learning, and at-home recreation became the cliched new norm, and those not in a position to buy new homes decided to remodel. Let’s take a look at how the pandemic has affected home remodeling.
Play areas, home offices, in-law suites, outdoor kitchens, and swimming pools – these are just some of the sought after renovations and projects homeowners are vying for as the pandemic relegated them to their houses. Whether borne out of necessity, a change of scenery or upkeep, the home improvement sector is bustling. This surge in home renovation projects has created a backlog and scarcity in labor and materials.
With home improvement projects on the top of everyone’s list, demand has driven prices up as materials supply and contractor availability wane. The unintended consequence of this is when homeowners can get their projects completed, they will have paid premium prices, and the market may no longer appreciate the improvements.
HomeLight, a real estate referral agency, conducted a Q4 top agent insights survey to get a feel for market conditions across the country. According to agents, the top resources in short supply due to pandemic-induced remodeling are labor, appliances, and windows and doors; more than half of agents say that they’re experiencing labor shortages in their markets.
Agents expressed concern that the surge in remodeling would have homeowners sinking money into their homes in response to the pandemic, but the return on their investment may not be seen when they sell.
Projects with low return
One of the most significant examples of coronavirus impacting real estate is in the specificity of home remodeling projects. Home gyms, pools, home theaters, backyard studio sheds or other structures, and home offices offer some of the worst returns on investment. The odds are that you know someone who installed a pool, sauna, or hot tub last year; 22 percent of agents said that this addition was a fleeting trend that homeowners would have difficulty recouping their investment when they sell. Nineteen percent of agents said that home gyms would have a terrible return, which increases depending on the region. For example, year-round outdoor recreation areas would find it more difficult to recoup a home gym investment at resale.
Projects with high return
Not to worry – if you’re aching to renovate your home, there are projects that have a high return on investment. You can always count on landscaping providing a high return, often at 100 percent of your initial investment. So, consider sprucing up the outdoors for enjoyment rather than creating a specialized area within your home. Minor remodels often have high returns, especially in the bathroom and kitchen. Tilework, a new sink, toilet, and new fixtures can change a room without breaking it down to the studs.
Forward-thinking homeowners will research their remodeling ideas before jumping in; that way, their significant investment isn’t lost when it comes time to sell. However, even minor projects may come at a premium with supply and labor shortages, so consider your options wisely.
Author:Kevin Kieffer Phone: 925-300-8000 Dated: January 27th 2021 Views: 819 About Kevin:
Kevin R. Kieffer is a Broker Associate and Realtor with Compass. His primary focus is the East...
Kevin R. Kieffer is a Broker Associate and Realtor with Compass. His primary focus is the East Bay residential home market. He is a top producing agent and also leads a successful team of Realtors as one of top producing teams throughout all of California (Real Trends Ranking). He was recognized as a Five St ar agent numerous years through an independent survey and has been featured in Diablo Magazine. He closed out 2017 in the top 1% of all agents in Contra Costa & Alameda counties and is currently one of the top producing agents in 2018 and awarded Quadruple Platinum Producer for the region. He has offices in Danville & Walnut Creek and has a team of experienced Realtors focusing on markets throughout the East Bay. Please give him a call and let him exceed your expectations!
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"Even having done our homework, my wife and I were still nervous and unsure of what to expect when we began shopping for our first home. Adding to the uncertainty of being first-time homebuyers, we were also renting a home that would require us to terminate our lease agreement early should we purchase a home before the expiration of our contract. Enter the EastBayPro Team of Kevin and Naomi Kieffer. Let me start off by saying Kevin and Naomi are without a doubt experts in the business of real estate. Buying, selling, renting, flipping, investing, property management…you name it, they know it. With that being said, we came across Kevin’s phone number when we drove passed a house we thought we might be interested in viewing. Kevin was the listing agent for the property and within a couple of short hours after speaking to him over the phone, we were back at the property and he was showing us the home. Kevin did a great job and was extremely knowledgeable of the property he showed us but in the end it was too small for our family’s needs. We later decided to have EastBayPro Team represent us as our buyer’s agent and we made a wise decision in doing so.
Kevin was always responsive in that whenever a property came on the market that we were interested in, all we had to do was give Kevin a call and he was there to show us the property within hours. We also spent a day with Kevin in which he showed us properties that he thought we would be interested in. I would like to note that we have four small children and they were with us at every showing. Kevin was great with them and had more patience with them than we did. It was on this day, that we found the house we fell in love with and Kevin was on top of putting an offer in for us immediately. The house was a short sale and as complicated as these transactions can be, they made it happen. We worked mostly with Naomi after our initial offer and as great as Kevin was, Naomi was even better (Sorry Kevin but your wife has you beat). Naomi was extremely responsive to any questions or concerns we had. When problems came up during the inspection process, Naomi was on top of it and was able to negotiate the price down beyond what we were expecting. Excellent job! Naomi was extremely organized and made the process, all the way through closing, run very smooth. But their service didn’t stop there. After closing, Kevin called our property management company for the house that we were leasing to see what it would take to break our lease earlier and minimize any penalties. Throughout the homebuying process, Kevin and Naomi fully represented our best interests and we believe that they went above and beyond what most agents would do for their clients. Two thumbs up for the EastBayPro Team of Kevin and Naomi as we would highly recommend!"