The 2017 Question: Remodel or Buy New?

It’s on the mind of most Anchorage homeowners who own a home built in the 1980’s and beyond. Anchorage’s housing aging stock is a boom for the big chain stores like Home Depot and Lowes who offer easy cosmetic remodeling for surface items like flooring, countertops and even cabinetry. But most serious remodeling goes much deeper than the ‘eye candy’ of a cosmetic remodel.

A substantial cost that most homeowners don’t think about is demolition. Not only are you buying and installing new replacements but there’s the demo cost. Demolition is one of the primary reasons that remodeling costs more on a price per square foot basis than buying new. That doesn’t seem reasonable but once you tear out those cabinets, add double ovens, maybe a new cooktop, fancy hood, there’s all that wiring that needs to be moved and replaced. The same holds true for plumbing. Then, there’s the sheetrock repair, the painting. Another big problem with remodeling that I personally have experienced is suddenly nothing else looks right. Those orange pendants hanging from the snake fixture suddenly look so 1990’s. Plus, because most owners continue to live in the home during the remodel, it frequently takes longer to complete as the contractor has to schedule around availability and the convenience of the owner.

There are lots of positives to staying put and remodeling. Friendly neighbors, familiarity with shopping, kids in the same schools. Stacey Dean and Cody Lee, owners of Grayling Construction, recently gave a presentation at the Dwell Sales Meeting. She stated that most homeowners pay cash for their remodeling and go into it knowing that cost does not equal value. Most remodels in Anchorage fall into the midrange value. Garage and family room additions offer a good return on value—almost 100% because it adds square footage to the home. However, a master suite addition only recoups about 29% of its job cost. Maintenance items such as garage or entry door replacement definitely do not recoup job cost. A favorite room to remodel is the kitchen. A major kitchen remodel which would include replacing cabinets, countertops, appliances, lighting and flooring returns only 32% of its job cost in resale value. But, as we all know living in Alaska, the kitchen is the heart of every home where family and guests gather on these cold winter nights. And that in itself may be worth the job cost.

Remodeled homes do sell faster than non and there is no denying there is some added value but statistically, both locally and nationally, the recouped cost averages only about 50 cents on the dollar. That’s the dilemma and question that homeowners will face in 2017 as our local housing stock continues to age and reaches cosmetic and functional obsolescence.