It doesn't mater whether it's an old house or a more recent one, almost any improvement will increase the value of your home. The more relevant question, perhaps, is whether it's possible to recoup all the money investment in home-improvement projects including restoration projects when it comes time to sell the house.
For example, if a homeowner invests $50,000 in a restoration project, will the future selling price increase by at least that amount? The answer to this question is hard to come by, primarily because there are so many interrelated reasons why residential property values appreciate. Among the more common factors are location, the reputation of the local school district; community amenities and services; accessibility to transportation, jobs, and shopping; local taxes; lot size; and the safety of the. Nonetheless, there are studies and anecdotal reports indicating that historically minded home-improvement projects do indeed pay off, though not always on a dollar-for-dollar basis.
Crunching the Numbers
The magazine "Remodeling" conducts an annual cost vs. value report that determines the average national return on investment, upon reselling the house one year later, for common, specific, home-improvement projects. At the top of the list are bathroom additions (94 percent return on investment), bathroom remodelings (88 to 91 percent), kitchen remodeling (67 to 80 percent), basement remodeling (79 percent), and family room additions (79 percent). A similar national survey by the Appraisal Institute of Canada reveals practically the same results.
Despite the difficulty in obtaining empirical evidence of the direct economic benefit of home restoration on property values, real estate agents specializing in the sale of historic homes, as well as published studies, agree on some market observations:
Not everyone wants to buy an old house, so the pool of potential buyers for older houses might be smaller than that for comparable new homes. However, this smaller pool consists of more motivated and more discerning buyers who are willing to pay a premium to get what they want.
Serious old-house buyers value the original features, finer craftsmanship, and higher-quality materials embodied in an older house. Agents report that buyers regularly look for fireplaces, tongue-and-groove floors, solid-wood paneled doors, rich hardware, and old window glass.
Although the overall condition of a house on the market will obviously affect the asking price, we all know that buyers of old houses are often more willing to accept less-than-perfect conditions. In fact, some investors specifically buy a fixer-upper, make necessary improvements, and then sell it at a handsome profit. Anyone tempted by this kind of short-term investment should bear in mind two time-tested axioms: 1) Buy the least desirable house in the most desirable neighborhood, and 2) Don't over improve for the neighborhood.
Restoring for Resale
Most old-house buyers will expect certain basic elements of the building to be in good condition. Therefore historic home owners/sellers should first consider investing in these key areas:
- Fix structural deficiencies, such as rotted sills, bulging walls, insect damage, sagging beams, wood rot.
- Replace worn-out roofing materials.
- Remove or encapsulate potentially hazardous materials, such as asbestos.
- Repair, upgrade, or replace outdated heating, plumbing, or electrical systems. (Wholesale replacement, however, is not always needed. For example, the original branch-circuit wiring might be perfectly acceptable, but heavying up to 100-amp service and a modern circuit-breaker box may be a good investment and even required by code for sale of the house.)
- Remove architecturally insensitive and incompatible remodelings, particularly from the 1970s era, advises one sales agent.
- Keep up with routine maintenance, such as cleaning out gutters, painting exterior woodwork, or repairing broken fixtures.
- Upgrade the kitchen and bathrooms to modern standards. The styling of these improvements can be within the spirit of the home's historic period, or even thoroughly contemporary.
There are some restoration projects that may return relatively little on investment. Many old-house restorers can be notorious perfectionists, investing inordinate amounts of time and money in authentic period details an admirable goal to be sure. There's nothing wrong with this dedication, so long as the primary payback you expect is the sense of accomplishment derived from preserving and restoring a piece of history. In fact, if you intend to live in and enjoy an old house over a long period of time, one agent encourages pulling out all the stops and going top-shelf for your own enjoyment.
So what's the bottom line? First, restore an old house principally for your own personal satisfaction. Then, if you're still concerned about return on investment, pay attention to the basics and don't over improve. Ask local agents what buyers are looking for and, if your old house is in a stable historic neighborhood, pat yourself on the back for what seems to also be a good economic bet.
DOWD Restoration has restoration experience from repairing weathered worn and damaged structures to recreating historic architecture to both private homes and commercial properties. Refurbishing a timeworn, derelict or mistreated piece of the past and renovating it for future generations to relish is tremendously satisfying work. Let DOWD Restoration help you with your next historic restoration project!