In a positive sign for the remodeling industry, the 2013 national average cost-value ratio rose to 60.6%, ending a six-year decline. The ratio represents nearly a three-point improvement over 2011-12, and is more than a half-point higher than the ratio from two years ago. Lower construction costs are the principal factor in the upturn, especially when measured against stabilizing house values.
Despite having the highest construction costs in the country, the Pacific region once again led the nation with an average cost-value ratio of 71.2%, due mainly to strong resale values. The three regions next in line — West South Central, South Atlantic, and East South Central — owe their high ranking to construction costs that were the lowest in the country.
Four regions — Pacific, West South Central, South Atlantic, and East South Central — outperformed the rest of the country for average cost-value ratio. While still remaining below the national average, most remaining regions showed strong improvement over last year.
The 2013 data show replacement projects gaining more ground than remodeling projects, likely due to their lower cost. Despite markets that are still exhibiting price-sensitivity, the cost-value ratio improved nationally for every project in this year’s survey and is higher than it was two years ago for both remodeling and replacement projects.
Thirty-one of the 35 projects achieved a cost-value ratio that surpassed the historical high national average (86.7%) in at least one city; the 13 listed here did so in eight or more of the 81 cities surveyed. Ten of the projects are priced under $16,000; average construction costs for the other three (Minor Kitchen Remodel, Attic Bedroom, and Basement Remodel) range from $18,527 to $61,303.
One sign of an improving market is higher-than-average cost-value ratios for a large number of projects. Of the 40 cities surveyed that reported at least one project with a cost-value ratio higher than the historical high of 86.7%, these 16 reported at least five such projects. All but two of the cities on this list reported at least one project with a cost-value ratio greater than 100%; San Francisco and Honolulu led this group with 15 and 14 such projects, respectively.